2016 Gohap60195. Revocation of restrictions on qualifications to participate in competitive tendering process open only to small and medium enterprises.

1.2 1.2

The Small and Medium Business Administration

October 13, 2016

November 17, 2016

1. The plaintiff's claim is dismissed.

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

On March 31, 2016, the defendant revoked a disposition to confirm an enterprise subject to restrictions on participation in competitive tendering process open only to small and medium entrepreneurs.

1. Details of the disposition;

A. The Plaintiff is a small and medium business entity under Article 2 of the Framework Act on Small and Medium Enterprises, which runs the business of manufacturing and selling ready-mixeds.

B. The Plaintiff issued a small and medium enterprise confirmation certificate (hereinafter “small and medium enterprise confirmation certificate”) under 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; hereinafter “former Act on the Support of Market Support”) from the Defendant, and the public institution has tendered an agreement to supply ready-mixed which places an order by means of “competitive bidding between small and medium enterprises” under Article 7 of the former Act.

C. On May 3, 2013, the Defendant conducted a fact-finding survey for companies that participated in competitive tendering process open only to small and medium entrepreneurs, and determined that the Plaintiff falls under Article 8-2(1)2 of the former Act on the Promotion of Development of Agricultural and Fishing Villages, Article 9-3 subparag. 2(c) of the Enforcement Decree of the Act on the Promotion of Purchase of Small and Medium Enterprise Products, and Article 9-3(2)3(c) of the Act on the Promotion of Development of Agricultural and Fishing Villages (hereinafter “Enforcement Decree of the Act on the Promotion of Development of Agricultural and Fishing Villages”), and requested a public institution to present its opinion on May 14, 2013.

D. After that, on June 28, 2013, the defendant sent a public document to a public institution, accompanied by the list of enterprises subject to the restriction on participation in bidding through the competition system between small and medium enterprises and small and medium enterprises that are ordered in the future, to the effect that the defendant restricted their participation in bidding. At that time, if a company subject to the restriction on participation applies for the issuance of a small and medium enterprise's confirmation through the public purchase information network (www. S.go.K.), the defendant notified the plaintiff that the company falls under the category of the enterprise subject to the restriction on participation in competitive bidding among small and medium enterprises pursuant to Article 8-2 of the Act on the Assistance to Small and Medium Enterprises by referring to the confirmation that it is the enterprise subject to the restriction on participation in competitive bidding among small and medium enterprises pursuant to Article 8-2 of the Trademark Act (hereinafter referred to as "the notification on restriction on participation").

A person shall be appointed.

E. On March 31, 2016, the Defendant indicated that the term of validity to the Plaintiff is from April 1, 2016 to March 31, 2017, and that the purpose of use is "for public institutions bidding (for small and medium enterprises subject to restriction on participation in competitive bidding among small and medium enterprises)," and issued a confirmation document of small and medium enterprises (hereinafter referred to as "written confirmation of confirmation of small and medium enterprises") (hereinafter referred to as "disposition of this case") stating that the Defendant is a company subject to restriction on participation in competitive bidding between small and medium enterprises pursuant to Article 8-2 of the Act on Promotion of Purchase of Small and Medium Enterprise Products and Support for Development of Market.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 8-2 (1) 2 of the Act on the Promotion of Purchase of Small and Medium Enterprise Products and the Support for Development of Market Support (hereinafter referred to as the “Act”), which are the basis of the instant disposition, and Article 9-3 subparagraph 2 (c) of the Enforcement Decree of the Act on the Support of Development of Market based on the delegation from the legal provisions of this case (hereinafter referred to as the “Enforcement Decree provision of this case”) are in violation of the Constitution for the following reasons. Therefore, the instant disposition based on the unconstitutional Act and the Enforcement Decree of the Act is also unlawful.

① The instant legal provision determines whether to restrict participation in the tendering procedure according to whether it is in a parent-subsidiary relationship with a large company, which is in violation of the principle of prohibition of comprehensive delegation, without entirely embodying the meaning of a parent-subsidiary relationship.

② The Enforcement Decree of the instant case sets the index of dominant or subordinate relationship in cases where a large enterprise lends its assets equivalent to the amount exceeding its total number of outstanding stocks or total amount of investment (referring to the total amount of assets in cases of a private enterprise) to, or guarantees its debts to, a small and medium enterprise. However, based on the inappropriate standard, it infringes the Plaintiff’s freedom of business in violation of the principle of excessive prohibition by excluding a specific small and medium enterprise

③ The enforcement decree of this case violates the Plaintiff’s right to equality by discriminating between a large enterprise and a small-medium enterprise that leased its assets from a large enterprise without reasonable grounds, although there is no substantial difference between the small-medium enterprise and other small-medium enterprises.

