[2] The case holding that an order of the Fair Trade Commission to prohibit the exchange of information to manufacturers of smuggling who exchange information from time to time on the fair price, sale volume, or production amount constitutes "measures necessary for correction" under Article 21 of the Monopoly Regulation and Fair Trade Act

[3] Whether the disposition of an unfair collaborative act is a deviation from or an abuse of discretionary authority, on the ground that, as a result of calculating an amount equivalent to 5% of the average sales amount as a penalty surcharge pursuant to Article 22 of the former Monopoly Regulation and Fair Trade Act and Article 9(1) of the Enforcement Decree of the same Act, the enterpriser led the unfair collaborative act and the market share of which is higher than that of the enterpriser (negative in principle)

[2] The case holding that since an act of exchanging information about smuggling price, sale volume, or production from time to time by a manufacturing company is aimed at an unfair collaborative act as stipulated in Article 19 of the Monopoly Regulation and Fair Trade Act, it constitutes an "measures necessary for correction" as stipulated in Article 21 of the same Act where the Fair Trade Commission ordered the exchange of information to the above company for correction

[3] The imposition of a penalty surcharge of an amount equivalent to 5% out of the average sales of a business entity as a penalty surcharge is determined based on the average sales of the business entity. It is understood that the upper limit of the penalty surcharge is determined based on the business entity’s economic burden is considered. Therefore, in light of the factors as stipulated in Article 55-3(1) of the former Monopoly Regulation and Fair Trade Act, such as the content and degree of the violation, duration and recovery of the violation, and the size of profits acquired from the violation, so long as the balance between the participating parties of the unfair collaborative act is not recognized to be considerably unfair, the imposition of a penalty surcharge of an amount equivalent to 5% out of the average sales of the business entity is determined based on the business entity’s average sales. Thus, the determination of the amount of the penalty surcharge calculated based on the above is difficult solely on the circumstance that the business entity’s average sales are reduced or abused.

1. Regarding the plaintiffs' grounds of appeal

A. Ground of appeal No.1

Examining the reasoning of the judgment below in light of the records, the court below acknowledged facts as stated in its holding, and held that the plaintiffs agreed to jointly restrict the fair production (sale quantity) and that such agreement was unfairly restricted competition in the fair sale market. There is no violation of the rules of evidence or misunderstanding of the legal principles as to the restriction on competition, as alleged in the grounds of appeal.

B. Ground of appeal Nos. 2 through 4

Examining the reasoning of the lower judgment in light of the records, the lower court acknowledged the facts as indicated in its holding, and determined that the Plaintiffs agreed on the abolition or reduction of the agreement and incentives on the standard price of smuggling products, and that such agreement was unfairly restricted competition in the fair sale market is justifiable. In so determining, the lower court did not err by misapprehending the rules of evidence or by misapprehending the legal doctrine on competition restriction, as otherwise alleged in the grounds of appeal.

2. As to the Defendant’s ground of appeal

A. Ground of appeal No.1

Article 21 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) provides that “The Fair Trade Commission may order the enterpriser concerned to suspend the act, to publish the fact that the enterpriser has received a corrective order or to take other measures necessary for correction if there is an act violating the provisions of Article 19(1).” Furthermore, the language and contents of the above provision, and further, as long as the corrective order under the Fair Trade Act is somewhat modified every specific day, it is difficult to cope with many transactions, which are ultimately unfair, and the nature of the corrective order is so far as it is so vague and abstract, and the purport of the system of the corrective order should be interpreted that the contents of the corrective order can only be interpreted as an order to prohibit repeating the same type of act that is likely to be repeated in the near future, and the contents of the corrective order should be interpreted as necessary for the exchange of information in light of the contents and nature of the order, and the contents of the order should be interpreted as necessary for correction and exchange of information as well as for the purpose of exchange of information.”

According to the evidence duly examined by the lower court and the lower court, eight companies, including the Plaintiffs, engaged in the instant unfair collaborative act, such as under agreement and determination on the price, sale volume, or production volume of eight companies from time to time by exchanging information on the price, sales volume, or production volume (hereinafter “the instant information”). The Plaintiffs’ purpose of exchanging the instant information is to facilitate the instant collaborative act. The Plaintiff’s exchange of the instant information is to facilitate the unfair collaborative act; domestic smuggling market is an over-point market with the market share of the upper three companies up to 75% and is so high that price collusion can be easily conducted; the instant information was not disclosed to third parties, such as consumers and administrative agencies, and was regularly exchanged within the company of the Subdivision association only at the inside of the Subdivision association. The instant information is a detailed information on the price, sales volume, and production volume of members of the Subdivision association, which can generally be treated as confidential in business activities and affect competition; the Plaintiffs’ individual member companies provided the instant information through such information can be identified as the point of time for information exchange or corrective measures prescribed in Article 1 of the Fair Trade Act.

