[2] Whether there is a benefit to seek revocation of an administrative disposition where reinstatement is impossible even if the administrative disposition is revoked (negative in principle), and where there is a benefit to seek revocation of the disposition even if reinstatement is impossible

[3] In a case where: (a) a large enterprise’s relation with a large enterprise falling under “a small and medium enterprise that lends assets equivalent to the total number of its issued stocks or total investment amount to a small and medium enterprise; and (b) a relation between the large enterprise and a small and medium enterprise constitutes “a parent or subsidiary relationship prescribed by Presidential Decree” which restricts participation in competitive bidding among the small and medium enterprise owners under Article 8-2(1)2 of the former Act on Promotion of Purchase of Small and Medium Enterprise Products and Support of Development of Agricultural and Fishing Villages Act; and (c) a violation of freedom and equality of business under Article 9-3 subparag. 2(c) of the Enforcement Decree of the Act on Promotion

[2] A lawsuit seeking the cancellation of an administrative disposition is intended to restore the original state to its original state by excluding the illegal state arising from the disposition, and protect or relieve the rights and interests infringed or interfered with the disposition. Thus, even if the disposition is revoked, there is no benefit to seek the cancellation of the disposition if reinstatement is impossible. However, even if reinstatement is impossible due to the same cause as that of the administrative disposition, there is a benefit to seek the cancellation of the disposition in principle. However, in cases where it is determined that there is a risk that illegal dispositions might be repeated between parties to the same lawsuit due to the same cause as that of the administrative disposition, and there is still a need

[3] In a case where the issue is whether a large enterprise is unconstitutional because it infringes on the freedom and equality of business among the small and medium enterprises under Article 8-2 (1) 2 of the former Act on the Promotion of Purchase of Small and Medium Enterprise Products and the Development of Market Support (amended by Act No. 12499, Mar. 18, 2014) which provides that the relationship between the large enterprise and the small and medium enterprise falling under “where the small and medium enterprise lends assets equivalent to the amount exceeding the total number of issued stocks or total investments of the small and medium enterprise,” the case held that the above provision of the Enforcement Decree of the Act was introduced to ensure fair competitive competition between the small and medium enterprise by blocking its entry into the competitive market between the small and medium enterprise and the small and medium enterprise having the same competitiveness as the total number of issued stocks or total investments of the small and medium enterprise, and that it does not clearly violate the basic rights of the small and medium enterprise, such as freedom of business, and thus, it cannot be deemed that the above provision violates the basic rights of the small and medium enterprise.

1. Summary of the relevant statutes;

According to the Act on the Promotion of Purchase of Small and Medium Enterprises-Invested Products and the Development of Market Support (hereinafter “Market Support Act”), the Minister of SMEs and Startups may designate products directly produced and supplied by small and medium enterprises and deemed necessary to expand markets as competing products among small and medium enterprises (hereinafter “competitive products”). The head of a public institution shall conclude a procurement contract for competing products based on limited competition for small and medium enterprises or designated competition among small and medium enterprises (hereinafter “competitive competition between small and medium enterprises”) (Article 7(1)).

For fair competition among small and medium entrepreneurs, Article 8-2(1)2 of the former Act on the Promotion of Purchase of Small and Medium Enterprise Products and the Support for Development of Market Support (amended by Act No. 12499, Mar. 18, 2014; hereinafter “former Act on the Support of Market Support”) provides that the head of a public institution shall restrict the participation of the small and medium enterprise in competitive bidding among the small and medium enterprise owners who engage in the same type of business as a large enterprise and who are in a group of enterprises with a specific control or subsidiary relationship prescribed by Presidential Decree with the large enterprise. According to delegation, the Enforcement Decree of the Act on the Promotion of Purchase of Small and Medium Enterprise Products and the Support of Market Support (hereinafter “Enforcement Decree on the Support of Market Support”) provides that the relationship between the large enterprise and the small and medium enterprise corresponding to the “cases where a large enterprise lends assets equivalent to the amount exceeding its total number of outstanding stocks or total investment amount to the small and medium enterprise” (Article 9-3 subparag. 2(c) and 2 of the Enforcement Decree

2. Case history

According to the reasoning of the judgment below, the following facts are revealed.

