The competition authorities have approved the merger between Tving and Wavve, the second and fourth largest domestic online video streaming services (OTT), on the condition that the current pricing levels are maintained until the end of next year.
On June 10, the Korea Fair Trade Commission (KFTC) announced, "We conditionally approve the business combination in which executives and employees of CJ ENM, the parent company of Tving, will also serve as executives of Wavve."
CJ, the business group to which CJ ENM and Tving belong, provides the OTT service Tving and is also engaged in the supply of OTT video content, including broadcasting content production and film distribution. The rival company Wavve belongs to the SK business group, which provides the OTT service Wavve and is also engaged in mobile telecommunications and digital pay-TV businesses.
The KFTC conditionally approved the merger between Tving and Wavve because it determined that the merger could restrict competition by raising subscription fees and reducing consumer choice.
The KFTC found that if Tving and Wavve merge, the number of top OTT providers in the market would decrease from four to three, increasing market concentration and giving the merged entity greater pricing power.
The KFTC stated, "Both Tving and Wavve have a significant base of loyal subscribers, and due to the provision of exclusive content, subscribers tend to be less sensitive to price. If standalone subscription options for Tving and Wavve are discontinued and only bundled products are offered, this could effectively result in higher subscription fees."
Accordingly, the KFTC ordered that Tving and Wavve each maintain their current pricing plans from the date of the corrective order until the end of next year. In addition, if Tving and Wavve are integrated into a single service during the corrective period, they must introduce a new pricing plan similar in price range and service content to the current plans and maintain it until the end of next year.
The KFTC explained that this is the first case in which behavioral remedies have been imposed using the "Submission of Corrective Measures in Business Combinations" system.
The KFTC stated, "This corrective action is significant in that it prevents potential price increases resulting from horizontal mergers between OTT providers, thereby protecting OTT subscribers from harm, while also supporting the original intent of the merger to enhance content acquisition and production capabilities, ultimately contributing to the welfare of OTT subscribers."
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