After seven-month deliberation, the Korea Fair Trade Commission (KFTC) tentatively disapproved SK Telecom Co.’s acquisition of cable TV content distributor CJ HelloVision Co., saying the buyout would jeopardize free competition in mobile media field.

According to the industry Tuesday, the KFTC issued an order banning stock exchange that would allow merger of SK Broadband Co. and CJ HelloVision.

The antitrust agency opposed the merger as it could create a broadcasting entity that would dominate 21 out of 23 jurisdictions.

SK Telecom has to build its case to appeal by July 20 before the KFTC meets for a final decision.

CJ Group in November reached a deal to sell 53.9 percent stake in CJ HelloVision held by its home shopping channel CJ O Shopping to SK Telecom at 1 trillion won ($866.2 million). Envisioning the mobile media platform as its new growth, SK Telecom submitted an approval for the merger on December 1.

The move was strongly protested by both the wireless and media industry fearing the entity can dominate both the wireless and cable TV platform.

But the business sector is worried that the case would dampen much-needed corporate restructuring to ease overcapacity.

“Who would attempt preemptive and voluntary mergers and acquisitions for business realignment when it gets overturned by the government authority?,” said an unnamed SK Telecom official. SK Telecom could consider going as far as launching lawsuit against the government agency.

CJ, in fear of losses as it has already advanced with the M&A deal, plans to help SK Telecom pitching for at least conditional approval.

CJ Hellovision has 4.15 million subscribers through distribution to 23 cable TV operators.

By Seo Chan-dong and Na Hyun-joon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]