202Nu13903 Demanding revocation of corrective orders, etc.

1. A stock company;

2. B;

3. C:

4. Stock companies D.

5. Stock company E.

6. Stock company F

7. Company G.

Fair Trade Commission

April 22, 2003

June 3, 2003

1. The plaintiffs' names are all dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

The part of the attached order and penalty surcharge payment order issued by the defendant to H on August 3, 2002 against the plaintiffs shall be revoked.

1. Details of the disposition;

A. The Plaintiffs are companies engaged in planning, producing, and selling sound records, and are business operators under Article 2 subparagraph 1 of the Monopoly Regulation and Fair Trade Act (hereinafter “the Monopoly Regulation and Fair Trade Act”).

B. Around April 2000, the Plaintiffs and individual entrepreneurs (which became J, hereinafter referred to as 'the Plaintiff, etc.’) agreed to sell their produced records to the Do and retail stores, instead of selling them to the Do and retail stores like the previous ones.

C. According to the above agreement, on April 27, 200, the Plaintiff et al. established K Co., Ltd. (hereinafter “K”) by investing the same shares, and entered into a music record sales agency agreement with K from April 28 to December 28 of the same year with each of the following contract provisions.

Current status of investment in K and conclusion of sound record sales agency contracts

A person shall be appointed.

A person shall be appointed.

Music Sales Agency Contract

Article 3(Terms of Contract)(b)A’s obligations “A” shall not engage in sound records transactions with any third party other than “B” without the consent of “B” (K). If either party suffers damage due to the breach of the contract of Article 5(Indemnification) or “B”, a party may claim compensation for damage and a penalty of 200% for such damage.

* Of the contract of the Plaintiff et al., Plaintiff D Co., Ltd. differs from the number of Article 4(b)(Article 3 4(b)(Article 4(2), Article 5(1), Article 5(2)(2), and Article 5(2)(3)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2)(2

D. After concluding each contract as above, the Plaintiff et al. sold the sound records it produced through K, barring special circumstances, and the sales amount of the sound records sold through K during the year from January 1, 2001 to December 31, 2001, out of the total sales amount of the sound records sold through K during the year from January 1, 200 to December 31, 201, constitutes 73.8 billion won and 67.9%.

Sale status of records by plaintiffs, etc.

(unit: 1,00,00 won, including VAT)

A person shall be appointed.

A person shall be appointed.

E. On August 3, 2002, the defendant deemed that the above act of the plaintiff et al. constitutes an unfair collaborative act under Article 19 (1) 4 of the Act, and the corrective order and penalty surcharge payment order under Articles 21 and 22 of the Act were decided by the plaintiff et al., and the contents of the corrective order and penalty surcharge payment order are the same as the attached corrective order and the statement of penalty surcharge payment order (hereinafter referred to as the "disposition of this case").

Evidence: Gap 1, Gap 6, Eul 7 through 29, 31 through 56, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Relevant statutes

Article 19 (Prohibition of Unfair Collaborative Acts) (1) No enterpriser shall agree with other enterprisers to jointly engage in any of the following acts that unfairly restrict competition (hereinafter referred to as "unfair collaborative acts") by contract, agreement, resolution, or any other means:

4. An act restricting the area of trading or trading partners;

The Fair Trade Commission may, when there exists an unfair collaborative act in violation of the provisions of Article 19, order the enterpriser concerned to discontinue such an act, to publish a violation of the Act, or to take other corrective measures.

Article 22 (Prohibition of Unfair Collaborative Acts) (1) The Fair Trade Commission may impose upon any enterpriser who has conducted unfair collaborative acts in violation of Article 19 a penalty surcharge not exceeding the amount equivalent to five percent of the turnover determined by Presidential Decree. The proviso is omitted. Article 55-3 (Imposition of a penalty surcharge) (1) The Fair Trade Commission shall take into account factors falling under each of the following subparagraphs in imposing a penalty surcharge under this Act:

1. Details and severity of the violation;

2. Duration and frequency of the violation;

3. Scale, etc. of profits acquired by the violation.

(3) The criteria for imposing penalty surcharges under paragraph (1) shall be prescribed by Presidential Decree.

(1) Reference in Article 22 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act to “the turnover determined by the Presidential Decree” in the main sentence of Article 22 of the Act shall be construed to include the average turnover of the enterpriser concerned for the immediately preceding three business years (hereinafter referred to as “standard turnover for imposing penalty surcharges”).

(2) Other matters necessary for calculating the standard turnover for imposition of penalty surcharges shall be determined by the Fair Trade Commission.

(1) The classification standards for penalty surcharges under Articles 6, 17, 22, 24-2, 28, 31-2 and 34-2 of the Act shall be as shown in the attached Table 2.

