FTC Gives Up on Repealing Newspaper Price Guarantee

The Fair Trade Commission on June 2 ended its effort to change the so-called “specific designations” protection enjoyed by the newspaper industry, informing the Liberal Democratic Party Research Council on the Antimonopoly Act of its decision.

NSK President Masato Kitamura welcomed the FTC decision, describing it “an appropriate judgment.” In a statement, Kitamura said, “Newspaper publishers, fully aware of their mission, will strive to create better newspapers, while redoubling efforts to maintain and further develop Japan’s unparalleled newspaper home-delivery network and appropriate sales activities.

The FTC decision to let the "specific designations" stand has ended six months of confrontation between NSK and the FTC. (Background: NSK News Bulletin Nov. 2005).

In a public statement, the FTC summed up the cases made by both sides and stated that despite repeated discussions, no compromise was reached and there was no prospect of an immediate breakthrough. “All political parties favor maintaining the Antimonopoly Act exemption that allows newspapers to set uniform prices nationwide,” it said.

The FTC still maintains that the specific designation of the newspaper industry as an industry deserving price protection runs counter to the Antimonopoly Act. But it appears to have put off any attempt to repeal the protection in light of mounting public backing for the status quo and moves in parliament to revise the Antimonopoly Act to institutionalize protection for the newspaper industry.

In the latter half of May, FTC Chairman Kazuhiko Takeshima and other top commission officials consulted officials of the governing coalition Liberal Democratic Party -- Policy Affairs Research Council chairman Hidenao Nakagawa and Antimonopoly Act Research Council head Koji Yasuoka. The FTC informed the two officials on May 31 of its decision to drop the matter. Nakagawa and Yasuoka told the media of the FTC decision later in the day.

At a session of the LDP panel on the Antimonopoly Act on June 2, Yasuoka said his council agreed with dropping the issue due to opposition from political parties and local assemblies. He also cited the deadlock between the FTC and the newspaper industry. FTC officials looked on as he spoke.

In reply to a question by a panelist about the FTC's aims, Yasuoka said he expected the FTC to steer clear of the issue so long as there was opposition in parliament.

Yasuoka told the session that he expects the newspaper industry to provide diversified services within the scope of not affecting its orderly sales activities, such as price discounts for students and households on welfare. He also said that the Antimonopoly Act is to be subject to a full-fledged reassessment in two years, adding that the competition policy should be reexamined within this context.

At a news conference on June 2, an FTC official said the commission had no idea when any reassessment process might resume. But he said that even under the existing framework, newspaper publishers are permitted to cut prices “for other legitimate and rational reasons.”

High Court Defends Source Anonymity, Ruling Appealed

The Tokyo High Court on June 14 overturned a lower court ruling and said that a Yomiuri Shimbun reporter was within his rights to refuse to reveal his source for a news story at the center of a U.S. health food company lawsuit in the United States.

Presiding High Court Judge Nobuo Akatsuka said news sources constitute “professional secrets” protected by the Civil Procedure Code, which allows witnesses to refuse to violate confidentiality agreements. He said the reporter’s refusal to respond to questions that might reveal the identity of his source was also justified under the freedoms of the press and of newsgathering activities extended by Article 21 of the Constitution.

His ruling said that even if a civil servant breached his own confidentiality obligations to the government, concealing the identity of that civil servant is still permitted in the common interest of ensuring the free flow of information to the general public.

In response to the high court ruling, the NSK Editorial Affairs Committee issued a statement over the name of representative Kojiro Shiraishi applauding the ruling for respecting the importance of media newsgathering and reporting.

The high court decision said that newsgathering must be free from intervention by public authorities and that the concealment of the identity of news sources is crucial to ensuring relations of mutual trust between the media and its sources.

The ruling said accurate information can only be ensured when informants are confident that reporters will, as a rule, not reveal their identities. “If media bodies are forced to reveal their news sources, relations of trust with their sources of information would be impossible, making it extremely difficult to gather any news -- eventually undermining the freedom of newsgathering and reporting,” it said.

Serving as a watchdog over public officials is an important mission for the media and if news sources cannot be kept anonymous, the media would not be able to do that job, the ruling said.

However, the ruling said that even though the media's right to protect news sources is recognized and safeguarded, such benefits are only incidental. “The right to hide news sources is not intended to provide any privileged status to media organizations,” it said.

The original Tokyo District Court ruling in March gave priority to civil servants’ confidentiality obligations to the government over the need to protect news sources and the public's right to know. The court had objected to the refusals by a Kyodo News reporter and a NHK reporter to reveal their sources in court appearances in a series of lawsuits filed by the Japanese subsidiary of a U.S. health-food maker.

The Tokyo High Court resolved the issue by saying obtaining insider information from civil servants should not automatically be seen as an illegal act, even though leaking such information is a breach of civil servants' confidentiality agreements. Reiterating the principle of the public interest requiring a free flow of information, the ruling said a reporter’s refusal to reveal a news source takes precedence over government confidentiality obligations.

However the high court did specify that concealing news sources should be allowed only on public issues and not in reporting on personal matters by private persons, nor to slander or defame someone. The matters at issue in the US food maker’s lawsuit over taxation are matters of public interest, it concluded.

During the original hearing, the counsel for the food maker argued that whether to exempt reporters from testifying should be decided by weighing his client's right to a fair trial against press freedoms.

On this argument, the ruling said that it is doubtful whether comparative weights can be appropriately assigned and that any criteria for such judgments should be kept vague. It further said that the procedures for civil cases must put weight on protecting professional confidentiality and thereby naturally limit the “right to a trial” on the part of those that seek to compel people to testify.

The high court judgment on the reporter's appeal defended his need to conceal a news source, departing from most court decisions that tend to favor an approach of weighing the comparative benefits of either option.

The high court ruling also recognizes the reporter’s right to refuse to answer not only questions that might directly identify the source, but also other general questions that might indirectly reveal the identity of his source.

A spokesman for the Yomiuri Shimbun said in a statement that newsgathering is based on a relationship of trust with sources about confidentiality. He praised the high court decision for fully recognizing and respecting the cornerstone of news reporting.

The food maker has since appealed the high court ruling to the Supreme Court in papers filed on June 16.