④ This case’s enforcement decree also violates the contents and intent of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises (hereinafter “Mutual Cooperation Act”).

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on this safety defense

A) The defendant's main defense

① The instant confirmation document is confirmed by the Plaintiff as a small and medium enterprise, and even if there is a notice of restriction on bidding in the said confirmation document, it is only impossible to confirm whether there is a restriction on participation in bidding pursuant to the Act on the Support of Development of Agricultural and Fishing Villages, and it does not have any legal effect that affects the Plaintiff’s specific duty of rights by the said notice document. Therefore, the said confirmation is not a

② According to Article 8-2(1) of the Act on the Development of Market Support, a small and medium enterprise is a public institution that is not the Administrator of the Small and Medium Business Administration. Therefore, the instant lawsuit is unlawful since it was filed against the Administrator of the Small

③ The instant confirmation document merely serves as the head of the public institution in charge of bidding restrictions on participation in bidding, and there is no legal interest to dispute the instant disposition against the Plaintiff. Even if the instant disposition is recognized as an administrative disposition, it is possible to resolve the dispute at once by disputing the restriction on participation in competitive bidding conducted by the public institution. Therefore, there is no benefit to dispute the instant disposition itself independently.

B) Determination

(1) Whether it is subject to appeal litigation

The issue of whether a certain act of an administrative agency can be the subject of an appeal cannot be determined abstractly and generally. In a specific case, an administrative disposition is an enforcement of law with regard to specific facts conducted by an administrative agency as the subject of public authority, which directly affects the rights and obligations of the people. The decision should be made individually by taking into account the content and purport of the relevant Act and subordinate statutes, the subject, content, form, and procedure of the act, the actual relation between the act and disadvantage suffered by interested parties, such as the other party, and the principle of administration by the rule of law, the attitude of the administrative agency and interested parties related to the pertinent act, etc. (see, e.g., Supreme Court en banc Decision 2008Du167, Nov. 18,

In full view of the following circumstances recognized by the regulatory structure and contents of the relevant statutes, such as the Act on the Development of Market Support, etc., it is reasonable to view the instant disposition as an administrative disposition subject to appeal litigation:

(1) According to Articles 7(1), 8(2), and 8-2(2) of the Act on the Development of Agricultural and Fishing Villages, a small and medium enterprise owner who intends to participate in a competitive tendering procedure involving products ordered by the head of a public institution and whose sales expansion is deemed necessary by a small and medium enterprise owner as a direct production and provision shall be confirmed by the Administrator of the Small and Medium Business Administration as being subject to participation eligibility or participation restriction on competitive tendering procedures. If such confirmation is not obtained or is confirmed as being subject to participation restriction on competitive tendering procedures, a public institution may not participate in all competitive tendering procedures ordered by the public institution. Accordingly, the Defendant’s act of confirmation as above limits the rights and

② Article 8-2(1) of the Act on the Development of Agricultural and Fishing Villages provides for the grounds for restrictions on participation in competitive tendering process open only to small and medium enterprises and the head of a public institution should restrict participation of small and medium enterprises in either of them. At the same time, Article 8-2(2) of the same Act provides that a small and medium enterprise who intends to participate in competitive tendering process open only to small and medium enterprises shall apply for verification as to whether it is subject to restrictions on participation in competitive tendering process open only to small and medium enterprises, and the Defendant shall confirm such grounds. As such, the Act on the Development of Agricultural and Fishing Villages allows public institutions to place restrictions on participation in competitive tendering process open only to small and medium enterprises in certain cases, and the Defendant is obliged to confirm whether the relevant small and medium enterprise is subject to restrictions on participation in competitive tendering process open only in the process of the Defendant’s determination as to whether it is subject to restrictions on participation in competitive tendering process open only to the public institution that has given notice of the disposition of participation in competitive tendering process.

