Government to Investigate Newspaper Business Practices: Is There a Hidden Intention?

The Fair Trade Commission (FTC) announced on March 8 it will launch a field investigation into the illegal business practice of offering excessive premiums to customers at 494 branch offices of 19 newspapers nationwide.

The FTC also added that it would probe the headquarters of newspapers in the first half of this year that are revealed to have ordered or supported the provision of excessive free gifts in its investigation into branch offices conducted in the first half of last year and this investigation.

Under the circumstances the press industry is faced with: economic problems amid the economic slump, the FTC investigation is expected to weigh heavily on the media.

Huh Seon, head of the Competition Policy Bureau of the FTC, said, “We are planning to conduct a six-week investigation until April 15 into 301 branch offices of newspapers nationwide whose business practices were reported to the Internet report center as unfair, and 193 branch offices in six areas which are recognized as violation-prone areas by the FTC.”

The commission will impose fines, order correction, or issue warnings if it finds violations of the law, including excessive offers of premiums and free newspapers.

Huh said, “This investigation is being conducted prior to the adoption of a reward system for reports next month. Violation cases that occurred since January 1 of last year are subject to this probe,” adding, “We will expand the probe into the headquarters of newspapers in the first half of this year as planned.”

Regarding the reward system, the FTC also said that it would pay those who report violations of the standards of fair trade in the press sector, including offers of excessive free gifts and free newspapers, five to 50 times the amount of the violation depending on its level of seriousness.

Some in the newspaper industry say that the FTC’s plan to conduct a sweeping investigation into branch offices of newspapers, introduce a reward system, and probe the headquarters of newspapers is intended to put pressure on the media.

In particular, there have been questions raised on the fairness and impartiality of the investigation in that the FTC has often targeted major newspapers in its probe.

In addition, experts say that there is a good chance that the commission’s arbitrary interpretation will be involved in the reward system, considering that the range of reward varies greatly from five times of the violation amount at the lowest to 50 times at the highest.

Kim Jong-seok, an economics professor at Hongik University, said, “The current policy direction of the FTC over newspapers seem to have a certain strategic intention,” adding, “The investigations into branch offices should be confined to a boundary in which they do not compromise the normal operation of those offices.”

Chi-Young Shin higgledy@donga.com