EXO-CBX Issue Detailed Response To SM’s Recent Response After Being Reported To The FTC, Say ‘They’re Not Afraid Of Anything’

Published Categorized as Kpop

After EXO members Baekhyun, Xiumin, and Chen have filed a complaint against SM Entertainment with the Fair Trade Commission, SM issued a response addressing their points and their lawyer has followed up with a statement responding to their points.

Related: SM Entertainment Claim They Will Provide Copies Of Settlement Documents For EXO-CBX, Promise Not To Hinder Future Group Promotions

SEE ALSO: The Timeline Of EXO-CBX and SM Entertainment Legal Battle

The statement has stunned fans.

Here is the full statement from the members of (Baekhyun, Xiumin, Chen).

I, lawyer Lee Jae-hak from the law firm Lynn, representing Baekhyun, Xiumin, and Chen of the group EXO, hereby provide a detailed rebuttal.

On behalf of our clients, we filed a complaint against SM Entertainment with the Fair Trade Commission (FTC) on June 4th regarding the abuse of transactional dominance. In response, SM Entertainment issued an official statement on June 5th.

We would like to address each point of their statement and provide additional information to the fans regarding the incidents involving the members.

  1. The case of Tao, a Chinese trainee, is a separate matter from the current issue. It is not valid to claim that the FTC’s previous decisions and our complaint were based on incorrect judgments.

SM Entertainment argues that they have already been recognized for their contract conditions regarding Tao due to a court ruling. However, this is not true.

Firstly, Tao, being a Chinese trainee, was expected to engage in overseas activities from the start when signing the exclusive contract. In contrast, Baekhyun, Xiumin, and Chen were all Korean trainees whose overseas activities were not determined at the time of signing the contract. However, SM Entertainment unilaterally compelled all three artists, whose overseas activities were not yet confirmed, to sign an addendum extending the exclusive contract for an additional three years under the pretext of overseas activities.

In the case of Baekhyun, he actually participated as a member of EXO-K (K stands for Korea), which focused on domestic activities, after the exclusive contract was signed. For SM Entertainment to unilaterally extend the contract for three years under the pretext of overseas activities is highly unjust. Similarly, Xiumin and Chen signed the addendum extending the contract for three years without any decision regarding their activities, and it was only after the exclusive contract was signed that they were assigned to activities in China. Therefore, the unfair act of extending the contract for three years with an artist whose overseas activities were not yet determined still exists.

As previously mentioned, SM Entertainment received an order of corrective action from the FTC on January 13, 2011, decision No. 2011-002 (2009SeoGyeong2741). The order stated that “The respondent (SM Entertainment), by utilizing its transactional position as an entertainer’s aspiring trainee, unilaterally applies the extended contract period to all trainees without considering their individual circumstances, thereby causing harm to the trainees.”

However, SM Entertainment continues to unilaterally extend the contract period through addendums for three years. This is a clear violation of the FTC’s order of corrective action.

Especially, SM Entertainment calculates the contract period from the time of debut, even though they have already signed contracts with trainees before their debut. At the time of signing the exclusive contract, it is not decided when the debut will happen, which group the artist will be assigned to, or whether they will engage in overseas activities. It is not permissible to unilaterally extend the contract for three years through addendums.

Our artists are aware that SM Entertainment is still unilaterally signing addendums extending the contract for three years under the pretext of overseas activities when signing contracts with trainees. This constitutes a violation of Article 125, Paragraph 1 of the Monopoly Regulation and Fair Trade Act, which stipulates that anyone who fails to comply with corrective measures under Article 49, Paragraph 1, shall be subject to imprisonment of up to two years or a fine of up to 15 million won.

It is bewildering that SM Entertainment continues to justify their unfair contracts despite receiving two orders of corrective action. This is precisely why the FTC needs to conduct a thorough investigation into the exclusive contracts between SM Entertainment and trainees/artists.

2. Contrary to SM’s statement, our legal representatives and artists have still not received the settlement documents.

Today (the 5th), at 8 a.m., SM distributed a press release stating that they would provide copies of the settlement documents. Accordingly, our legal representatives submitted the artists’ signed confidentiality agreements to SM.

However, as of 6 p.m. today, which marks the end of the business day, SM has not provided any settlement documents, claiming that the preparation of the documents is not yet complete.

  • To the EXO fans who have been experiencing anxiety and unrest due to worrisome news rather than joyful news, Baekhyun, Xiumin, and Chen would like to provide a detailed explanation of the events that have transpired so far.

3a. Continuous persuasion and fostering of an atmosphere

In June 2010 and May 2011, respectively, we signed exclusive contracts with SM, and in December of last year, which was about a year before the arrival of the 12th or 13th year, we received a contract extension from SM for a total of 17 to 18 years, including the previous contract.

During the renegotiation process, we appointed lawyers to review the contract, and at that time, we requested adjustments in eight different aspects as we deemed the contract unfair. However, SM did not accept any of our requests. We only saw a firm determination from SM that they would not change anything in the contract. Ultimately, our requested changes were hardly reflected in the contract.

We considered it unfair, but we had no choice but to sign it because of continuous persuasion and the difficult atmosphere to refuse. We came across discussions that if an individual did not accept the renegotiation, it could negatively impact the other team members or the entire team.

