Revocation of Restriction on Acquisition of Qualification

2. The costs of lawsuit shall be borne by the Plaintiff.

A. The Plaintiff is a corporation that runs the production and sales business of B (B; hereinafter referred to as “B”).

B. 17 companies (hereinafter referred to as the "cooperative of this case") including the plaintiff who produces B (the plaintiff, D Co., Ltd., E Co., Ltd., F Co., Ltd., GH Co., Ltd., Ltd., GH Co., Ltd., A Co., Ltd., Ltd., J., K Co., Ltd., Ltd., L Co., Ltd., Ltd., M Co., Ltd., Ltd., 00, P Co., Ltd., Q., Ltd., Q. and R., Ltd., are members of the cooperative of this case, and individual companies are defined as "stock company," and limited liability company.

C. On July 1, 2016, S and the managing director T, the representative director of the Plaintiff, in collusion with the executives of the instant association, the representative director of the instant association, or the bidding officer of the instant member company, etc. from July 1, 201 to May 24, 2016, under the Seoul Central District Public Prosecutor’s Office, found the Defendant guilty of having been sentenced to suspension of execution 360 years through a bid offer or 27 years in total by: (a) prior to the designation of a successful bidder (association or individual member companies) and a bidder; and (b) the other company was reflected in the bid price at a higher price than the pre-determined bid price; and (c) the other company was found guilty of having been sentenced to suspension of execution 36 years through a negotiated contract by allowing a specific company to convert the contract method by the initial restricted competition method (hereinafter referred to as “instant collaborative act”); and (d) 360 years through a bid offer or 365 years in total; and (e) 365 years through a bid bid offer.

D. On December 5, 2016, the Defendant issued a notice that the Plaintiff’s act of collusion constitutes “an act of collusion, etc.” under Article 8(3)3 of the Act on the Promotion of Purchase of Small and Medium Enterprise Products and the Development of Market Support,” and that the Plaintiff’s act of collusion constitutes “an act of collusion, etc.” and notified that the Plaintiff would cancel the qualification for participation in competitive bidding between small and medium enterprise proprietors and restrict the acquisition of the above participation eligibility for six months (from December 8, 2016 to June 7, 2017) (hereinafter “instant disposition”).

【Fact-finding without dispute over the ground for recognition, Gap evidence 1 through 3, Eul evidence 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Due to the characteristics of B that should supply a large number of models at a construction site, it is difficult for a small and medium enterprise owner to supply the entire quantity of B requested by a procuring entity alone, and a small and medium enterprise owner who is practically entitled to participate in bidding because of the higher transportation cost among the goods price is limited to neighboring enterprises in the construction site. For this reason, the members of the instant companies, including the Plaintiff, held a minimum consultation in the process of determining companies entitled to participate in bidding and sharing inventory quantity to prevent bid bid bid bid and to facilitate supply B. This was inevitable to prevent an influent and smooth supply of B, and the Plaintiff actively participated in the process, and thus, the Plaintiff cannot be deemed to have committed unjust acts, such as collusion under Article 8(3)3 of the Act on the Development of Agricultural Markets.

(b) Fact of recognition;

1) Competing B’s designation of competing products between small and medium enterprises was designated as competing products between small and medium enterprises pursuant to Article 6 of the Act on the Promotion of Purchase of Small and Medium Enterprises Products and Development of Market Markets, and was given an opportunity to participate in the bid procedures for B purchase ordered by public institutions, including the Defendant. In particular, since a public corporation or quasi-governmental institution was mandatorily entrusted to the Administrator of the Public Procurement Service pursuant to Article 44 of the Act on the Management of Public Institutions, the size of B’s government-funded market has increased since that time.

2) Organization of working-level council, representative council, etc.

A) Around April 2009, the instant member companies established the “Operational Rules of the B Working-level Council (hereinafter “Operational Rules of the instant case”) consisting of B manufacturers who are members of the instant association at the time, and consulted on the allocation of quantities and price maintenance in the supply market B including the private supply market among the members. As the residence of the instant association, the instant member companies regularly held the Working-Level Council (hereinafter “Working-Level Council”), the Representative Council (hereinafter “Working-Level Council”), the U committee, and the V council, etc. to exchange information on the monthly production and sales performance and inventory status of B between the members, and maintain the supply unit price in the government-funded market compared to other small and medium enterprises, and after completing the joint production plan, check whether the supply unit price in the instant government-funded market complies with the schedule as a method of implementation, and check the production and sales volume of B by implementing the schedule as a method of implementation.

