[1] The meaning and method of determining “competitive competition” of the pertinent act that must be proved in order to presume the agreement of enterprisers pursuant to Article 19(5) of the former Monopoly Regulation and Fair Trade Act

[2] The case holding that the increase of the price at the same level at the same time by 10 steel products with 92% of the total steel output constitutes an act practically restricting competition in the steel market

[3] The standard for determining circumstances that can destroy presumption of agreement on unfair collaborative acts under Article 19(5) of the former Monopoly Regulation and Fair Trade Act

[1] Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [2] Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [3] Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004)

[1] Supreme Court Decision 99Du6514, 6521 decided Mar. 15, 2002 (Gong2002Sang, 903) / [3] Supreme Court Decision 2001Du5552 decided Dec. 12, 2003 (Gong2004Sang, 163) Supreme Court Decision 2004Du8323 decided Nov. 23, 2006 (Gong2007Sang, 55) Supreme Court Decision 2006Du10443 decided Feb. 29, 2008

Plaintiff 1, et al. (Law Firm Sejong, et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm Doll, Attorneys O Jae- Chang et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2004Nu14696 delivered on June 21, 2006

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315, Dec. 31, 2004; hereinafter “the Act”) provides that the “competitive restriction on competition” of the pertinent act, which must be proved in order to presume the agreement of enterprisers pursuant to Article 19(5) of the former Monopoly Regulation and Fair Trade Act, refers to the restriction on competition before the presumption of agreement. Thus, whether such act restricts competition exists or not should be determined by considering the market share of the enterpriser who engaged in the pertinent act, the characteristics and status of the goods and markets produced and sold by the enterpriser concerned, and the impact of the pertinent act on the competition of the market and the enterpriser concerned, etc., whether the act in question reduces competition in a particular business area and causes or threatens to cause impacts on the determination of price, quantity, quality, other terms and conditions of transaction, etc. (see, e.g., Supreme Court Decision 9Du6514, Mar. 15, 2002).

After compiling the adopted evidence, the court below acknowledged the facts as stated in its decision, and determined that the company of this case's price increase in the sales price of the iron industry, including the plaintiffs, was taking part in only 10 companies, and among them, the company of this case accounts for about 92% of the total output of the steel industry. The steel industry has an excessive market structure that is difficult to enter the market as a capital-intensive industry that can have large-scale production facilities in the early stage, and it is difficult to discriminate from quality because the manufacturing process is technically the same for each manufacturer and it is not easy to discriminate in quality, and competition is inevitable. In light of the fact that the company of this case's price reduction at the same time is likely to restrict the sales price to be decided through competition, which is the most important factor in the free market economy, and thus, the company of this case's price increase in the steel industry that can be lowered by competition, and the act of this case is practically restricted by competition.

In light of the above legal principles and records, the fact-finding and decision of the court below is just, and there is no error in the misapprehension of legal principles as to substantial competition limitation, omission of judgment or incomplete hearing, etc. as alleged in the grounds of appeal.

The Plaintiffs asserts to the effect that the substantial restriction on competition cannot be acknowledged due to price increase since the domestic steel market for the period of 2002 and 2003, where each of the instant price increase activities, continued excessive demand.

However, in light of the records, it is difficult to conclude that the domestic steel market was in excess of the demand at the time of each of the instant price discount acts, and such circumstance alone does not lead to the denial of substantial competition restriction. Therefore, the above grounds for appeal by the Plaintiffs are rejected.

2. Regarding ground of appeal No. 2

According to Article 19(5) of the Act, in determining circumstances in which enterprisers who are presumed to have agreed to engage in unfair collaborative acts may reverse presumptions of agreement on unfair collaborative acts, a reasonable determination shall be made in accordance with the trade norms by comprehensively taking into account the characteristics and status of the market in the field of trade of the goods in question, the characteristic and mode of the goods, the distribution structure, all and the internal and external impacts on the market price, the status of each individual company in the same field of trade, the status of the position and demand or price changes in the individual company's operating income, market share, etc., the legitimacy of the business judgment in light of the individual business conditions of the enterpriser, the actual state of direct exchange of opinions, such as meetings between the enterprises, etc., the degree of probability that the agreement may be reached even without consultation, the history of violation of the Act, and the background of the economic policy at the time (see, e.g., Supreme Court Decision 2001Du552, Dec. 12,

The court below determined that the company of this case maintains the unfair collaborative act of this case, including the plaintiff of this case, on the ground that each of the prices increase activities of the company of this case, including the plaintiff 2 corporation, was conducted independently according to the business judgment of each company without any agreement or mutual understanding, or it was not sufficient to acknowledge the reason for destruction of presumption, such as that the leading company merely copied the price increase. Rather, in light of the circumstances as stated in its reasoning, it can be inferred that there was an agreement on price increase among the company of this case, and even if it did not reach the specific and explicit degree of agreement, there was a little difference between five times of price increase factors on each business. However, although the company of this case did not directly or indirectly exchange opinions among the working parties of each company of this case, or collect information on price increase by using the other party's price increase information, it should be presumed that there was a price increase in the same degree as that of the company of this case.

In light of the above legal principles and records, the court below's fact-finding and determination are just and acceptable. Contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of presumption of collaborative acts against plaintiff 2 corporation and the violation of the rules of evidence.

3. As to the third ground for appeal

A. As to the completion of the violation period

With respect to the termination of the period of violating the Act, which serves as the basis for the calculation of the instant penalty surcharge, the Plaintiffs asserted that the act of violating the Act should be deemed terminated on May 12, 2003, when the price difference between the companies was commenced by changing the price of certain steel products from KRW 1,00 to KRW 4,00,000.

In light of the circumstances stated in its reasoning, the lower court rejected the allegation on May 12, 2003, on the grounds that it is difficult to recognize that the unfair collaborative act of this case was terminated.

In light of the records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the calculation of the period of violation or incomplete hearing.

B. As to the assertion of excessive penalty surcharge contrary to the principle of proportionality

In calculating the penalty surcharge against the plaintiffs, it cannot be deemed unfair that the defendant calculated the amount calculated by multiplying the sales amount by 1.5/100 for each company during the period in which an unfair collaborative act was conducted pursuant to the related Acts and subordinate statutes, and since the total market share in the steel market of the company of this case including the plaintiffs reaches about 92%, it is highly likely that an unfair collaborative act may occur, while it is highly necessary to ensure fair and free competition among the manufacturing companies like the plaintiffs in order to enhance corporate efficiency and supply the demand quantity at a lower price, it is highly necessary to ensure that each price reduction act of this case in which the plaintiffs actually restrict competition through the collaborative act in the steel market of this case is highly likely to be subject to criticism, and the degree of illegality such as each act in price reduction is not less than five times for more than one year, and all other circumstances revealed in the arguments of this case including the plaintiffs' past records of violation of the law, the court below determined that the penalty surcharge of this case against the plaintiffs is an abuse of discretionary power.

In light of the relevant statutes and the records, the above determination by the court below is just, and there is no error in the misapprehension of legal principles as to deviation and abuse of discretionary power or incomplete hearing in calculating penalty surcharges as alleged in the grounds of

4. Conclusion

Therefore, all appeals are 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 Hong-hoon (Presiding Justice)