A. The Plaintiffs are small and medium entrepreneurs under Article 2 of the Framework Act on Small and Medium Enterprises, and are companies engaged in manufacturing and selling ready-mixeds by leasing ready-mixed production facilities owned by large enterprises. The Plaintiffs issued a “small and Medium Enterprise Certification” under Article 8(2) of the Act on Support of Development of Markets from the Minister of SMEs and Startups (the Administrator of the Small and Medium Business Administration before the alteration, and the Administrator of the Small and Medium Business Administration (hereinafter “the Administrator of the Small and Medium Business Administration”), and the public institutions have tendered to a contract for supply of ready-mixeds by means

B. On May 31, 2013, the Defendant Administrator of the Public Procurement Service issued a public notice of tender for the annual unit price contract of ready-mixed (hereinafter “instant bid”). The Plaintiffs except the Plaintiff (hereinafter “Plaintiff”), as a member company, participated in the instant bidding and was awarded a successful bid in the capacity of the Plaintiff’s member company. Accordingly, the Defendant’s Administrator entered into an annual unit price contract with the Red-mixed Industry Cooperatives (hereinafter “instant bid”) until May 31, 2014 with the term of contract as of May 31, 2014 (hereinafter “instant contract”), and the Plaintiffs, other than the Plaintiff Mineyang Cons, entered into the instant contract in the capacity of the member company of each of the instant cooperatives, but the said Association entered into the instant bid except for the Plaintiff Gwangju Consor in the year 2012.

C. At the time of the public announcement of the instant tender, the Defendant publicly announced that “the persons falling under Article 8-2(1) of the Act on the Development of Agricultural and Fishing Villages shall not participate in this tender, and shall not be erroneous in recovering the amount terminated and the amount already allocated if it is confirmed to be the pertinent company after the conclusion of the contract,” and Article 4-3(1)1 of the “Additional Conditions for the Purchase of Goods (hereinafter referred to as “Additional Conditions”) added to the terms and conditions of the instant contract,” stipulated that “if a contracting partner (including a partner in the case of an association) is unable to participate in competitive bidding between small and medium entrepreneurs due to the amendment and new application of the relevant provisions, it shall be suspended until a small and medium entrepreneur obtains the eligibility to participate in competitive bidding” (hereinafter “Additional Conditions”).

D. From January 2, 2014 to December 2, 2014, the Administrator of the Small and Medium Business Administration issued each of the following issuance to the Plaintiffs with the small and medium enterprise confirmation statement stating the phrase “the participation restriction clause among the small and medium enterprise owners is subject to the participation restriction on competitive bidding pursuant to Article 8-2 of the Act on Support for Development of Agricultural and Medium Enterprises,” stating that “The participation restriction clause between the small and medium enterprise owners is subject to the participation restriction” (hereinafter “instant confirmation disposition”).

E. On February 4, 2014, the Defendant Administrator of the Public Procurement Service received a small and medium enterprise confirmation document from the Plaintiffs, and notified the Plaintiffs that “The Plaintiff’s letter of restriction on participation is specified in the small and medium enterprise confirmation document submitted by the Plaintiff. In the event that the Plaintiffs constitute a company subject to restriction on participation in competitive bidding between small and medium enterprises, as at present, the Plaintiffs would have to be informed that the allocation of government-funded ready-mixed quantity should be suspended under additional special conditions (hereinafter “instant notification”).

3. As to the disposition of the instant notice

A. The term “disposition”, which is the subject of an appeal litigation, refers to the exercise or refusal of public authority as an enforcement of law with respect to a specific fact by an administrative agency, and other corresponding administrative actions (Article 2(1)1 of the Administrative Litigation Act). Whether a certain act by an administrative agency may be subject to an appeal litigation cannot be determined abstractly and generally. Determination is based on the content and purport of relevant statutes, the subject, content, form, and procedure of the act, the substantial relation between the act and the disadvantage suffered by interested parties, such as the other party, and the principle of administration by the rule of law, and the attitude of the administrative agency and interested parties related to the act, etc. (see, e.g., Supreme Court en banc Decision 2008Du167, Nov. 18, 2010; Supreme Court Decision 2015Du52395, Nov. 29, 2018).

