LG Uplus on Monday stepped up its opposition to rival SK Telecom’s proposed acquisition of pay-TV provider CJ Hellovision by claiming the deal is illegal.
According to a Korea Times report on Monday, a lawyer tasked by LG Uplus to look into the matter has claimed that the deal could violate article seven of the country’s Fair Trade Law, which prohibits a takeover that may curtail fair competition.
The South Korean mobile operator maintains that the tie-up, announced in early November, does indeed have the potential to harm fair competition because it will combine the country’s dominant telco and TV players.
The proposed transaction will see SK Telecom initially pay 500 billion won (€398.2 million) for a 30% stake in CJ Hellovision currently held by CJ O Shopping. The deal allows it to acquire CJ O Shopping’s remaining 23.9% stake in CJ Hellovision at a later date through call and put options.
The deal is expected to close in April 2016. Upon completion, SK Telecom will push for a merger between CJ Hellovision and its fixed-line unit SK Broadband via a stock swap.
Once the dust settles, SK Telecom will own 75.3% of the combined entity, and CJ O Shopping will own 8.4%.
However, LG Uplus claimed in Monday’s Korea Times report that the law prohibits SK Telecom from taking a stake that large in CJ Hellovision.
The operator pointed out that SK Broadband provides an Internet TV service, and that the law prohibits an Internet-based TV operator from acquiring more than 33% of a pay-TV provider.
