FTC Orders SM To Change Contract Lengths From 10 Years To 7 Years
The Fair Trade Commission has laid down an order on SM Entertainment, responsible for groups such as Girls’ Generation, Super Junior and SHINee, against their unjust exclusive contracts.
The Fair Trade Commission revealed on the 23rd that, “Regarding SM’s unjust exclusive contracts with its celebrities and trainees, we have issued them a warning as they have volunteered to rectify the problem. We have ordered them to change the act of uniformly including an additional three years to the contracts of all trainees.”
This decision made by the Fair Trade Commission was set off by TVXQ’s fanclub last year, when they called for the FTC to investigate and lay a verdict on the whether or not SM Entertainment’s contract with TVXQ was a slave contract, stating that SM abused their status in the transaction to disadvantage TVXQ.
The acts that SM has been using which violate the laws set by the FTC are the act of creating an unjust exclusive contract (long-term contract period, excessive penalty for breach of contract, unilateral decisions on schedules) and the act of uniformly lengthening the contract period on all contracts to accommodate to overseas activities with no consideration of each individual’s circumstances.
According to the FTC, the length of the exclusive contracts of SM celebrities were ’13 years since the contract was first signed’ or ’10 years or more from the debut date.’ SM has changed this according to the FTC’s order to ‘7 years from the debut date.’
Also, till now, SM celebrities had to pay three times the amount of total investments and twice the predicted sales in the remaining contract period as compensation in the case of a breach in the contract, but the FTC has ordered that this be changed to the celebrities paying the total of the number of months left in the contract period multiplied by the average monthly sales in the two years before the contract is breached
The FTC has also ordered that SM change the clause that states, ‘The celebrity must prioritize and appear on shows created by SM Entertainment,’ to ‘The celebrity can state his or her opinion whenever they wish regarding activities for the company, and if SM makes an unjust request, the celebrity is entitled to reject such a request’ in order to respect the freedom of these celebrities.
The action taken by the FTC has allowed SM celebrities to escape from the harm of unjust exclusive contracts and is predicted to greatly influence the legal dispute between SM and the three members of TVXQ (currently members of JYJ, Jaejoong, Yoochun and Junsu)..
The FTC will continue to investigate exclusive contracts in entertainment agencies and is planning to create conditions so that the industry may rid itself of such contracts.
Source: [edaily spn+DNBN]
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