B. In full view of the following circumstances, the regulatory structure and content of the pertinent statutes as seen earlier, and the contents of the instant announcement of tender and the instant additional special conditions, the instant notification is based on the instant confirmation disposition by the Administrator of the Small and Medium Business Administration and the subsequent enforcement based on Article 8-2(1) of the former Act on the Development of Market Support, which directly affects the rights and obligations of the Plaintiffs who are the other party. Therefore, the instant notification is an exercise of public authority as an enforcement of the law on the specific facts conducted by the Administrator of the Public Procurement Service

1) Article 8-2(1) of the former Act on the Support of Market Development explicitly states that “the head of a public agency, such as the Defendant Public Procurement Service, is the subject of the disposition of restriction on participation in competitive bidding. The Defendant Public Procurement Service finally determined that the Plaintiffs were in a parent-subsidiary relationship with a large company, and subsequently notified the instant case as an enforcement act

2) The Plaintiffs cannot be allocated the volume until they obtain eligibility to participate in competitive bidding among small and medium entrepreneurs pursuant to Article 8-2(1) and Article 9-3 of the Enforcement Decree of the former Act on the Development of Agricultural and Fishing Villages due to the instant notification. This constitutes a legal disadvantage that directly affects the rights and obligations of the Plaintiffs.

3) Although the Administrator of the Public Procurement Service made the instant notification based on the additional special conditions while rendering the instant notification, the additional special conditions refer to confirming the contents of Article 8-2(1) and Article 9-3 of the former Enforcement Decree of the Act on the Development of Agricultural and Fishing Villages, and the instant notification constitutes subsequent enforcement with the main focus on ensuring that the quantity is suspended accordingly. Therefore, it is difficult to regard the instant notification as a measure taken in pure private economic status, and rather, it is reasonable to deem that the instant notification was made in a superior position to achieve the administrative purpose called the realization of public interest.

4) The Defendant Administrator of the Public Procurement Service did not use the expression “disposition” at the time of the instant notice, and did not provide guidance on the method of appeal, such as administrative litigation, and thus, it is difficult to deem the instant notice to have been in an external form of administrative disposition. However, prior to the instant notice, the Defendant Administrator notified in advance that “A person falling under Article 8-2(1) of the Act on the Development of Agricultural and Fishing Villages cannot participate in this bidding, and if it is confirmed to be the relevant company after the conclusion of the contract, the amount of termination of the contract and the amount already allocated shall be recovered.” The instant notice aims to suspend the allocation of the volume because the Plaintiffs are subject to restriction on participation in bidding pursuant to the former Act on the Development of Agricultural and Fishing Villages. The Plaintiffs also filed an appeal suit against the instant notice. In this regard, the instant notice can be deemed to have satisfied the appearance of administrative disposition.

C. The judgment of the court below to the same purport is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the subject of appeal

4. As to the interest in a lawsuit seeking the confirmation of this case and the revocation of the instant notification

A. Relevant legal principles

A lawsuit seeking the revocation of an administrative disposition is a lawsuit seeking to restore the original state to its original state, and protect or relieve the rights and interests infringed or interfered with the disposition, and thus, in principle, there is no benefit to seek the revocation of the administrative disposition, even if the disposition is revoked. However, even if it appears impossible to restore the original state to the original state even if it is impossible to restore the original state to the original state, there is no benefit to seek the revocation of the disposition. However, even if it appears impossible to restore the original state to the original state due to the same cause as that of the administrative disposition, where it is judged necessary to explain legal issues for which illegality verification or uncertainty of the administrative disposition is verified or unclear, such as securing the legality of the administrative disposition, judicial control thereof, and expansion of citizens’ rights and interests (see, e.g., Supreme Court en banc Decision 2006Du19297, Jul. 19, 2007; Supreme Court Decision 20

B. Whether there is a legal interest in seeking revocation of the instant confirmation disposition

In the instant disposition, the validity period of the small and medium enterprise confirmation certificate has already expired until March 31, 2014. However, in order to participate in competitive bidding among small and medium enterprises ordered by public institutions even after the expiration of the above validity period, the Plaintiffs shall obtain a small and medium enterprise confirmation certificate from the Defendant Administrator at all times. As long as the Plaintiff’s total number of outstanding shares or total amount of investment and the value of assets leased from large enterprises are changed and the former is not abnormal, Defendant Administrator of the Small and Medium Business Administration is highly likely to repeat the same disposition against the Plaintiffs’ application for the issuance of a small and medium enterprise confirmation certificate. Therefore, there is a need to clarify any legal problem that confirms

C. Whether there is a legal interest in seeking the revocation of the instant notification

1) At the time of the instant notification, the contract term of the instant contract had already expired. However, the Defendant Administrator may, in the future, repeat the dispositions to the Plaintiffs on the same grounds as the previous ones by applying the provisions of the Enforcement Decree of the instant case. Thus, it constitutes a case where there is a need for explanation of legal issues in which illegality of administrative disposition is verified or unclear. Accordingly, the Plaintiffs still

