SM Entertainment received a firm order from the Fair Trade Commission to revise the unfair contracts which bind SNSD, Super Junior, SHINee, and many others to them.
On December 23rd, the Fair Trade Commission stated, “We gave them a warning to voluntarily correct the unfair exclusive contracts that their celebrities and trainees have signed. [SME] is to reduce all contract lengths by three years.”
This decision by the FTC was based off of a complaint made by TVXQ’s fanclub, Cassiopeia. The group alleged that SM Entertainment was using their status to pressure a disadvantaged (’slave’) contract onto TVXQ.
SM Entertainment’s violation, as disclosed by the FTC, lies in the unfair contract conditions. These conditions included forcing artists to sign on for a long period of time, an excessive penalty provision for breach of contract, and a one-sided scheduling of activities. There’s also a clause that allows SME to extend contracts for overseas activities without first consulting the artist in question.