③ Article 6(1) [Attachment 2] of the Guidelines for Confirmation of Small and Medium Enterprises, Small and Medium Enterprises, Small and Medium Enterprises, and Disabled Enterprises, which are published by the Small and Medium Business Administration based on Article 8-2(2) of the Act on the Development of Market Support (hereinafter “Notice of this case”), provides that if a company subject to restriction on participation falls under a company subject to restriction on participation, a small and medium enterprise’s confirmation shall be noted that it is a company subject to restriction on participation in competitive tendering process with regard to small and medium business proprietors pursuant to Article 8-2 of the Markets Support Act, and that it is deemed that the evaluation of whether the defendant is subject to restriction on participation in competitive tendering process has been made in the form of “verification”

④ A small and medium business proprietor who was confirmed by the Defendant as subject to a restriction on participation in a competitive tendering procedure may be deemed to have a legal unstable state that he/she would be unable to participate in the competitive tendering procedure at that stage. Therefore, it is appropriate for the principle of rule of law to allow a small and medium business proprietor to escape from the risk of the future by having the small and medium business proprietor evadeing the legality of the verification act at the said stage, and by getting him/her participate in the competitive tendering procedure, going further

(2) As to the qualification of the defendant

As seen earlier, the instant disposition directly affects the rights and obligations of the people, and constitutes an administrative disposition subject to an appeal litigation. The Plaintiff legally filed the instant lawsuit seeking revocation against the Defendant, who is the principal agent of the instant disposition. Accordingly, the Defendant’s aforementioned defense is without merit.

(3) Whether there is a benefit of lawsuit

Since a determination as to which small and medium enterprises are subject to restrictions on competitive participation is made by the Defendant, a dispute cannot be resolved as a result of the creation of a dispute against a public institution that only becomes subject to restrictions on competitive participation according to the Defendant’s disposition in this case, that only contests the disposition of restrictions on competitive participation. Therefore, the Plaintiff is the legal interest, i.e., the legal interest of the Defendant’s claim for cancellation of the disposition in this case, and therefore,

2) Determination on the merits

A) Whether it violates the principle of prohibition of blanket delegation

Article 75 of the Constitution of the Republic of Korea provides that "the President may issue Presidential Decrees with regard to the matters for which the scope is specified and delegated by the Act" so that delegation may be based on the Constitution of the Republic of Korea and at the same time set the specific scope of delegation. This is a special provision that is embodied in administrative legislation in the principle of clarity (see, e.g., Constitutional Court Order 2004Hun-Ga29, Apr. 26, 2007). On the other hand, in the case of delegated legislation, the limitation is predictability in the case of delegated legislation. This means that if the basic matters of the contents and scope already prescribed by the Presidential Decree are specified in the Act, all of the relevant specific provisions should not be determined with a comprehensive and systematic basis, and if such predictability is not determined with the relevant specific provisions, it shall be determined with an organic and systematic basis, and it shall be determined with the whole of the relevant provisions in accordance with the specific and individual nature of each applicable law, and it shall be determined with the Constitutional Court Decision 2009Hun-Ba28, Feb. 2016.

In full view of the following circumstances recognized by comprehensively taking account of the structure and contents of the Act on the Development of Agricultural and Fishing Villages, the legal provision of this case took a legislative method that provides for the contents of the relevant lecture and provides for partial supplement by the Presidential Decree, and thus, it can be predicted through the legal provision of this case that can be supplemented by the Presidential Decree. Therefore, the legal provision of this case cannot be deemed to violate the Constitution by meeting the clarity requirements derived from the rule of law, which is the basic principles of our Constitution. Accordingly, the Plaintiff’s assertion on this part is rejected.

① The instant legal provision was newly established on June 1, 2012 by Act No. 11462, which was amended to promote fair competition between small and medium enterprises and small and medium enterprises. This aims at facilitating fair competition by restricting participation in competitive bidding between small and medium enterprises for fair competition between small and medium enterprises and small and medium enterprises. However, since the types and forms of participation in bidding between large and medium enterprises that are in a relationship that interferes with fair competition between large and medium enterprises and small and medium enterprises, which are acts that undermine fair competition between large and medium enterprises, are very diverse, the issue of whether to treat certain small and medium enterprises as "an enterprise in a relationship that is controlled or subordinate to a large and medium enterprise" should vary depending on the actual state and status of a specific enterprise based on the overall economic situation of the State, and it is impossible or inappropriate to require the National Assembly to provide all detailed

② Meanwhile, Article 7(1) of the Act on the Development of Markets stipulates that "the head of a public institution shall conclude a procurement contract for competing products through limited competitive bidding for only small and medium enterprises or designated competitive bidding among small and medium enterprises," which restricts only small and medium enterprises to participate in the competitive bidding for small and medium enterprises, and restricts a large enterprise or a small and medium enterprise that can be deemed a large enterprise to participate in the competitive bidding for small and medium enterprises only.