2) Even if the Plaintiff Mineyang-mixed did not participate as a member of the cooperative of the cooperative of the Jeonnam-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-Dong at the time of the tender of this case, the Administrator of the Public Procurement Service became final and conclusive that the Plaintiff Gwangju-dong-si cannot participate in competitive bidding conducted by the Administrator of the Public Procurement Service and became likely to have a specific and direct impact on the Plaintiff’s rights and obligations of the Plaintiff Mineyang-mixed. Furthermore, in the future, the Defendant Administrator of the Public Procurement Service is likely to repeat the disposition on the same ground as that of the previous case by applying the provision of the Enforcement Decree of this case to the Plaintiff Mineyang-dong-dong-dong

D. Sub-determination

The judgment of the court below to the same purport is just, and contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending the legal principles on

5. As to the unconstitutionality of the provision of the Enforcement Decree of this case

A. Whether the Enforcement Decree of the instant case is unconstitutional by infringing the Plaintiffs’ freedom of business

Article 8-2 (1) 2 of the former Act on the Development of Market Support, Etc., which provides the basis for the instant confirmation disposition, requires the Defendant Administrator of the Public Procurement Service to restrict the participation in competitive bidding among the small and medium enterprises in the event that a small and medium enterprise borrows assets equivalent to the amount exceeding the total number of issued stocks or total amount of investment from a large enterprise, and accordingly there is room to restrict the Plaintiffs’ freedom of business. However, the instant provision of the Enforcement Decree complies with the principle of excessive prohibition under Article 37 (2) of the Constitution, and thus, it cannot be deemed as unconstitutional and invalid by infringing the Plaintiffs’ freedom of business

1) In our Constitution, considering the importance of a small and medium enterprise’s national economy, the State’s duty to protect and foster small and medium enterprises is stipulated as a national task (see Article 123(3)). Accordingly, the Framework Act on Small and Medium Enterprises imposes the duty to establish and implement policies on small and medium enterprises in order to support creative and independent growth of small and medium enterprises, to upgrade the industrial structure, and to develop the national economy in a balanced manner (see Articles 1 and 3).

2) The competitive bid system between small and medium entrepreneurs is aimed at securing markets for products of small and medium enterprises by having only small and medium entrepreneurs participate in the public procurement market, and at inducing the enhancement of competitiveness among small and medium entrepreneurs, and at preventing the establishment of disguised small and medium enterprises of large enterprises. It is also an important interest to protect small and medium entrepreneurs from improving their competitiveness and rationalizing their management through fair competitive bidding.

3) Article 8-2(1)2 of the former Act on the Development of Agricultural and Fishing Villages limits the participation of large enterprises in the competitive bidding by small and medium enterprises located in “controlling or subordinate relationship”. Generally, a dominant or subordinate relationship between companies may be determined based on whether a company is in a position that may have influence on the ownership or management of the relevant company, and the human and physical combination relationship between companies or business relationship between companies may be a symbol to determine their influence (see Constitutional Court en banc Decision 2014Hun-Ba419, Dec. 29, 2016). In other words, “controlling or subordinate relationship” means a case where a large enterprise and a small and medium enterprise are in a “controlling or subordinate relationship” means a case where the fair competition between small and medium enterprises is likely to be impeded by taking into account various factors, such as human and physical combination between companies, business relationship between the large enterprise and a small and medium enterprise, the current status of the relevant market, the ideal of transaction relationship, etc. that a large enterprise enters the public procurement market bypass.

4) The instant provision was introduced in order to ensure fair competition between small and medium enterprises by preventing a large enterprise with competitiveness similar to a large enterprise from entering the competitive bidding market through the aforementioned means, as many cases arise, through means of lending assets equivalent to an amount exceeding the total number of outstanding stocks issued or total investment amount of the small and medium enterprises to small and medium enterprises.

