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KOREA SLAMS 5 MAJORS

U.S. distribs held guilty of trade violations

SEOUL — Five major U.S. distribs in Seoul have been found guilty of anti-competitive practices — includ-ing forming a cartel — by the Korean Fair Trade Commission.

Im Young-jun, a KFTC official in charge of the investigation, confirmed to Daily Variety Thursday that he has is-sued warning notes to the Seoul branches of the five top U.S. film distribs: Columbia TriStar, 20th Century Fox, United Intl. Pictures (UIP), Warner Bros. and Buena Vista.

“As the chief officials of U.S. majors in Seoul admitted their wrongdoing, the least punitive action was taken this time. Any anti-competitive practices in the future will pay the harsh penalties,” Im said. If convicted of repeated wrongdoing, all the U.S. majors would be subject to a fine or ordered to close their South Korean branch offices, he added.

Korean reps of the five U.S. majors refused comment.

The commission launched a formal investigation into the five U.S. film distributors for alleged anti-competitive practices last month.

Since UIP pioneered direct distribution amid harsh protests from the local film community in 1988, South Korea has emerged as one of the top 10 foreign markets for U.S. releases. The American firms jointly account for more than 60% of the Korean market.

Among the anti-competitive practices cited by the KFTC was what the panel termed “collusion” involving the withholding of ads in two Seoul-based newspapers.

The U.S. firms withdrew their ads because they thought they were being forced to pay 30% more for their ads, ac-cording to the panel.

But Hana Media prexy Gene Yoo said the U.S. firms were not being overcharged by the Korean papers, but rather were paying for ad agency services, which the Koreans were not, and also missed out on cost-saving measures practiced by the locals.

“I would have been happy to share our tactics with them,” Yoo said, “because I believe movie ad rates are too high, too.” But none of the majors contacted him, he said.

Another indie distrib, Kwak Kyung-hee, said the majors missed a chance to work with the locals, and “could have saved millions of dollars.”

“Eventually, it was a big loss for the entire Korean film distribution industry. We lost a golden chance to prick a golden bubble of high-rated newspaper ad prices,” Kwak said.

Yoo is in the process of quantifying the financial damages caused by the U.S. firms’ alleged collusion.

Obtaining advantageous ad rates has not been Hana Media’s only area of success. The firm has shown profits for the past five years, launching movies thought difficult to market in the action star-driven Korean market, such as “Fried Green Tomatoes,” “The Shawshank Redemption” and “Before Sunrise.”

The firm has carved a niche for itself despite competition from not only the U.S. firms, but also Asian heavy-weights Samsung, Hyundai, Daewoo and CJ Entertainment.

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