“Fanomenon”: K-pop Industry Meets Competition?

Korea appears to be preparing a very interesting project aimed at making K-pop a "core industry of the Korean economy". As many K-pop fans will know, the JYP founder Jin-young Park has been appointed as a co-chair of the government’s Popular Culture Exchange Committee, and since then, there have been reports that the four biggest K-pop labels, HYBE, SM Entertainment, YG Entertainment, and JYP Entertainment, are considering certain collaborations to achieve this ambition. Finally, on 16 April, Business Post reported that the labels had recently entered into the Korea Fair Trade Commission (KFTC)’s merger review stage by filing to establish a joint venture (JV) to create a Coachella-style global festival, called “Fanomenon” (for English coverage, see Reuters).

As my knowledge of, and experience in, the entertainment industry are limited, I am not in a position to offer any firm view on the business side of this deal, such as whether such a deal could actually be executed, or what a realistic governance structure for the JV might look like in practice. But from the perspective of a competition lawyer—and a shy BLINK—several points already come to mind that seem worth considering.

First, market definition. In line with the government’s ambition to support K-pop as a future industry, this project is framed as one that would expand K-pop’s global footprint by establishing a global music festival, drawing fans from around the world and eventually touring cities abroad. When Park unveiled “Fanomenon” last year at the committee launch ceremony, he described a vision of establishing a global festival that would begin in Korea first in December 2027 and then expand overseas from May 2028.

It is an ambitious vision, and one that is hard not to support as a fan. But in competition law and policy, such framing does not itself answer the market definition question. Much will depend on how one characterises the activity at issue. For example, if one looks broadly at the global live-entertainment market, the collaboration may appear less restrictive. But if one looks more narrowly at, say, the domestic market for the procurement of K-pop artist performances for major festivals, and asks whether overseas pop artists are genuinely substitutable for headline-level K-pop acts, the competition concerns may look more serious than the publicity around a “global” project might initially suggest. The JV is also likely to touch several adjacent domestic markets, including ticketing, fan platforms, festival sponsorship, and media rights, where additional competition concerns may well arise—though this remains no more than a tentative hypothesis from someone who is not an expert in the industry.

Second, it is also worth asking whether this JV will remain truly project-specific. If it becomes not merely a vehicle for running a festival, but a hub through which the four leading labels repeatedly coordinate matters, such as artist participation, appearance fees or fee floors, scheduling, blackout periods, sponsorship packages, media rights, or venue access, beyond what is reasonably necessary to operate the JV, the deal would look considerably more problematic.

In my view, these concerns are not merely fanciful. In the Three Tenors case, for example, Warner and PolyGram formed a JV for the 1998 release, but separately agreed to suspend discounting and advertising of their independently owned earlier releases. The side agreement was sanctioned by the Federal Trade Commission (FTC) in 2003 and upheld by the D.C. Circuit in 2005. The analogy is not exact, of course, but it shows how concerns may emerge around a JV, rather than only within it. As for venue access, the Live Nation/Ticketmaster litigation illustrates how control over concert venues can become a powerful lever stifling competition and innovation in the live entertainment industry. In a more K-pop-specific context, one might also recall the JYJ case in 2013, in which SM Entertainment and an industry association were sanctioned for interfering with JYJ’s broadcast appearances and music distribution.

To be clear, I am not suggesting that any such anticompetitive conduct is likely to take place; the point is that these are the kinds of practices that competition law typically watches closely amid market consolidation in the music industry.

Third, one should also ask what this project, encouraged under the current government’s industrial-policy push, could mean for artists and agencies outside the four labels. I am personally concerned that this project might result in the four major labels’ artists enjoying preferential access to the festival and related opportunities on more favourable terms, while artists from smaller agencies could find themselves in a disadvantaged position. This could raise discriminatory foreclosure concerns.

Of course, even to a non-expert in the industry like me, it seems rational that a mega-festival of this sort would likely need a broader external lineup, wider sponsorship, and global partners to succeed. Still, concerns about preferential treatment are not purely hypothetical. There is already a precedent for the KFTC imposing merger remedies aimed at supply-refusal and self-preferencing concerns in the music sector, in the Kakao/SM Entertainment case in 2024. Similar remedial thinking is conceivable here—although whether smaller agencies would really feel protected by such commitments is a separate question—a scepticism justified by the Live Nation/Ticketmaster case.

Last but not least, this case seems to raise a broader concern that competition may once again be asked to yield to industrial policy. It is fairly clear that this JV is being discussed against a backdrop of visible governmental support for the expansion of K-pop as a strategic industry. The president has publicly pledged strong support for making K-pop a "core industry of the Korean economy", and the Ministry of Culture, Sports and Tourism has broadly echoed that policy direction. Setting aside whether such overt government enthusiasm is desirable (ironically, to the best of my knowledge, K-pop’s current success owes much to the industry’s own dynamism, which developed largely when the government was paying little attention to it), under this kind of industrial-policy momentum, the KFTC may be tempted to treat the competition issues too leniently, or to make concessions that it would not otherwise make in a more ordinary case. For Korean competition experts, this concern is not entirely abstract. A number of large deals pushed, or strongly backed, under broader governmental policy priorities have left a somewhat traumatic memory—including Hyundai Motors/Kia Motors, SK Telecom/Shinsegi Telecom, and more recently Korean Air/Asiana Airlines.

Of course, this “Fanomenon” case is different. It is not a rescue deal proposed in the middle of a crisis or insolvency risk, but an industrial-growth-oriented deal intended to support the global expansion of already successful firms. And, to put it somewhat bluntly, the KFTC is not institutionally overmatched by the Ministry of Culture, Sports and Tourism, in the same way that it may be by more powerful ministries, such as the economic or transport ministries, in the precedents just mentioned. Even so, there is no harm in stressing, again and again, the importance of the KFTC’s mandate and its autonomous judgment as the guardian of free and fair competition.

In fact, although the case may be complex in several respects, its likely outcome does not seem particularly hard to anticipate. Few would expect either outright prohibition or unconditional clearance; some form of conditional clearance may appear the most plausible outcome, if the project proceeds. Still, at a time when industrial-policy thinking is resurfacing across various sectors, it is striking to see a similar tension emerging in a cultural sector such as K-pop. In that sense, it will be interesting to watch how this case unfolds.