Court Rejects Bulk of Newspaper Law

Article 17 of the Newspaper Law, labeled as antitrust guidelines and at the center of contention surrounding the legislation, has been ruled unconstitutional.

On October 20 and December 31 last year, the Uri Party lawmakers insisted the importance of the balance of public opinion when submitting the newspaper bill. They said that if certain newspapers had dominated the entire market, diverse opinions from the public would have failed to voice. Some say that the legislation was intended politically to discriminate against major newspapers such as Dong-A, Chosun and JoongAng Ilbo that are mostly critical of the Roh administration.

Nevertheless, the constitutional court’s ruling in favor of the newspapers has revealed clearly the unconstitutionality of the legislation. The court refused the alleged purpose of the law of diversity in the newspaper market by ruling article 15 anti-constitutional which prevents news providers from cross share holdings and plural operations.

The laws limit predatory business by enforcing far stricter standards regarding the newspaper industry only: 30% market share limit for a business and 60% for 3.

The court concluded by 7 to 2 that “the concerned article is not an appropriate measure to regulate the newspaper market in the name of protection of the diversity as a part of the intention of the legislation: rather it ruins the freedom of the press and violates rights to equality.”

Meanwhile, regarding Article 34 excluding dominating newspaper companies from the list of the beneficiary of the government subsidiary for newspaper fund, the court ruled it unconstitutional unanimously, saying that “the article counters the principle of the equality in the constitution.”

Regulating on diversity is unconstitutional-

The judges reasoned their conclusion, saying that “the dominant status of some papers is established by the readers’ choice independently according to their taste. The major papers, therefore, are not considered unfair or are not likely to hurt the transparency of the industry. As long as the market share results from the choices of the nature by readers’ opinion, the government shall not arbitrate the market.”

The main issue is how to define the market and to calculate market shares. The laws define the newspaper industry as a market including daily newspapers along with specialty newspapers such as industry, science, religion, education and sports news providers. In addition, the market share is calculated by the circulations of the papers.

The court judged that “daily news providers and specialty ones are two different newspapers, given that the readers are segregated from each market. Therefore, considering them as homogeneous is practically partial.”

The court added that “circulation is not the right standard to measure the market share.” The ruling can be interpreted that the number of readers serves as only one of many standards, since the abundance of the capital is a source of dominance of the public opinion.”

Meanwhile, two judges, Joo Sun-hoi and Lee Gong-hyun, voiced against the major ruling, citing that “as the monopoly or the oligopoly over the intangible news industry is more likely to distort public opinion than it does over tangible products, intensified regulation limited on the news industry does not counter the constitution.”

Unprecedented banning of market share-

No country in the world arbitrates the newspaper market under the cause of diversity of the ideas. For instance, the U.S. is so lenient that only 6 newspapers are published to cover more than 2 large cities. In Japan, 3 major daily newspapers including the Asahi Daily hold a whopping 76.8% market share in the industry (in 2003).

Taking another example, although the French government, which is well known for a hard stance regulator, regulates in principle that the market share should not be exceeded above 30 percent in case of M&A, the government does not regulate in practice due to the difficulties of arbitration.

Mun Jae-wan (professor of the constitutionality at Hankook University of Foreign Studies) criticized that since news consumers rely on various news sources, it is a thought prone to suppliers’ side to separate newspapers from other news sources in order to regulate the anti-trust activities.

Jin-Yeong Lee ecolee@donga.com