At the time, SM expressed that they wanted everyone to be together in deciding on the members’ contract renewal. However, on the other hand, they pressured and persuaded Baekhyun by saying, “Baekhyun, if you sign, the other members can receive this level of contract fee.” They even mentioned that the contract could be canceled at any time before it went into effect. At that time, Baekhyun was in the midst of his military service.

Baekhyun, despite being at a point where about a year remained until the end of the exclusive contract, which was a period of maintaining EXO’s activities smoothly amidst inconsistent contract end dates for each member, had no choice but to sign the contract with a discouraged and resigned heart.

Although we requested adjustments in eight different aspects, the process was embarrassing to even call it negotiation, and the renegotiated contract did not reflect any of our requests. Despite this, we signed the contract solely because we wanted to uphold loyalty to our EXO members and protect EXO. To be honest, we almost gave up on the contract terms and signed it.

The powerlessness we felt at that time was not unrelated to the long-standing closed and collective atmosphere unique to SM, and it even led us to think about gaslighting, which has been filling the media landscape recently. 3b. Beyond the unfair content, the unfair process

Not only the content of the contract but also the process itself was unfair.

Although the contract should have been handed over immediately upon signing, SM took back the contract and did not provide it to us. It was only after our request that the contract was eventually handed over a few days later.

Furthermore, due to the clause stating that the contract fee would be paid one year after the signing date, our members still have not received the contract fee.

It is also puzzling that the renegotiation was suddenly and hastily conducted when there was still more than a year left until the end of the contract period.

After our contracts with SM were abruptly terminated like a flash in the pan, various news articles about the acquisition battle surrounding SM came to mind. We couldn’t help but wonder, “So did they rush to sign the contract that still had about a year left?”

At the same time, we couldn’t help but question ourselves repeatedly whether signing this contract, filled with doubts, was truly an act of protecting EXO and its members. After numerous questions, our final thought was, “Let’s make an effort for the sake of our precious people, even if it’s just once.”

3c. Lack of explanation regarding significant changes in the company

During the transition period of the company, SM did not provide any understanding, words, or explanations to our artists. We felt like outsiders, having to understand the company’s situation through media reports. We could only feel bewildered.

The thought that occurred to us during the acquisition process was that the company did not consider us important at all. We felt like mere accessories, and it was a sad thought that we were just subjects who had to unquestioningly follow the company’s orders.

3d. Decades of revenue infringement experienced by artists

When issues like the LK Plan were widely discussed in the media, it was portrayed as if only the interests of the company and its shareholders had been infringed upon, but no one paid attention to the fact that the interests of our artists and staff, who have been working together with SM for many years, were also significantly infringed upon.

It can be strongly inferred that a significant portion of the revenue stated in our settlement statements for the past 12 to 13 years has been unjustifiably and unreasonably deducted, whether it be under the pretext of producer fees or royalties.

Before SM says, “There will be no more such incidents in the future,” we believe that there must be a process of accurately understanding what happened in the past and explaining it to our artists, fans, the public, and shareholders. From there, a new beginning is possible.

When the company was in turmoil, the artists were even more in turmoil. Although everyone had doubts, we, as artists, couldn’t rashly take action.

3e. Request for the provision of settlement documents over seven instances

We never imagined that receiving settlement documents from the company would be this difficult.

Receiving settlement documents is a basic right of artists. After more than ten years of being together and working hard, is it possible that we cannot even enjoy this basic right? It was incredibly disappointing, and our suspicions only grew.

To think that the company would consider it so wrong for us to want to verify the numbers and seek the help of accountants or lawyers, I never expected such a stance from the company.

No one resolved this issue for us. It was daunting, but with the sole desire to know the truth, we mustered the courage to take a step forward.

Although it is clearly stated as “provision of documents” in the contract, how can we understand this outrageous claim that it only means the right to view the documents? Can we expect the Fair Trade Commission and the courts to accept SM’s cunning argument that the “provision of documents” in the contract simply refers to the right to view?

Settlement documents should not be treated as confidential information, at least not for us, the parties involved. Every expert we consulted unanimously agreed that there is a clear distinction between “provision” and “the right to view.”

Only a few media outlets and YouTubers who have a close relationship with SM seem to support the claim that it is only the “right to view.” Do the Fair Trade Commission and judicial authorities really believe SM’s previous misleading argument that it is only the “right to view”?

3f. Message to EXO fans

If someone has been benefiting from the memories, love, youth, effort, and passion that the members and fans have shared for 11 years, I believe it should be rectified. More than anyone else, I sincerely hope for fairness, but if it is not the case, I believe it should be corrected, even if only to a small extent.

If the “SM community,” as a community, demands that the artists tolerate the unfairness they have experienced, we believe that we must raise our voices against such demands, even if only to a small extent.

We value EXO members more than anything else. We have spent half of our lives together, sharing joys and sorrows. We will never betray those members, and no matter the situation, EXO will always be our top priority.

Whether our courage to demand our rights is considered a betrayal of EXO members or not, we leave that judgment to the public and our precious fans.

Above all, if we have our fans by our side, we are not afraid of anything.

Source: (A)

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