(2) The amount calculated pursuant to paragraph (1) may be increased or decreased, taking into account the matters falling under each subparagraph of Article 55-3 (1) of the Act.

(3) Except as otherwise expressly provided for in this Decree, detailed standards necessary for imposing penalty surcharges shall be determined and publicly notified by the Fair Trade Commission.

[Attachment 2] Criteria for Imposition of Penalty Surcharges by Category of Violations (Related to Article 61(1))

A person shall be appointed.

(b) Whether it constitutes an unfair collaborative act;

(1) According to Article 19(1) of the Act, the requirement for the establishment of an unfair collaborative act under Article 19(1)4 of the Act requires a joint agreement between two or more business entities to jointly “act restricting transaction areas or transaction partners,” and that such agreement should be limited unfairly.

(2) As to whether there exists an agreement among the plaintiffs et al. on the joint action of Article 19 (1) 4 of the Act as to whether there exists an agreement on the joint action of the plaintiff et al., as seen in the above 1-B, the plaintiff et al. agreed to sell only the records that they produced and sold to the previous wholesale and retail, etc., through K. Thus, it constitutes an agreement that restricts the transaction partner jointly. Accordingly, as seen in the above 1-C, in the case of a music record sales agency contract with those other than the above KR, it shall be deemed that the plaintiff et al. concluded a music record sales agency contract with the plaintiff et al. to compensate for damages, thereby granting the binding force as to the above agreement between them as well as between them.

(3) Restriction on competition

Next, as to whether the above agreement of the plaintiff et al. constitutes an act of unfairly restricting competition, the plaintiff et al. is a business operator who produces and sells the records, and the above agreement is related to the sale of the records, so the related market is a "record sales market". In full view of the overall purport of the arguments in the above Eul 3-7 through 14, 26, 30, and 31, the total sales amount of the records in 2001 to 10.66 billion won and the total sales amount of the records in Korea are 53.9% of the total sales amount of the records in 208.6 billion won, and the sales amount of the records sold by the plaintiff et al. through K accounts for 3.6% of the total sales amount of the records in 7.8 billion won and 7.3.6% of the total sales amount of the domestic records sales amount of the records, the plaintiff et al. is likely to uniformly sell the records to K and pay the new sales amount of the records to the plaintiff et al.

As to this, the plaintiffs argued that the above agreement was not a "act of unfairly restricting competition" because they had a legitimate purpose, although they did not obtain the defendant's authorization under Article 19 (2) of the Act as necessary to exclude the application of Article 19 (1) of the Act in making the above agreement, and the motive of the agreement of the plaintiffs, etc. was the process of the above agreement reached by the plaintiffs, etc., and it did not have any legitimate purpose as argued by the plaintiffs, etc., but rather, the plaintiffs et al. established a distribution company on the basis of their high share in the music market and established a distribution company on the basis of their own, and made the distribution order to overcome the truth of the domestic music records distribution structure.

(4) Sub-determination

Thus, the above agreement of the plaintiff et al. is an unfair collaborative act under Article 19 (1) 4 of the Act.

C. Whether an order to pay penalty surcharges is lawful

Although the Plaintiff et al. cannot be exempted from liability for unfair collaborative acts, the Plaintiff et al. asserted that the above agreement was unlawful, taking into account the circumstances such as the fact that it was derived from pure motive for improving the structure of the Korean sound records market, etc.

In full view of the statement in Eul 3-4, considering the purpose of achieving the imposition of a penalty surcharge within the maximum amount of the penalty surcharge under Article 22 of the Act and Articles 9 and 61 of its Enforcement Decree, and the reason under Article 55-3 (1) of the Act, namely, the content and degree of the violation, the duration and frequency of the violation, and the size of profits acquired from the violation (as stated in Article 5-3 of the Act, net income for the year 2001 of K seems to exceed 1.485 million won according to the entry in Article 1-3 of the Act, the net income for the year 2001 of K seems to exceed 1.485 million won) of the plaintiff et al., it can be acknowledged that the amount calculated by multiplying the total amount of the above penalty surcharge by 1% can be recognized as imposing a penalty surcharge, and there is no counter-proof evidence. Thus, the above amount of the penalty surcharge shall be calculated properly pursuant to the above Acts and subordinate statutes and the defendant's detailed criteria for imposing a penalty surcharge (the Fair Trade Commission Notice No.202-1 of January 2, 2, 20002).

3. Conclusion

Therefore, the disposition of this case is lawful, and the plaintiffs' claim of this case seeking its revocation is dismissed as it is without merit, and it is so decided as per Disposition.

The presiding judge, judge and judge.

Judges Yang Yang-ju

Judges subordinate of the Supreme Court

A person shall be appointed.