Shares in K-Pop management agencies fell on Wednesday, after South Korea's antitrust watchdog began investigations into any potential infractions of subcontracting rules when outsourcing production of albums and merchandise, Yonhap reported.
The Korea Fair Trade Commission (KFTC) sent investigators to the offices of HYBE, SM Entertainment and YG Entertainment on Tuesday, Yonhap news agency reported citing unnamed industry sources.
The KFTC is looking into whether agencies engaged in any practices with subcontractors such as verbal contracts without issuing them in writing, unfair contracts or delayed payment, Yonhap said. No specific charges have been brought.
The KFTC declined comment on any specific investigation.
HYBE, SM and YG did not immediately respond to a request for comment.
Shares in HYBE, the management agency of K-Pop sensation BTS, fell 2.1% in early morning trade, versus a flat wider market. SM Entertainment and YG Entertainment shares also fell 1.5% and 0.4%, respectively, as of 0015 GMT, although YG later reversed losses.
HYBE reported 410.6 billion won ($315.9 million) in January-March quarter sales; out of that, 44.9% came from albums and 16.8% from merchandise and intellectual property, according to a Shinhan Investment & Securities report on Tuesday.