5) A small and medium enterprise participating in competitive bidding among small and medium enterprises shall have facilities capable of directly producing and providing competing products (Article 9(1) of the Enforcement Decree of the Act on the Development of Agricultural and Fishing Villages). However, if a small and medium enterprise borrows assets equivalent to the amount exceeding its total number of shares issued or total amount invested by a large enterprise from a large enterprise, the above requirements can be easily satisfied, and accordingly, it is highly likely that it will depend on, or be dependent on, a large enterprise. Furthermore, a competitive bidding system among small and medium enterprises may be implemented by causing unfair outcomes that considerably reduce opportunities for receiving orders from other small and medium enterprises. Therefore, regardless of whether to pay reasonable rents, deeming “small and medium enterprises that have leased assets exceeding the total number of shares issued or total amount invested by a large enterprise” as having a dominant or subordinate relationship with a large enterprise and restricting participation in competitive bidding among small and medium enterprises

6) Even if a small and medium enterprise falls under Article 8-2 (1) of the Enforcement Decree of the instant case, the relevant small and medium enterprise is unable to participate only in the competitive bidding ordered by the head of the relevant public institution, and there is no obstacle to the public sector procurement contracts or private sector’s private economic activities. Furthermore, the relevant small and medium enterprise is allowed to participate in competitive bidding among the small and medium enterprise by securing financial soundness by increasing total number of outstanding shares or total amount of investment, etc. Furthermore, the instant provisions are limited to the small and medium enterprise engaging in the same kind of business as a large enterprise (see Article 8-2 (1) 2 of the former Act on the Promotion of Development of Agricultural and Fishing Villages). The instant provisions of the Enforcement Decree of the instant case do not clearly show any other means that are less than that of the Plaintiffs’ fundamental rights, such

B. Whether the enforcement decree of the instant case violates the Plaintiffs’ right to equality and thus is unconstitutional

The principle of equality, which is based on Article 11(1) of the Constitution, prevents a person from arbitrarily treating the same in essence. It means that not only the application of the statutes, but also the application of the legislation, but also unreasonable discrimination should not be treated when the legislation is made (see, e.g., Supreme Court en banc Decision 2005Du14417, Oct. 29, 2007). The provision of the Enforcement Decree of the instant case, “small and Medium Enterprises that have leased assets equivalent to the amount exceeding the total number of issued stocks or total investment amount from large enterprises,” unlike “small and Medium Enterprises that have not leased assets from large enterprises or have leased assets equivalent to the amount that does not exceed the total number of issued stocks or total investment amount from large enterprises,” is reasonable to treat “small and Medium

1) Small and medium enterprises falling under Article 1 of the Enforcement Decree of the instant case and other non-small and medium enterprises have significant differences in the aspect of financial soundness. Small and medium enterprises that leased assets equivalent to the amount exceeding the total number of issued stocks or total amount of investment from large enterprises are highly likely to have economic, de facto, dominant or subordinate relationships with large enterprises, as the size of assets leased from large enterprises is large compared to the size

2) In particular, the Plaintiffs’ business constitutes a device industry that requires considerable initial investment costs in installing manufacturing facilities. In such circumstances, when a small or medium enterprise borrows assets equivalent to the amount exceeding its total number of outstanding stocks or total amount of investment from a large enterprise, it can easily satisfy the requirements for facilities to directly produce and provide competing products, and in substance, it has the superior competitiveness compared to other small or medium enterprises by using the assets of the large enterprise as they are, and by practically, having the capabilities similar to the large enterprise. As can be seen, there is reasonable reason to treat a small or medium enterprise differently from a small or medium enterprise in an economic and de facto relationship with a large enterprise by entirely dependent on the lending of assets of the large enterprise.

3) Administrative legislators have certain discretion to determine whether to treat a small or medium enterprise as an “enterprise in a parent-subsidiary relationship with a large enterprise” within the scope of delegation, taking into account various factors, such as physical relevance, human relevance, and the consignment and consignment of business with a large enterprise and a small or medium enterprise. It is difficult to view that the standards under the Enforcement Decree of the instant case are manifestly unreasonable and clearly deviates from the scope of discretion permissible under the Constitution.

C. Sub-decision

Nevertheless, the lower court determined otherwise, on the ground that the instant provision violated the Plaintiffs’ freedom of business due to the lack of assets, and there is a difference between the “small and medium enterprises that should be leased from large enterprises due to lack of assets” and “small and medium enterprises that need to be leased from outside due to lack of assets” in terms of the need to protect and foster small and medium enterprises, and thus, thereby infringing the Plaintiffs’ right to equality without reasonable grounds. In so determining, the lower court erred by misapprehending the legal doctrine on freedom of business and equality under the Constitution, thereby adversely affecting the conclusion of the judgment. The allegation contained in

6. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Attachment] List of Plaintiffs: Omitted

Justices Park Sang-ok (Presiding Justice)