Furthermore, according to the reasoning of the judgment below, the defendant's order of prohibiting the exchange of information that "the defendant shall not exchange information on the prices, smugglings, or output in a way other than in the case of collecting information through the market, directly or through the association, or in any other way." In light of the above phrase "except in the case of collecting information through the market," and the purport of the whole corrective order, it can be known that the order of prohibiting the exchange of information in this case only prohibits the exchange of information that is not disclosed in the present or in the future, so it does not violate the principle of clarity and the principle of proportionality.

Nevertheless, the lower court, on the premise that the “other measures necessary for correction” under Article 21 of the Fair Trade Act does not include measures beyond the degree of suspension of the act, determined that the instant information exceeded the degree of suspension of the act, and thus, exceeded the reasonable scope of the corrective order, and violated the principle of excessive prohibition. Therefore, the lower court erred by misapprehending the legal doctrine on the corrective order under the Fair Trade Act, thereby adversely affecting the conclusion of the judgment.

B. Ground of appeal No. 2

According to the reasoning of the judgment below, the court below determined that the Defendant’s arbitrary adjustment penalty surcharge calculated by the Defendant against six business entities, including the Plaintiffs, exceeds 5% of average annual sales in the immediately preceding three business years, which are the maximum penalty surcharge prescribed by the relevant statutes, and that it was unlawful since it violated the principle of proportionality and equality under the Constitution, and it was in violation of discretionary authority. In other words, by the determination of the penalty surcharge, three business entities, including the ○○ System with high market share, were reduced by approximately 70% from the voluntary adjustment penalty surcharge, but only 57% from the voluntary adjustment penalty surcharge, were reduced in cases of the Plaintiffs with low market share. This would be meaningful to increase and reduce the penalty surcharge for each business entity, and thus, it would be relatively unfavorable to the Plaintiffs, such as the Plaintiffs. The Plaintiffs were subject to the imposition of the penalty surcharge significantly unfairly unfair compared to other business entities, such as ○○ System.

However, such judgment below is hard to accept for the following reasons.

The Defendant calculated a surcharge for voluntary adjustment against each of the enterprisers who committed the instant unfair collaborative acts, and then calculated a surcharge for the amount equivalent to 5% of the average sales of each of the enterprisers. The imposition of a surcharge for each of the above businesses is based on Article 22 of the former Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) and Article 9(1) of the former Enforcement Decree of the Fair Trade Act (amended by Presidential Decree No. 18768 of Mar. 31, 2005), which provides that an enterpriser who committed the unfair collaborative act shall be subject to the imposition of a surcharge within the scope not exceeding the amount calculated by multiplying the average sales of the three business years by 5/100. This is understood as having determined the upper limit of the surcharge based on the average sales of each enterpriser. Accordingly, even if the amount of the surcharge calculated as above was determined as a surcharge for the unfair collaborative act by taking into account the content and degree of the violation, and the amount of profit acquired from the violation, it can be determined as a more unfair collaborative act.

However, according to the facts acknowledged by the court below, the defendant's simple participation in the unfair collaborative act of this case and low market share were reduced by 30% by reflecting it in calculating a voluntary adjustment penalty surcharge. However, the defendant led the unfair collaborative act of this case and did not completely reduce the amount for three companies, such as ○○, etc. with high market share; the penalty surcharge imposed on three companies, such as ○○, etc. is much larger than the penalty surcharge imposed on the plaintiffs; three companies, such as ○○, etc. due to the upper limit of the penalty surcharge under the law, are 70% of the amount of the penalty surcharge imposed on the plaintiffs; and 57% of the amount of the penalty surcharge imposed on the plaintiffs. Accordingly, in light of the content and degree of the violation; the period and frequency of the violation; and the amount of profit acquired from the violation, it cannot be deemed that the defendant's disposition imposing the penalty surcharge imposed on the part of the participants of the unfair collaborative act is considerably unfair

Nevertheless, the court below erred in the misapprehension of the scope of discretion on the imposition of penalty surcharges, which affected the conclusion of the judgment, by misunderstanding the scope of discretion on the imposition of penalty surcharges.

3. Conclusion

Therefore, the part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Plaintiffs’ appeals are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)