[EDITORIALS]Intervention Behind Media Fines

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[EDITORIALS]Intervention Behind Media Fines

The government is coming out with penalties against media companies in droves. Following the announcement of back tax levies on media companies and the revival of fair trade regulations on newspapers, the Fair Trade Commission announced a combined fine of 24.2 billion won($19 million) for improper transactions within media companies and with affiliates. The government said that it was merely a coincidence that the penalties were imposed all at once. But it is not difficult to imagine how strong the determination of the government against the media world was.

It is our belief that media reform is necessary, and we have been calling for stepped-up effort to renew ourselves voluntarily. It was for that purpose that the newspaper companies agreed in November to strengthen self-regulatory measures to control excessively competitive activities and to sanction those that fail to comply. But the recent government actions bypass those industry efforts and appear to be attempts to influence and intervene deeply into the workings of the media.

The Fair Trade Commission has decided to revive the regulations governing newspaper companies effective July 1, two years after scrapping them. The newspaper companies have been making various attempts to correct undesirable practices of forcing unwanted copies to readers. We have stressed repeatedly the need to stop printing large numbers of free copies, which in effect head straight to recycling plants. Granting the need to deal with the issues addressed in the revived regulations, there are scores of areas that are shaky in their standards and justifications. We believe there are articles in the regulations that the antitrust agency can delve into not only the circulation and advertising operations of the three major newspapers, JoongAng Ilbo, Chosun Ilbo and Dong-a Ilbo, but also the editorial functions.

The regulations dictate that it is an abuse of dominant market position for a newspaper to set or maintain sales prices or advertising rates at a level excessively higher than costs. The antitrust agency is clearly determined to go after the three major newspapers. Contrary to the applicable article in the Monopoly Regulation and Fair Trade Act, the agency allows itself to regard three companies as having dominant market position, even though their combined market share is less than 75 percent. It is also preposterous that the government will set "rational" advertising rates, which are in effect in the realm of intellectual property rights. It is our view that the agency's resolve to curb "a newspaper from using its dominant market position to print an article that is critical, without foundation, of an advertiser means the antitrust body will be the judge of what is true and false in a newspaper and that it intends to influence the editorial direction of articles. The agency also pointedly ignored the newspaper industry's request that it be notified prior to an investigation, to prevent the agency from targeting specific companies for illegitimate purposes.

The antitrust agency's investigations into improper internal transactions by media companies were also beyond customary in the scope and timing and in the scale of penalties. The investigations were not included in the agency's plan for the year but launched suddenly and concurrently with the tax audits. The investigations have been reserved for the top 30 business groups designated according to the antitrust law and the major public corporations. We question the equity of the media probe as we compare the 24.2 billion won in fines levied on 13 media companies, all of which are equivalent to medium size companies in scale, and the 44.2 billion won levied last year on the top four conglomerates and the 40 billion won levied on five major public corporations including Korea Electric Power Corporation.

We reiterate that the newspapers must take the initiative to correct undesirable practices in circulation and advertisement. When their initiatives fail to yield results, government agencies can intervene. If the Fair Trade Commission genuinely intends impartiality, it must prove that they will not misappropriate the regulations through action. The newspaper association must establish a code of fair trade conduct and regulatory committee to ensure that the movement of self-reform is put in place.
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