[2] The method to determine whether a collaborative act has competition-restricting effect under Article 19(1) of the Monopoly Regulation and Fair Trade Act, where the collaborative act also brings about competition-restricting effect as well as competition-restricting effect

[3] Standard for determining the scope of acts prohibited under the Monopoly Regulation and Fair Trade Act

[2] Whether a collaborative act restricts competition under Article 19(1) of the Monopoly Regulation and Fair Trade Act should be determined by examining whether the collaborative act affects or is likely to affect the determination of price, quantity, quality, and other terms and conditions of trading by taking into account various circumstances, such as the characteristics of the pertinent product, consumers’ standard for choosing products, and the impact of the pertinent act on the market and enterprisers. In particular, if the collaborative act causes or is likely to cause impacts on the determination of price, quantity, quality, and other terms and conditions of trading, other than the effect of restricting competition, it should be determined by comparing and balancing the two. The effect of restricting competition should be considered taking into account the market share of the enterprisers who participated in the collaborative act, the degree of restricting competition among the enterprisers who participated in the collaborative act, and the effect of promoting competition should be comprehensively considered, but whether the collaborative act is reasonably necessary to bring about such effect shall be considered.

[3] Since a corrective order under the Monopoly Regulation and Fair Trade Act has to be somewhat inclusive and abstract due to its essential nature, the scope of the act prohibited by the corrective order shall be determined by considering the language and text of the corrective order, the relevant statutes, and the reasons for the corrective order stated in the written resolution.

1. Regarding ground of appeal No. 1

The essence of “agreement” under Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) is to communicate with two or more enterprisers, and includes not only explicit agreement but also implied agreement.

According to the reasoning of the judgment below, the court below affirmed the following facts: (a) as a result of the amendment of the provision on the collection of user fees prepared by the Korea Music Copyright Association, an incorporated association, the Korea Music Performers Association, and the Korea Creative Producers Association, an incorporated association (hereinafter “trust three organizations”), the Plaintiff participated in meetings of the Digital Music Industry Development Council (hereinafter “N-DM”), which was a group of music operators, and expressed the intent to provide music costs on the Non-DM goods, unlike other foreign music operators, while attending meetings of the Korea Music Industry Development Council (hereinafter “D”) which was a group of music operators; and (b) as a result, the Plaintiff participated in the provision of music costs on the Non-DM goods, such as Mnet Media Co., Ltd., which combines the status of online music service providers and music service providers; and (c) concluded the agreement with the Plaintiff on the provision of music costs on the N-DM goods to the above 40th of May, 905, including the agreement on the provision of music costs to the N-DM goods.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error of misapprehending the legal principles as to the agreement under the Fair Trade Act, or exceeding the bounds of the principle of free evaluation of evidence against experience and logic

2. Regarding ground of appeal No. 2

Whether a collaborative act restricts competition as stipulated under Article 19(1) of the Fair Trade Act should be determined by examining whether the collaborative act affects or is likely to affect the determination of price, quantity, quality, other terms and conditions of trading, etc. (see, e.g., Supreme Court Decisions 9Du6514, Mar. 15, 2002; 2010Du10471, Jun. 14, 2012). In particular, in cases where the collaborative act also causes competition promotion effects, other than the anti-competitive effect, the effect of restricting competition should be determined by comparing and balancing the two. Considering the market share of the enterpriser who has participated in the collaborative act, the degree of restricting competition among the participating enterprisers, and the effect of promoting competition, the effect of promoting competition should be comprehensively considered when comprehensively considering the increase in efficiency caused by the collaborative act leads to the increase in consumer welfare.

According to the reasoning of the judgment below, the court below held to the effect that the agreement in this case was involved in the 91% of the share based on the sound source sales, and that the competition through the terms and conditions of trading was restricted by the agreement in this case as the Non-DM goods are limited to two types, and that the possibility of consumer choice was restricted, and that the agreement in this case could be advanced at the market price of Non-DR products, but it did not have any room in light of the market situation at the time. Thus, the court below held that the competition promotion effect due to the agreement in this case did not exceed the anti-competitive effect.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to competition limitation of unfair collaborative acts.

3. Regarding ground of appeal No. 3

If the Fair Trade Commission imposes a penalty surcharge on an unfair collaborative act, and if it imposes a penalty surcharge, it has discretion to determine the specific amount of the penalty surcharge within a certain scope prescribed by the Fair Trade Act. Thus, if there are grounds such as misunderstanding of facts constituting the basis for the imposition of a penalty surcharge, or contrary to the principle of proportionality and equality, it constitutes deviation and abuse of discretionary power (see, e.g., Supreme Court Decisions 2000Du1713, Sept. 24, 2002; 2010Du10471, Jun. 14, 2012). In addition, where an unfair collaborative act imposes a penalty surcharge on an enterpriser, the penalty surcharge should be calculated based on the sales volume of the goods or services related to the period of the unfair collaborative act. The scope of relevant goods or services, which is the basis for the calculation of sales, should be determined on an individual, specific basis, taking into account the type and nature of the goods or services included in the agreement between the enterpriser who has conducted the unfair collaborative act, the purpose and possibility of substitution, and transaction area, trading counterpart, transaction phase, etc.

According to the reasoning of the judgment below, the court below determined that the Defendant’s calculation of the penalty surcharge in the calculation of the penalty surcharge was legitimate on the ground that the Defendant’s calculation of the penalty surcharge was lawful, based on the following: (a) the Plaintiff, while continuing to participate in the NAM meeting, was in a position to present positive opinions; and (b) the Defendant’s calculation of the penalty surcharge by deeming the agreement as subject to the penalty surcharge; and (c) the Defendant’s determination of the penalty surcharge through mandatory and discretionary adjustment was made; and (d) the Plaintiff’s calculation of the penalty surcharge was based on the influence of the demand for Non-DM products, which are the subject of the instant agreement, in relation to the substitution of the Non-DM products with Non-DM products; and (b) the instant agreement did not provide food source for the Non-DM products, which are the subject of the instant agreement, with the intention to maintain the competitiveness of DM products.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the misapprehension of legal principles as to deviation and abuse of discretionary power like the grounds of appeal.

4. Regarding ground of appeal No. 4

The scope of the corrective order under the Fair Trade Act should be determined by considering the language and text of the corrective order, the relevant statutes, and the reasons for the corrective order stated in the written resolution, etc.

According to the evidence duly admitted by the court below, it may be deemed that the Plaintiff’s corrective order itself prohibits the Plaintiff from supplying the sound source to online music service providers of the conditions that restrict the number of grains-DM products and consumer prices. However, according to the language and text of the corrective order of this case, the Fair Trade Act prohibits unfair competition, and the Fair Trade Act prohibits “agreement” that unfairly restricts competition. According to the written resolution of this case, the Plaintiff’s provision of sound source only to the Non-DRM products with other music service providers without supplying sound source, and the Plaintiff’s provision of sound source only to the Non-DRM products constitutes an unfair collaborative act under the Fair Trade Act.

In light of the aforementioned circumstances in light of the legal principles as seen earlier, the scope of prohibited acts under the instant corrective order is deemed to be “the Plaintiff’s act of jointly supplying Non-DM products and the sound source of conditions under which limits the prices of Non-DM products and consumer prices with other music service providers,” and thus, the lower court’s rejection of the Plaintiff’s assertion seeking the revocation of the instant corrective order is reasonable, and there is no violation of law

5. Conclusion

Therefore, the appeal is dismissed and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee In-bok (Presiding Justice)