[OUTLOOK]Two Free Newspapers at My Front Door

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[OUTLOOK]Two Free Newspapers at My Front Door

The morning after we moved into our new apartment in Pyeongchang-dong three newspapers appeared at our front door. One was this paper, which we wanted. The others were two large Korean dailies, which we can't yet read. (Our Korean language teacher will whip us into shape.)

The papers continue to come every day - for more than seven weeks now. I have been told that sooner or later a collection agent will come to our door and act very indignant when we refuse to pay. I will just smile sweetly, flutter my innocent round eyes, babble in English and pretend that I don't understand.

On Tuesday evenings my wife and I gather up up a week's worth of newspapers - six JoongAng Ilbos and six Choson Ilbos - and carry them downstairs to the recycling bin. So far, we have thrown out nearly 90 newspapers, un-opened and unread.

It is a minor nuisance to throw the papers away, and a shame that trees were sacrificed in vain to make the wasted newsprint. But is it a crime to give them to me?

The National Tax Service says it is, or if not a crime at least an illicit practice. It has assessed the two newspapers, and also the Dong-a Ilbo, more than 80 billion won ($62 million) each and reported them for prosecution on tax-evasion charges.

Tax evasion? For bringing me newspapers I don't want? There is more to it, of course. There may have been bookkeeping irregularities and funny dealings between corporate affiliates. I have no idea about the validity of these allegations.

And I certainly have no idea whether the tax audit is a politically motivated attempt to muzzle or intimidate a critical press. But the idea that giving away newspapers is both unsavory and taxable seems to contradict two things I learned in law school.

The first has to do with anti-trust law. Evidently the National Tax Service thinks that giving away too many newspapers - more than 20 percent of the number of paid-for papers is the rule that has now been articulated by the Federal Trade Commission - is an unfair and ruthless business practice designed to drive competitors out of business. So the tax service calculated how much the giveaway papers would have sold for if anyone had paid for them, imputed that figure to the companies as income, and assessed tax on this notional income.

It is true that "predatory pricing" is the way old John D. Rockefeller built his Standard Oil monopoly and made himself a billionaire. American courts a century ago ruled that practice illegal and ordered the break-up of Standard Oil.

But classical antitrust law always insisted that the idea is to preserve competition, not to coddle weak competitors. Canny business practices aimed at increasing market share are how businesses succeed in a capitalist economy. Evidently Korean newspapers think that giving away lots of papers is a productive marketing strategy, either because it brings new subscribers or because it prevents other papers from selling to those potential subscribers.

I don't know whether this is a smart or a stupid strategy. It must be pretty costly to give away hundreds of thousands of newspapers every day, mostly to be thrown away unread. But how can the tax service call the practice unfair? Korea has a vigorously competitive newspaper economy. The "Big Three" papers all circulate more than a million copies daily. Indeed, their competitive balance was recognized in the fines assessed, essentially the same for each paper.

An even more basic point of law-governed societies is that people or companies are not to be punished for conduct that was only later declared illegal. I haven't gone into the law libraries, but so far as I can tell from reading the papers, the justification for setting 20 percent as the permissible limit for giveaway papers is that the newspaper companies themselves once adopted that figure as a voluntary guideline.

Since when do voluntary guidelines adopted by private companies have the force of law?

Another new rule, from the Federal Trade Commission, limits giveaways to seven consecutive days - not seven weeks, as I have been getting. But this rule went into effect July 1. Why is the National Tax Service applying it retrospectively?

When I finished law school, I went back to journalism. I never tried a case. Maybe it is time for me to activate my dormant legal career. I'd love to cross-examine the National Tax Service on this case.

Meanwhile, two more free papers appeared at my door this morning. Watch it, guys - my legal skills are rusty, and I haven't been admitted to the Korean bar. I may not be able to get you off.


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The writer is the editor of the JoongAng Ilbo English Edition.

by Hal Piper

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