③ The instant legal provisions clearly stipulate the requirements that the relevant small and medium enterprise is in a dominant or subordinate relationship with the large enterprise in order to restrict the participation in competitive bidding by those operating small and medium enterprises that undermine fair competition between small and medium enterprises and small and medium enterprise proprietors. However, in order to respond flexibly to the changing economic situation, administrative demand, etc., only the standard of determining the control or subordinate relationship is delegated to

④ Article 8-2(1) of the Act on the Development of Market Markets stipulates that the restriction on participation in the competitive bidding by small and medium enterprises in relation to large enterprises or their parent-subsidiary relations shall be placed for the fair competition of competitive bidding. In light of this, the major principles to be supplemented by the Presidential Decree through the legal provisions of this case can be predicted that the ‘small and medium enterprises in relation to large enterprises or their parent-subsidiary relations' will be subject to the restriction on participation in competitive bidding to the extent that it would prejudice the fair competition of competitive bidding.

(5) In addition, Article 2 subparagraph 1 of the Act on Support for Development of Agricultural and Fishing Villages stipulates small and medium entrepreneurs as small and medium enterprise owners under Article 2 of the Framework Act on Small and Medium Enterprises

Meanwhile, Article 2 of the Framework Act on Small and Medium Enterprises provides for the scope of small and medium enterprises in detail, while Article 3-2 of the Enforcement Decree of the Act on the Development of Markets provides for the meaning and criteria of the control or subsidiary relationship of related enterprises in detail. According to the structure and contents of the relevant statutes, it seems that the outline of the control or subsidiary relationship with large enterprises can be sufficiently predicted based on the meaning of the small and medium enterprise in the

(6) On the other hand, Article 9-3 of the Enforcement Decree of the Act on the Promotion of Development of Agricultural and Fishing Villages (amended by Presidential Decree No. 24492, Apr. 3, 2013; Presidential Decree No. 24492, Apr. 2, 2013) was newly prepared to determine matters to be considered in determining the scope of persons to whom competitive participation is restricted after the establishment of the legal provision of this case, and whether to recognize the restriction on participation in competitive bidding. Article 9-3 of the Enforcement Decree of the Act on the Promotion of Development of Agricultural and Fishing Villages provides that "where a representative, largest shareholder, or largest shareholder of a large enterprise defined in Article 2 subparagraph 2 of the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises concurrently holds office as an executive officer of a small or medium enterprise or is dispatched as an executive officer of a large enterprise," "where a large enterprise lends assets equivalent to the total number of its outstanding stocks or its total amount of investment (referring to total amount of assets in cases of an individual business) or guarantees its debts, etc."

B) Whether it violates the principle of excessive prohibition and infringes on freedom of business

In full view of the following circumstances recognized by comprehensively taking account of the structure and contents of the Act on the Development of Market Support, it is difficult to deem that the legal provisions of this case or the Enforcement Decree provisions of this case violate the excessive prohibition principle, thereby infringing on the Plaintiff’s freedom of business. Accordingly, the Plaintiff’s assertion on

(1) Appropriateness and adequacy of legislative purpose and method

As seen earlier, the legal provisions of this case or the Enforcement Decree of this case aim to promote fair competition by restricting participation in competitive bidding between small and medium enterprises and small and medium enterprises for fair competition between small and medium enterprises. Therefore, the legitimacy of legislative purpose is recognized.

However, if a small and medium enterprise in a dominant or subordinate relationship with a small and medium enterprise in which only a small and medium enterprise is participating, it is practically going against the legislative purpose of the Act on the Promotion of Development of Development of Development of Industry that contributes to the enhancement of competitiveness and business stability of a small and medium enterprise by facilitating the purchase of products of small and medium enterprises and supporting markets, as well as to the participation of a small and medium enterprise in a competitive bid between small and medium enterprise and small and medium enterprise. From this point of view, restricting participation in the competitive bidding between a large and medium enterprise and a group of enterprises in a dominant or subordinate relationship is an effective and appropriate means to achieve the above legislative purpose.

(2) the minimum of damage and balance of legal interests;

According to the structure and content of the instant legal provision, the following circumstances are recognized.

① As seen earlier, the instant legal provision or the Enforcement Decree of the instant case aims to promote fair competition by restricting participation in the competitive bidding between small and medium enterprises for fair competition between small and medium enterprises and small and medium enterprises in a dominant or subordinate relationship with a large and medium enterprise. In light of the enhancement of competitiveness of small and medium enterprises through fair competition between small and medium enterprises and promoting fair competition, it is difficult to deem that the participation of small and medium enterprises in competitive bidding among small and medium enterprises substantially deemed large enterprises is excessively infringed upon their interests.

