Following the start of investigations for any possible breaches of subcontracting laws while outsourcing the manufacturing of albums as well as goods by South Korea's antitrust watchdog, shares of K-Pop management companies plummeted on Wednesday, according to Yonhap.
Korea Fair Trade Commission dispatched investigators to investigate the office of HYBE, YG Entertainment, and SM Entertainment on Tuesday, according to a report by Yonhap news agency quoting anonymous sources in the entertainment industry.
According to Yonhap, the Korea Fair Trade Commission is investigating whether agencies used unfair contracts, verbal agreements without producing written documents, delayed payments, or other tactics with subcontractors. There haven't been any particular accusations made.
Concerning any particular probe, the KFTC refuses to comment.
When contacted for comment, HYBE, YG, and SM did not do so right away.
Comparatively to a flat wider market, shares of HYBE, which is the management company for the K-Pop sensation BTS, dropped 2.1 percent in the early hours of trade. As of 00:15 GMT, shares of YG Entertainment and SM Entertainment both decreased by 0.4% and 1.5%, respectively. YG, however, later regained losses.
According to a report released on Tuesday by Shinhan Investment & Securities, HYBE reported revenues of 410.6 billion won, namely $315.9 million, for the January-to-March quarter, of which 44.9% were from albums while 16.8% were from intellectual property and merchandise.