B) All members of the instant working group including the Plaintiff participated in the instant working group, and among the working group councils of the instant working group, 10 companies including H, L, K, D, N, J, R, R, R, G, E (which were concurrently affiliated with the South-North Korean Council and the Seoul Metropolitan Area Council), and 4 companies including the Plaintiff, P,O, Q, etc. were affiliated with the Yong-Namnam Council, and 5 companies including W, M, F, G, and E were affiliated with the Yong-Namnam Council.

3) The method of the instant collusion

A) The instant member companies, with respect to the government-grade B purchase bid, failed to determine the level of successful bid price by taking into account the activity areas, production and inventory volume, bidding eligibility points, etc. of the members, and then failed to enter into a negotiated contract. The instant member companies, other than those scheduled to award a successful bid and those members, were able to enter into a negotiated contract by failing to participate in the relevant bidding, and by failing to enter into the relevant bid in the form of “free bid, single bid, and bid exceeding the estimated price” in order to enhance the basic amount publicly announced by the ordering agency.

B) (1) In the case of a bid of at least one billion won, a joint supply and demand company shall be organized, and the bid price shall be awarded in the name of the instant partnership, and the instant partnership shall be divided into the share of the joint supply and demand company, and the bid price shall be allocated to the relevant member. (2) In the case of a bid of at least one billion won, a joint supply and demand company shall be organized, a joint supply and demand company shall be selected to participate in the tender under the name of the principal agent. (3) In the case of a participation in the tender in the name of an individual company without forming a joint supply and demand company, a company located near the construction site shall be preferentially allocated due to the cost of transportation.

C) Examining the specific implementation process, in a case where a specific member participates in a tendering procedure individually, the first decision on whether to participate in the tendering procedure is made, and then the first decision on whether to participate in the final tendering procedure is made at the Consultative Council of the Working-Levels of this case, and if a specific member is determined by the Consultative Council of the Working-Levels of this case as a successful bidder for a specific case of supply B, the member requests a bidding by notifying the amount of his bid or the amount of his bid bid for a specific case of supply B among other member companies of this case by making a bid for a certain amount exceeding the bid price of the successful bidder. The member is a method of allowing the successful bidder to enter into the relevant contract by conducting a bidding at a price exceeding the bid price of the successful bidder.

D) The working-level council of the instant case allocated membership and quantity to be awarded a contract for each case of public announcement of tender, and delivered the allocated data to the employees of the instant association, and had the instant association manage the fair distribution of the contract amount by enterprise.

4) The main contents of the instant operational rules are as follows.

Article 5 (Duties of Council) of the Regulations for Operation of the Working-level Council shall deliberate, determine, and execute the following matters.1. 1. Coordination of the fair order system and the reasonable price through mutual consultation; 2. Determination of the order of priority in government-level and private bidding; 4. The execution of all acts for the stability of the B industry shall be carried out at the representative director's meeting; 1. The visit to the representative director at the time of detection of the violation shall be excluded from two times the number of violations at the government-level and private bidding; 2. Determination of the number of violations at the government-level and private bidding; 3. Determination of the order of priority in the government-level and private bidding; 4. Determination of the order of priority in the government-level and private bidding; and 1.2. Determination of the number of members at the council of members at the 2/3 or more; and 1.2. Determination of the number of members at the 1.2. Determination of the basic order of priority in consultation among the members at the 1.5th Council (3.1.2) and the 5th Council of members (1.1.2) announcement.

(2) On the basis of the basic order, the selection of the first first priority shop shall be granted the right of preferential bargaining in front of the basic order among the members who are bid (s) and first requested (s). The number of members shall also be equal to the same rule. (3) Each member shall have a duty to notify in the executive organ whether or not he/she has received a request for bidding (satisfy) within the prescribed time limit without any falsity, and shall be borne even if there is any disadvantage in the bidding (satisfy). (4) Each bidding (satisfy) first priority shop (satisfy) shall be able to be awarded a successful bid at the unit price determined by the Council, and shall be subject to sanctions when it takes place without prior consultation. (4-1) Each bidding (satisfy) first priority shop (satisfy) shall be determined and consulted on the price of bid, settlement conditions, etc. at sub-satisfys and shall be able to be replaced by the second two (satisfy) order (satisfy).

