Constitutional Court Rules "Provision for Korea Press Foundation's Exclusive Handling of Government Advertising Work is Constitutional"

The Constitutional Court has ruled that the presidential decree provision allowing the Korea Press Foundation (hereinafter the Press Foundation) to exclusively handle government advertisements does not violate the Constitution.

According to the legal community on the 6th, the Constitutional Court dismissed a constitutional complaint filed by an advertising agency corporation and its CEO, who claimed that Article 6, Paragraph 1 of the Enforcement Decree of the Government Advertisement Act infringed on their freedom of contract and equality rights, with an 8 (dismissal) to 1 (acceptance) vote.

Constitutional Court of Korea, Jaedong, Jongno-gu, Seoul.

The petitioners argued that the enforcement decree provision mandating that government advertisement work be entrusted exclusively to the Press Foundation, and the underlying Government Advertisement Act provision, prevented them from directly securing advertising agency contracts from government agencies or public corporations, forcing them to obtain contracts only through the Press Foundation, thereby infringing on their fundamental rights, and filed a constitutional complaint.

The petitioners also challenged Article 10, Paragraph 1 of the Government Advertisement Act, which allows the Minister of Culture, Sports and Tourism to entrust government advertisement work to institutions or organizations designated by presidential decree if deemed necessary.

However, the Constitutional Court dismissed the case on the grounds that the requirement of "direct infringement of fundamental rights," a prerequisite for constitutional complaints, was not met. The Court reasoned that fundamental rights are not infringed directly by the statutory provision but only by the enforcement decree provision delegated under the statute.

The Court stated, "The relevant provision merely delegates the authority to designate the institution or organization entrusted with government advertisement work by presidential decree," and "the fundamental rights infringement claimed by the petitioners arises only from the enforcement decree provision in this case, not directly from the statutory provision."

The provision that the Constitutional Court substantively reviewed for constitutionality was Article 6, Paragraph 1 of the Enforcement Decree of the Government Advertisement Act, which stipulates that "the Minister of Culture, Sports and Tourism shall entrust government advertisement work to the Korea Press Foundation, established under Article 29 of the Act on Promotion of Newspapers, pursuant to Article 10, Paragraph 1 of the Act."

The petitioners argued that the enforcement decree provision infringed on their freedom of contract and equality rights and violated Article 119 of the Constitution concerning the economic order of the Republic of Korea. However, the Court focused on the freedom to pursue a profession as the most closely related right and only examined whether this freedom was infringed.

The Court concluded that the enforcement decree provision entrusting government advertisement agency work exclusively to the Press Foundation does not violate the principle of proportionality, which serves as the standard for assessing fundamental rights infringement, including legitimacy of purpose, suitability of means, minimal infringement, and balancing of interests.

First, the Court stated, "This enforcement decree provision aims to unify the execution of government advertisement work to promote the public nature, transparency, and efficiency of government advertisement operations, ultimately improving the overall quality of government advertisements. Such legislative purpose is legitimate. Entrusting government advertisement work to a single quasi-governmental institution, the Press Foundation, is an appropriate means to achieve this legislative purpose."

The Court also found that the minimal infringement requirement was satisfied.

The Court pointed out, "Government advertisements serve a public function as a communication channel with the public, enhancing citizens' understanding and support of policies and thereby improving the effectiveness of government administration. To increase the policy communication effect of government advertisements, it is necessary to integrally manage the process from planning to execution to maintain consistency in policy promotion, thus recognizing the need to entrust government advertisement work to a single institution."

It added, "If there were no institution dedicated to government advertisement work, excessive competition among advertising agencies to secure advertisements could occur, potentially causing disorder in government advertisement transactions. Therefore, this enforcement decree provision entrusts government advertisement work collectively to the quasi-governmental Press Foundation to prevent excessive competition, related corruption, and various fraudulent acts, thereby maintaining fairness in government advertisement transactions."

The Court judged that considering the unique characteristics of government advertisements, which differ from general commercial advertisements, it is not unreasonable to allow the Press Foundation to exclusively handle government advertisements.

The Court premised, "Government advertisements are conducted for purposes such as legal obligation announcements, promotion of government agencies' policies, laws, and administrative services to gain public understanding, cooperation, and support, or other public interests, and thus differ from private commercial advertisements aimed at profit."

The Court further noted, "Most government advertisements are simple public notice advertisements and small-scale ads, while the number of government agencies as advertisers is very large. Except for some large-scale advertisements, many private advertising agencies are reluctant to handle them due to lack of profitability. Therefore, if government advertisement agency work were fully opened to the private sector, private agencies would likely only handle high-value government advertisements with expected profitability, leaving most government advertisements without an agency."

It added, "Opening high-value government advertisements to private agencies while operating a public organization to handle the rest is inefficient in terms of cost-effectiveness."

The Court also stated, "Since government advertisement fees are paid through budgets of government agencies funded by taxpayers' money, efficient expenditure of advertisement fees is very important. Considering the difficulty in securing sufficient budgets for government advertisements and the inflexibility of budget execution procedures, if private advertising agencies directly handled government advertisements, government agencies with insufficient budgets might find it very difficult to advertise on media with high promotional effects."

It concluded, "Therefore, this enforcement decree provision allows a single public institution to leverage economies of scale and bargaining power to handle government advertisement work swiftly and efficiently."

Additionally, the Court cited that the Press Foundation has ▲ long performed entrusted government advertisement work with specialized personnel and systems tailored to government advertisements, ▲ applies a lower commission rate (10% of advertisement fees) compared to advertising agencies, and ▲ all government advertisement commissions received by the Press Foundation are fully used for public purposes such as supporting press promotion, broadcasting and advertising promotion, and contributions to the Press Promotion Fund, concluding that entrusting government advertisement work to the Press Foundation is not unreasonable.

For these reasons, the Court held, "It is difficult to conceive of alternative means that would restrict the petitioners' fundamental rights less while achieving the same legislative purpose as this enforcement decree provision; thus, this provision satisfies the minimal infringement requirement."

Finally, regarding the balancing of interests, the Court stated, "Government advertisements do not constitute a large proportion of the overall domestic advertising market, and advertisements commissioned by advertisers other than government agencies are not subject to this enforcement decree provision. Therefore, the degree of fundamental rights restriction caused by this provision is limited, and private advertising agencies have the opportunity to participate in government advertisements through the Press Foundation in some cases." The Court concluded, "Hence, the disadvantages suffered by the petitioners due to this provision are not significant compared to the public interest pursued by it."

However, Justice Lee Young-jin dissented, stating, "From the perspective of the market economy order, a monopoly system generally lacks constitutional legitimacy unless there are special circumstances," and "the enforcement decree provision violates the principle of proportionality and infringes on the petitioners' freedom to pursue a profession."

This decision is the first ruling by the Constitutional Court on the constitutionality of the enforcement decree provision entrusting government advertisement work to the Press Foundation.

Previously, in 2008, the Constitutional Court ruled that provisions of the then Broadcasting Act and its enforcement decree, which stipulated that only the Korea Broadcasting Advertising Corporation and its investee companies could act as sales agents for terrestrial broadcasters' advertising, violated the freedom to pursue a profession and equality rights of broadcasting advertisement sales agents, declaring those provisions unconstitutional.

A Constitutional Court official stated, "The 2008 case concerned advertising 'sales agency' related to terrestrial broadcasting, whereas this case involves advertising 'purchase agency' for government agencies as advertisers, not advertising 'sales agency' for media companies, marking a difference."

This content was produced with the assistance of AI translation services.