Two karaoke chains hit sour note

The Fair Trade Commission yesterday fined the nation's two largest karaoke chains -- Holiday Entertainment Co (好樂迪娛樂事業) and Cash Box KTV (錢櫃) -- NT$2.5 million apiece for violating fair-trade regulations by acting in concert to buy music videos.

The two KTV giants were fined, according to Article 14 of the Fair Trade Act (公平交易法), for signing exclusive karaoke deals with a local music distributor in late 2002. The commission said the deal appeared to crimp business opportunities for other music distributors.

Violators who do not rectify their conduct after being ordered to do so can be punished by up to three years' imprisonment or detention, or by a fine of not more than NT$100 million, or by both.

Commission Vice Chairman Chen Chi-yuan (陳紀元) said both companies appeared to have halted their misconduct in the second half of last year, but the commission will closely monitor the situation.

Holiday and Cash Box decided in December 2002 to jointly purchase music videos through a Holiday affiliate, Young Sound Multimedia Co (揚聲多媒體), the nation's largest music video distributor.

The deal accounted for 60 percent of the music-video authorization value in Taiwan, the commission said in a statement, adding that Holiday and Cash Box made up to 41 percent of the nation's karaoke market.

Other local music distributors, including MDS Multimedia Corp (弘音多媒體) and Meihua Multimedia Technology Co (美華影音), expres-sed concern over the deal. At the time they said the deal would force record companies seeking to sell to the the two KTV chains to cooperate solely with Young Sound.

Last month the commission fined Young Sound NT$3.5 million for discriminating in favor of Holiday and Cash Box.

The two karaoke chains have a combined annual revenue of more than NT$7 billion.

Cash Box may appeal the ruling, its spokesman Tsai Yi-ming (蔡易明) told the Taipei Times yesterday.

He said Cash Box turned to Young Sound because the KTV chain was involved in several civil lawsuits with MDS Multimedia and Meihua Multimedia at the time.

MDS Multimedia and Meihua Multimedia resumed supplying Cash Box after reaching an agreement in the second half of last year, Cash Box said in a statement.

Holiday's spokesman Jack Yung (楊昌恆) said his company would decide what legal action to take over the fine after receiving the official documentation from the commission.

Cash Box bought a 32-percent stake in Holiday in January last year and considered merging with Holiday at the end of last year as a way of cutting costs while expanding market share.

But the merger plan was sus-pended after Cash Box failed to deliver the necessary documents to Holiday by a Nov. 17 deadline last year.

The Fair Trade Commission gave approval to the planned merger deal last July but the permission expired on Jan. 1.

A Cash Box official, who asked not to be named, said the merger deal may not go through this year.