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Kakao Entertainment has been fined by the Korean Fair Trade Commission (FTC) due to alleged unfair contracts for web novelists. The company was ordered to pay KRW540 million in penalty for the offense.
Based on the reports, Kakao Entertainment abused the novelists' right to create secondary works by forcing them to sign contracts with unfair terms. The contracts are for the web authors who won the company's contest.
The country's antitrust regulator revealed on Sunday, Sept. 24, that Kakao Entertainment restricted a total of 28 authors who won in the competition organized by the company. The FTC imposed the fine because the novelists were barred from using their original content to make dramas, movies, webtoons, and other types of secondary works.
As per Korea Joongang Daily, Kakao Entertainment launched five contests between 2018 and 2020 where writers competed with their mystery and thriller-themed stories. The 28 winners eventually signed contracts with the entertainment firm, however, there was one condition stipulated in the contract that is said to be against the law.
The FTC pointed out that the line in Kakao Entertainment's contracts, which reads, "the rights to make secondary works for winning content belong to Kakao Entertainment," is an unfair practice. This is because the works were made exclusive for the company only.
"It is an act of Kakao Entertainment disadvantaging [the authors] by abusing their market dominance," the antitrust watchdog of the country said in a statement. "A big platform provider limited the content creators' rights using its superior status in the contracts signed for the contests, which are a gateway for young writers."
Korea's Business Post further quoted the FTC as saying, "Due to the transaction terms that Kakao Entertainment unilaterally set in the contracts it signs with contest-winning writers, the writers were unable to exercise their right to create secondary works and were unable to choose other transaction partners."
The regulator added, "Under better conditions, the writers were unable to exercise their right to create secondary works. The opportunity to produce derivative works was fundamentally blocked."
Photo by: Kakao Entertainment PR Center
