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By Yoon Sung-won
Loen Entertainment and KT Music, the nation's largest music streaming service providers, have been fined 100 million won each for fixing the prices of digital music sources in 2008.
The Supreme Court said Sunday it has confirmed the original verdict at the appellate court that sentenced the two companies to the fines for breaking the fair trade act by fixing the price and types of online music services. The former CEOs of both Loen Entertainment and KT Music were also fined 10 million won each by the court.
"The original verdict does not have a misunderstanding on legal principles that determine the validity of a joint illegal act," the Supreme Court said.
In 2008, when the regulation on the sales of non-digital rights management (DRM) music sources was lifted, Loen Entertainment and KT Music secretly arranged for meetings with their competitors M.net and Neowiz to discuss new music service standards and prices, aiming to neutralize market predominance of a certain business in the non-DRM music source download market. The combined market shares of the four companies reached 76 percent at that time.
Before the regulation on the non-DRM music source sales was lifted, users could download or stream music sources online on certified devices.
Loen Entertainment and KT Music were accused of this illegal act by the Fair Trade Commission (FTC) in 2012. According to the FTC, the two companies had mutually consented not to release unlimited non-DRM music services and increase the prices of limited non-DRM music services.
In the first and second trials, the justice department said, "The deliberate distortion of prices and terms has greatly limited competition in the online music source market, and thus is a grave crime," and sentenced the companies and their former CEOs to the fines.
Loen Entertainment, which provides the nation's most-used music streaming service MelOn, used to be an affiliate of SK Group between 2005 and 2015. In January, Kakao, the operator of the top mobile messenger service Kakao Talk, merged Loen Entertainment as a subsidiary by acquiring its 76.4 percent share for 1.87 trillion won.
Established in 1991, KT Music has been a subsidiary of the nation's second-largest telecom company KT since 2007 and provides music streaming service Genie.
