Korea's antitrust watchdog on Monday said it has rejected SK Telecom Co.'s bid to buy the country's leading cable TV operator, raising concerns that the merger would undermine competition in the market.

SK Telecom, the top mobile carrier with a market share of more than 50 percent, agreed to acquire a 53.9 percent stake in CJ HelloVision Co. from its parent firm CJ O Shopping, an affiliate of CJ Group, for 1 trillion won ($870 million) in November last year.

SK Telecom said it seeks to become an all-around media platform operator both in the mobile and Internet-based IPTV sectors, while the latter has been in a reorganization effort to focus more on the entertainment and TV production business.

The Fair Trade Commission put the brakes on a merger between the two giants in the local telecommunications and broadcasting sectors as it will help SK Telecom further strengthen the company's monopolistic control of the market.

"We found out that the consolidation of SK Telecom and CJ HelloVision would substantially hurt market competition," the FTC said in a release. "Therefore, the FTC has decided to ban the merger from the beginning."

If SK Telecom merges with CJ HelloVision, which has around 4.2 million subscribers, it will raise the total number to more than 7 million, along with its current 3 million held by its cable and Internet TV service unit, SK Broadband.

It would sharply narrow the gap with the No. 1 TV platform provider KT Corp., with roughly 8.1 million subscribers.

The combination would also help the communications behemoth cement its market command in terms of market share, as CJ HelloVision is dominant in 21 out of the 23 cable TV broadcasting blocs.

In the mobile market, SK Telecom far outnumbers its rivals KT and LG Uplus Corp., while CJ HelloVision runs a budget phone business that takes up nearly 40 percent in the sector.

As a result, SK Telecom's move to take over the cable TV operator has drawn fierce backlash from its local rivals, who argue that the merger would enhance SK Telecom's presence in the budget phone market and in the cable TV business.

The watchdog has been looking into the SK Telecom-CJ HelloVision takeover bid for months as every South Korean company with 2 trillion won or more in assets or revenue is subject to a prior review by the FTC of any M&A bids under the country's fair trade law. (Yonhap)