Conditional approval has been granted regarding the merger of Tving and Wavve.
On the 10th, the Fair Trade Commission (Chairperson Han Gi-jung, abbreviated as 'FTC') reviewed the corporate merger notification specifying that employees of CJ ENM (hereinafter 'CJ ENM') and Tving (hereinafter 'Tving') hold executive positions in Contents Wave Co., Ltd. (hereinafter 'Wavve') and concluded that there is a concern that the merger could substantially limit competition in the paid subscription-based OTT video service market (hereinafter 'OTT market').
In response, the FTC decided to impose corrective measures requiring Tving and Wavve to maintain the current pricing system until the end of 2026, and even if Tving and Wavve integrate into a single service, to ensure that a price increase does not occur, allowing consumers to choose an integrated pricing product similar to the existing one.
The companies involved in this merger notification, CJ ENM and Tving, provide the OTT service 'Tving' while also engaging in the business of supplying OTT video content through broadcasting content production and film distribution. The counterpart company, Wavve, which is part of SK, provides the OTT service 'Wavve' while engaging in mobile communication and digital paid broadcasting businesses.
In this merger, Tving and Wavve both operate in the OTT business, resulting in a 'horizontal merger' as they are competitors. Additionally, companies affiliated with CJ ENM supply video content to OTT providers such as Tving and Wavve through the production and distribution of video content including broadcasting and films, thus causing a 'vertical merger' between CJ-affiliated companies and Wavve. Furthermore, companies affiliated with SK Telecom and SK Broadband sell products that combine OTT video services with mobile communication services and IPTV services, demonstrating a 'mixed merger'.
Based on this, the FTC judged that 1) a horizontal merger occurs in the OTT market, 2) three vertical mergers occur between the OTT market and three content supply markets (▲outsourced production of broadcasting content, ▲broadcasting rights transactions, and ▲additional distribution of films), and 3) two mixed mergers occur between the OTT market and ▲retail mobile communication and ▲digital paid broadcasting markets, and thoroughly reviewed the impact of these six mergers on the relevant markets operated by each company.
While reviewing this merger, the FTC concentrated on whether consumers of OTT services might face subscription fee increases ('horizontal merger - standalone effect'), whether CJ-affiliated companies supplying content only to Tving and Wavve could restrict competition by failing to adequately supply content to other OTT businesses ('vertical merger - foreclosure effect'), and whether SK-affiliated companies might exclude competing OTT businesses through bundled sales of mobile communication and paid broadcasting services along with OTT services ('mixed merger - tying').
First, considering the following points, the FTC determined that there is a concern about subscription fee increases and hindrance to consumer choice through the sale of bundled products between Tving and Wavve in the domestic OTT market.
First, if Tving and Wavve merge, the top four firms in the OTT market will be reduced to three, increasing market concentration, which could enhance price-setting abilities.
Second, there is a significant loyal subscriber base for Tving and Wavve, and due to the provision of exclusive content, subscribers' price sensitivity is relatively low, which could lead to a situation where the availability of standalone products for Tving and Wavve is eliminated, and only combined products are offered, resulting in a practical increase in subscription fees.
In particular, since the content offered by each OTT provider in the OTT market is not homogeneous and is differentiated, it must be considered that subscribers who highly prefer the real-time broadcasting channels and exclusive broadcasts of the Korean Baseball Organization (KBO) may find it difficult to switch to competing OTT services even if prices increase with the launch of bundled products.
Therefore, the FTC decided to impose the following behavioral corrective measures to alleviate concerns over subscription fee increases and competition limitation in the OTT market due to this merger.
First, Tving and Wavve must maintain their current pricing systems from the day they received the corrective order (June 10, 2025) until December 31, 2026.
Second, during the implementation period of the corrective measures, if Tving and Wavve are integrated into a single service (hereinafter referred to as 'integrated OTT video service'), they must release a new pricing plan that is similar in pricing and service content to the current one, and maintain the newly released pricing plan until December 31, 2026.
In addition, for consumers who are subscribed to the current pricing plan prior to the launch of the integrated OTT video service, they should be allowed to continue using the services corresponding to that plan, and if consumers who had subscribed to the current pricing plan cancel that service after the launch date of the integrated OTT video service and request to rejoin the current pricing plan within one month from the cancellation date, this should be permitted.
This corrective measure was prepared by referencing the corrective measures submitted by Tving and Wavve to alleviate competition concerns through the 'Corporate Merger Corrective Measure Submission System' and consulting expert opinions.
The FTC emphasized that this corrective measure is significant as it prevents potential price increase effects that could arise from horizontal mergers between OTT service providers, thereby protecting OTT subscribers while also contributing to the ultimate increase in well-being for OTT subscribers by preserving the intent of the corporate merger to enhance content supply and production capabilities. Additionally, it is noteworthy that this is the first instance in which behavioral measures have been imposed using the 'Corporate Merger Corrective Measure Submission System.'
In the future, it is expected that Tving and Wavve will fiercely compete with major competitors such as Netflix, Coupang Play, and Disney+. Moving forward, the FTC plans to closely monitor the OTT market to ensure fair and free market competition and innovative growth while rigorously enforcing the law against any violations.
[Photo] Tving, Wavve provided.
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