5) In the instant collaborative act, the Plaintiff, such as the Plaintiff’s successful bid, participated in the bid “price B of government-funded materials” between July 201 and May 24, 2016 in accordance with the method of the instant collaborative act, and was awarded a successful bid over 203 occasions. The instant cooperative participated in 169 biddings (total successful bid amount of KRW 281,264,025,739) which was awarded a successful bid by organizing a joint contractor and participating in 169 biddings (total successful bid amount of KRW 281,264,025,739) and received the right to supply B right equivalent to the corresponding amount. The amount allocated to the Plaintiff or directly awarded a successful bid by such method reaches KRW 69,824,629,

【Ground of recognition】 The fact that there has been no dispute, Gap 3, 9 through 12, Eul 1 through 3, the purport of the whole pleadings

C. Determination

1) Article 8(3) of the former Act on Promotion of Purchase of Small and Medium Enterprise Products and Support for Development of Market (amended by Act No. 13866, Jan. 27, 2016; hereinafter referred to as the “Distribution Support Act”) provides that “The Administrator of the Small and Medium Business Administration may cancel the participation eligibility or suspend it for a period not exceeding one year, where a small and medium enterprise participating in competitive bidding between small and medium enterprises falls under any of the following subparagraphs. The Administrator of the Small and Medium Business Administration may restrict the acquisition of participation eligibility within one year from the date of cancellation of the participation eligibility.”

2) Considering the following circumstances recognized by comprehensively taking into account the aforementioned facts and the purport of the entire pleadings, the instant collusion constitutes “unfair conduct, such as collusion,” under Article 8(3)3 of the Act on the Promotion of Development of Agricultural and Fishing Villages, which is an act detrimental to the fair enforcement of competition or the proper implementation of contracts.

Therefore, we cannot accept the Plaintiff’s assertion.

A) Since both domestic and foreign small and medium enterprises producing B are members of the instant association, and as B is designated as a small and medium enterprise or a supplier in the government-funded market and limited to a small and medium enterprise, in principle, competition occurs only among the members of the instant association. Thus, the instant collusion between the members of the instant association was in the form of external competition, but actually, it brought about the result that there was no competition in the government-funded market by excluding competition.

B) The Plaintiff asserted that the production of the instant member companies did not result in a rapid increase in demand by the instant member companies; the restriction on the production capacity of the instant member companies, which are small and medium entrepreneurs, would lead to producing a variety of specifications B in a timely fashion and supplying them to the demand source; due to transportation costs, only the participants in the construction site near the construction site subject to supply, in order to maintain B as a competitive item between small and medium entrepreneurs, the Plaintiff is merely a short-scale consultation in the process of sharing inventory and determining the participating companies for the purpose of preventing a bid bid in order to maintain B as a competitive item. However, in light of the number of collusions and the successful bid amount; the number of the members of the instant member companies, which led to the failure, concluded a free contract or adjusted the quantity of supply by a specific member company to establish a joint depreciation plan, as alleged by the Plaintiff, it is difficult to view that the instant collaborative act merely led to mutual compromise and compromise within the scope recognized by the general transaction norms to prevent the free competition in a proper line taking into account corporate profits into account.

C) In fact, the instant member companies, using the situation in which competition in the government-funded market was excluded in B, controlled the supply price of B in the government-funded market, and adjusted the production and shipment volume of government-funded B by formulating and implementing a joint production plan. The instant member companies, using methods such as non-tenders, single bidding, and price excess bidding, failed to directly affect the determination of the terms and conditions of transaction, such as allowing a specific member to enter into a free contract.

D) Also, even if considering the circumstances as alleged by the Plaintiff, the issues arising from such circumstances should be resolved through the normal process of competitive bidding, such as retenders through changes in the terms and conditions of trading after a failure to examine a certain number of times, and a negotiated contract in accordance with due process after a failure to examine, so the above bid collusion cannot be justified. The purpose of maintaining the designation of competitive products among small and medium entrepreneurs only is to ensure the interest of the members of the instant case.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Judge Lee Young-soo

Judges Kim Gin-han