② The instant provision, which forms the basis for determining a parent-subsidiary relationship with the Plaintiff, provides that “Where a large enterprise lends assets or guarantees debts corresponding to the amount exceeding its total number of issued stocks or total investments (referring to the total amount of assets in cases of an individual business) to a small-medium enterprise.” This provision does not simply provide for determining a parent-subsidiary relationship, but merely provides for clear criteria by limiting assets equivalent to the amount exceeding its total number of issued stocks or total investments in a small-medium enterprise to a case where it lends assets equivalent to the amount exceeding its total issued stocks

(3) In particular, in cases falling under the above provisions, a small and medium enterprise owner who borrows assets equivalent to the amount exceeding its total number of outstanding stocks or total investment amount from a large enterprise can be deemed to have actually used the assets of a large enterprise as they are. Therefore, if a small and medium enterprise owner participates in a competitive tendering procedure open only to small and medium enterprises which correspond to a large enterprise, the small and medium enterprise owner may be able to become able to benefit to himself

In full view of these circumstances, even if the Plaintiff is unable to participate in competitive tendering process open only to small and medium enterprises pursuant to the legal provisions of this case or the Enforcement Decree of this case, there is no clear other means that infringe the Plaintiff’s freedom of business, etc. while attaining the legislative purpose, and thus, the legal provisions of this case or the Enforcement Decree of this case have the minimum extent of damages. In addition, an enterprise in a relationship of control or subsidiary with a large enterprise due to the legal provisions of this case or the Enforcement Decree of this case is unable to participate in the procurement contract on the products ordered by the head of public institution (i.e., goods and services less than the amount publicly notified by the Minister of Strategy and Finance. see Article 4 of the Act on the Support of Development of Agricultural and Fishing Villages) and there is no obstacle to the public procurement contract of the part not corresponding thereto or private sector’s private economic activities. Thus, the private interest infringed by the legal provisions of this case or the Enforcement Decree of this case’s legal provisions of this case cannot be deemed to be more than public interest to promote balanced national economic development through the improvement of competitiveness and business stability.

C) Whether the right to equality is violated

In light of the legal provisions of this case or the Enforcement Decree of this case, a small and medium enterprise that falls under the legal provisions of this case or the provisions of this case, i.e., a small and medium enterprise that is in a dominant or subordinate relationship with a large enterprise by leasing assets exceeding the total number of issued stocks or total investments (referring to the total amount of assets in the case of an individual enterprise) of the relevant small and medium enterprise, is practically participating in the above competitive bidding, and there is a significant difference between the large enterprise and the small and medium enterprise that do not. Therefore, it cannot be deemed that the legislators’ restriction on the participation in competitive bidding of small and medium enterprise among the provisions

D) Whether there is a conflict with the Act on Collaborative Cooperation

According to Article 1 of the Collaborative Cooperation Act, the purpose of the Act is to enhance the competitiveness of large enterprises and small-medium enterprises by publicly announcing the win-win cooperation between large enterprises and small-medium enterprises, and to achieve their shared growth by resolving the polarization between large enterprises and small-medium enterprises, thereby laying the foundation for sustainable growth of the national economy. In addition, according to Article 2 subparagraph 3 of the Collaborative Cooperation Act, win-win cooperation means joint activities conducted between large enterprises and small-medium enterprises, between small-medium enterprises, or between commissioning enterprises and commissioned enterprises in order to increase their mutual interests in the fields

On the other hand, the legal provision of this case aims to promote fair competition by restricting participation in competitive bidding between small and medium enterprises and small and medium enterprises for fair competition between small and medium enterprises.

As can be seen, the Act on Collaborative Cooperation aims to promote mutual interests through collaborative cooperation, on the premise that it is divided into large enterprises and small-medium enterprises. It is difficult to view the instant legal provisions or the instant Enforcement Decree provisions to prevent acts that undermine fair competition by participating in competitive bidding between small and medium enterprises and small-medium enterprises. Rather, it appears that the fair competition between small and medium enterprises is guaranteed through the instant legal provisions or the instant Enforcement Decree provisions, thereby enhancing the competitiveness of small and medium enterprises. Furthermore, the instant legal provisions or the instant Enforcement Decree provisions are consistent with the legislative purpose of the Act on Collaborative Cooperation, inasmuch as interests between small and medium enterprises, or between large and medium-sized enterprises can be promoted.

E) Sub-decision

Therefore, the Plaintiff’s assertion that the legal provision of this case or the enforcement decree of this case is unconstitutional cannot be seen as being unconstitutional, and that the disposition of this case is unlawful based on the legal provision, etc. is unconstitutional.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

The presiding judge, Yoon-sung

Judges Kim Jae-han

Judges Civil Service Bureau

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.

A person shall be appointed.