[1] In a case where an appeal is filed against a disposition by the Fair Trade Commission and the purport of the appeal is added, the standard point of time to determine whether the period for filing the appeal against the disposition is complied with (i.e., the time of filing a lawsuit seeking cancellation of the previous disposition (when an application for addition or modification of the claim is filed) / In a case where, after filing a lawsuit seeking cancellation of the previous disposition, the previous disposition was added to the claim seeking cancellation of the previous disposition, but the previous disposition becomes extinguished as a provisional disposition, and the purport of seeking cancellation of the subsequent disposition is also included in the purport of seeking cancellation of the previous disposition, the standard point

[2] In order for a high-ranking officer to be involved in the act of a violation that affects the contents and degree of the violation, which is the reason for the calculation of penalty surcharges, under the Monopoly Regulation and Fair Trade Act, which is the reason for the imposition of penalty surcharges under the former Public Notice on the Detailed Criteria for Imposition of Penalty Surcharges, whether the officer should be involved in the act of violation or directly in the act of violation to the extent that the act of a high-ranking officer, which is the reason for the imposition of penalty surcharges under the Monopoly Regulation and Fair Trade Act, constitutes a reason for different evaluation on the intent, nature and circumstances of the violation (affirmative)

[1] According to Article 54(1) of the Monopoly Regulation and Fair Trade Act, when a person intends to file a lawsuit of dissatisfaction against a disposition by the Fair Trade Commission pursuant to the said Act, he/she shall file the lawsuit within 30 days from the date of receiving the notice of disposition or the date of receiving the certified copy of the written adjudication

Where a claim is added, it appears that a new lawsuit is filed at the time of addition of the purport of the claim. Therefore, compliance with the time period for filing a lawsuit against the additional purport of the claim should be determined based on the time when an application for addition or modification of the purport of the claim

However, even in cases where a lawsuit seeking cancellation of the preceding disposition was filed and the purport of seeking cancellation of the subsequent disposition is added, if the preceding disposition is a kind of provisional disposition scheduled for cancellation of the preceding disposition, and where there is a subsequent disposition, the preceding disposition is extinguished by absorption of the preceding disposition, and if it can be deemed that the ground for illegality alleged to exist in the preceding disposition also exists, and the purport of seeking cancellation of the subsequent disposition is also included in the subsequent disposition, the period of filing the lawsuit seeking cancellation of the preceding disposition shall be determined at the time of filing the first lawsuit seeking cancellation of the preceding disposition.

[2] According to Article 55-3(1)1 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”), the Fair Trade Commission shall determine a penalty surcharge in consideration of the content and degree of a violation, etc., and Article 61(1) [Attachment 2] 2(c) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) upon delegation under Article 55-3(5) of the Fair Trade Act provides that a penalty surcharge shall be adjusted in accordance with the criteria determined and publicly notified by the Fair Trade Commission, taking into account the following factors: (a) the content and degree of a violation, which affect the matters under each subparagraph of Article 5-3(1) of the Fair Trade Act, such as “the intention or negligence of the violator, nature of the violation, and circumstances.” Based on the foregoing, the former public notice on the detailed criteria for imposing a penalty surcharge (amended by the Fair Trade Commission No. 2014-7, May 30, 2014) (hereinafter “public notice”) provides that a penalty surcharge may be aggravated within the scope of 10/10%.

In order to deem that the act of a senior officer’s involvement in the act constitutes grounds for calculating the penalty surcharge under the Fair Trade Act, that is, the act of a senior officer’s involvement in the act constitutes grounds for different evaluation of “the act of a violation enterpriser’s intentional act, nature and circumstances of the violation,” which affect the contents and degree of the violation, the officer may be deemed to have led, planned, or directly involved in the act beyond the level of indirectly involved, such as the report of the violation

Therefore, the Fair Trade Commission’s imposition of penalty surcharges on the ground that the high-ranking officer was “direct involvement in a violation,” and applied the above provision to increase the penalty surcharges. However, if there are special circumstances, such as the fact that the involvement act was indirectly engaged in the act of not merely in receipt of a report on the violation, the imposition of penalty surcharges calculated as such constitutes a deviation or abuse of discretionary power,

[1] Article 54(1) of the Monopoly Regulation and Fair Trade Act / [2] Article 55-3(1)1 and (5) of the Monopoly Regulation and Fair Trade Act, Article 61(1) [Attachment Table 2] 2(c) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act

[1] Supreme Court Decision 2004Du7023 Decided November 25, 2004 (Gong2005Sang, 44), Supreme Court Decision 2010Du7796 Decided November 29, 2012 (Gong2013Sang, 77), Supreme Court Decision 2011Du2754 Decided July 11, 2013 (Gong2013Ha, 1488), Supreme Court Decision 2015Du45953 Decided July 27, 2016 (Gong2016Ha, 1256) / [2] Supreme Court Decision 2016Du35199 (Gong2017Sang, 385) Decided November 12, 2017

KS Construction Co., Ltd. (Law Firm LLC, Attorney Lee Dong-woo, Counsel for the plaintiff-appellant)

Fair Trade Commission (Government Law Firm, Attorney Lee Dong-hwan, Counsel for defendant-appellant)

Seoul High Court Decision 2014Nu7505 decided June 30, 2016

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. As to whether the period for filing a lawsuit is observed

(1) According to Article 54(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”), when a person intends to file a lawsuit of dissatisfaction with respect to a disposition by the Fair Trade Commission pursuant to the said Act, he/she shall file a lawsuit within 30 days from the date of receiving the notice of disposition or the date of receiving the certified copy of a written adjudication on an objection.

