Regulation for Fair Trade Practices in Newspaper Business Case

(14-2 KCCR 84, 2001Hun-Ma605, July 18, 2002)

In this case, the Constitutional Court upheld the provision of thepublic notification limiting the total value of free papers and giftsdistributed by a newspaper corporation to a maximum of 20% of the total amount of circulations.

A. Background of the Case

In January, 1997, the Fair Trade Commission (hereinafterreferredto as the "FTC") enacted and enforced a new public notification classifying and regulating some of the existing practices of thenewspaper business as unfair trade practices. Then, the newspaperbusiness association made a resolution to voluntarily clean up theirbusiness practices contrary to the provisions of the above publicnotification, and the public notification lost effect in January of1999.The FTC found the self-cleansing efforts of the newspaperbusinessesfar from satisfactory, and enacted a new public notification whichentered into force on July 1, 2001. One of the provisions(hereinafterreferred to as the "instant provision") in the public notificationprohibited the papers from providing free papers and gifts exceeding 20 percent of the total amount of paid circulations.

The complainant, who is in the newspaper sales business, filed theinstant constitutional complaint, arguing that the instant provision wasin violation of the rule against blanket delegation and excessivelyrestricts property rights.

B. Summary of the Decision

The Constitutional Court unanimously upheld the instantprovision, and rejected the complaint as follows:

(1) Rule against Blanket Delegation

The Monopoly Regulation and Fair Trade Act provides specificexamples of unfair trade practices, and delegates to a presidentialdecree the duty to decide "categories of and standards foridentifyingunfair trade acts." The Enforcement Decree of the Act based on the Act, then, provides more specific "categories of and standardsfor identifying unfair trade acts," and further delegates to the FTCthe duty to enact a public notification providing more detailed regu-lations to be applied to a specific area or business practice whennecessary. The instant provision is a part of the public notification enacted thus.

Unfair trade practices occur in complicated and diverse formsduring business competition, and they constantly evolve. Then,regulations concerning types and standards of unfair trade practicesshould make appropriate adaptation to such changes in a timelymanner. The National Assembly would not be able to predict nor investigate every unfair business practice distorting conditions for normal com- petition in all areas, and it would be very difficult to make revisionsto existing statutes to adapt to the changes in the environment.Therefore, it is inevitable that detailed rule-making about the typesof and standards for identifying unfair trade practices is delegatedto a presidential decree.

It is possible to predict what would be the contents of "thetypesof and standards for identifying unfair trade practices" to bespecified by presidential decree in light of examples of unfair trade practicesprovided by the statute itself. Therefore, the enabling clause didnot go beyond the limit for delegation of legislation.

In the instant case, the presidential decree first provides morespecific "categories of and standards for identifying unfair tradeacts,"and then further delegates to the public notification of the FTC toprovide more detailed regulations to be applied to a specific area or business practice. Then, it is apparent that the instant provision of the public notification has observed the constitutional limits to the re-delegation of rule-making.

(2) Rule against Excessive Restriction

(A) The legislative purpose of the instant provision is to reduceoverzealous competition in the newspaper business by preventingunfair practices of allowing free papers and distributing gifts bynewspaper distributors who have the backing of newspaperpublisherswho have deeper pockets in order to take away consumers whosubscribe to other newspapers. It thus aims to normalize the com-petition in the newspaper sales and subscription market, thereby, maintaining the

public functions of the newspaper in a democraticsociety, namely, to provide speedy and accurate information and tolead the formation of public opinion in a proper manner. Theprovision also aims to deter infringement on the basic rights of the newspaper subscribers, general citizens, to make his own choice of newspaperssince it is likely that allowing free paper and distributing giftswould lead to coercion to subscribe to a particular newspaper. In light of these factors, the legitimacy of the legislative purpose is recognized.

(B) Certain restriction on allowing free paper and distribution of gifts would be an appropriate means to achieve such legislative ob- jectives. The public notification of the FTC regulating practices of other business sectors classifies the act of providing gifts exceeding 10% of total value of transaction of goods or services as unfair in-ducement of consumers. The instant provision applies a relativelymore relaxed standard to the newspaper business. In light of such facts,the degree of restriction on the basic rights of citizens in theinstant case is minimal level necessary to achieve the legislative objectives.

(C) The private interests being infringed by the instantprovision are freedom of occupation and property rights of individuals in thenewspaper sales business. The public interest to be protected bythe instant provision, on the other hand, is restoration of normal price and competition in the newspaper business by reducing overzealous competition. Since the public interest being protected by the instant provision is larger than the private interest it infringes, the instant provision does not violate the rule against excessive restriction.