South Korea's LG Uplus is stepping up its opposition to the proposed takeover of pay TV provider CJ Hellovision (CJH) by rival SK Telecom, petitioning the government to block the deal on the grounds that it is “illegal.”
At a news conference covered by the Korea Times, an LG Uplus executive accused the operator of trying to further entrench its dominance in the telecom market with the merger.
The executive, Park Hyung-il, is quoted as saying the deal will weaken the competitive environmment of the local media content industry and hand SK Telecom a dominant market position.
A lawyer contracted by LG Uplus to study the merger also stated that the proposed deal is illegal is it violates an article of South Korea's fair trade law prohibiting takeovers that could curtail fair competition.
SK Telecom has announced plans to acquire a 30% stake in CJH for 500 billion won ($432.6 million), taking its total holdings to 75.3%. The proposed deal will also give SK Telecom the option to acquire the remaining 23.9% stake at a later date.
But LG Uplus has argued that this will mean the deal also falls afoul of regulation prohibiting internet-based TV operators from owning more than 33% of a pay TV operator, because SK Telecom owns a 100% stake in its SK Broadband subsidiary, which provides IPTV services.