Where a claim is added, it appears that a new lawsuit is filed at the time of addition of the purport of the claim. As such, compliance with the time period for filing a lawsuit against the added purport of the claim should, in principle, be determined at the time of addition and modification of the purport of the claim (see Supreme Court Decision 2004Du7023, Nov. 25, 2004).

However, even in cases where a lawsuit seeking revocation of the preceding disposition was filed and the purport of seeking revocation of the preceding disposition is added, if the preceding disposition is a kind of provisional disposition scheduled for revocation of the preceding disposition, and is extinguished by absorption of the preceding disposition, and if it can be deemed that the ground for illegality alleged to exist in the preceding disposition also exists in the same way as that of the subsequent disposition, the period for filing a lawsuit seeking revocation of the preceding disposition shall be determined at the time of filing the first lawsuit seeking revocation of the preceding disposition (see Supreme Court Decisions 2010Du7796, Nov. 29, 2012; 201Du27544, Jul. 11, 2013; 2015Du45953, Jul. 27, 2016).

(2) According to the reasoning of the lower judgment, the following facts are revealed.

① On September 15, 2014, the Defendant ordered the Plaintiff to pay penalty surcharges of KRW 4.49 billion. On the same day, pursuant to Article 35(3) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (hereinafter “Enforcement Decree of the Fair Trade Act”), the Defendant issued an order to pay penalty surcharges of KRW 2.44 billion after reducing penalty surcharges of KRW 2.7 billion on the ground that the Plaintiff falls under the second-class investigator for investigation (hereinafter “instant subsequent disposition”).

② On October 17, 2014, the Plaintiff filed a lawsuit against the Defendant seeking revocation of the previous penalty surcharge order within 30 days from the date of receiving the notice of the order to pay the said penalty surcharge; however, on June 8, 2015, the Plaintiff sought confirmation of invalidity of the subsequent disposition of the instant case; and added the claim seeking revocation in the preliminary case.

(3) On the premise of the foregoing factual basis, the lower court deemed that the period for filing a lawsuit seeking revocation of the instant subsequent disposition ought to be determined based on the “the time of filing the instant lawsuit” on the following grounds, on the premise that the prior disposition of a penalty surcharge was absorbed and extinguished by the instant subsequent disposition, and determined that the lawsuit seeking revocation of the instant subsequent disposition was lawful within the period for filing the lawsuit.

① Pre-paid penalty surcharge payment order and the instant subsequent disposition were conducted through a series of procedures to determine final penalty surcharge against the Plaintiff.

② The subject matter that the Plaintiff seeks to dispute via the instant lawsuit is the amount of penalty surcharge determined by the subsequent disposition of the instant case.

③ Even after adding the purport of the claim seeking revocation of the subsequent disposition of the instant case, the Plaintiff continued to claim an illegal ground that is common to the prior penalty surcharge payment order and the subsequent disposition of the instant case.

④ While the contents of the corrective order and the penalty surcharge payment order are specifically stated in the letter of the disposition of the preceding penalty surcharge payment order, it is difficult for the Plaintiff to have easily known that the subsequent disposition of the instant case is subject to litigation as a final disposition, since only the amount of “as to the Plaintiff, a penalty surcharge of KRW 4.4 billion shall be changed from KRW 4.4 billion to KRW 2.4 billion.4 billion”

⑤ Therefore, it is reasonable to view that the lawsuit seeking revocation of the preceding penalty surcharge order includes the Defendant’s final disposition, which is the Defendant’s final disposition.

(4) Examining the aforementioned legal principles and records, such determination by the lower court is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the period of filing a lawsuit.

2. As to the increase of penalty surcharge on the ground of the involvement of senior executives

(1) In full view of the provisions of Articles 6 and 22 of the Fair Trade Act, the Fair Trade Commission may decide, at its discretion, whether to impose a penalty surcharge on a violation of the Fair Trade Act; and if a penalty surcharge is to be imposed, at its discretion, whether to determine the specific amount of a penalty surcharge within a certain scope prescribed by the Enforcement Decree of the Fair Trade Act and the Fair Trade Act. As such, the Fair Trade Commission’s imposition of a penalty surcharge on a violator of the Act is a discretionary act. However, if there is a misunderstanding of the fact that serves as the basis for imposing a penalty surcharge in the course of exercising the discretion or there is a reason contrary to the principle of proportionality and equality, it is illegal as a deviation or abuse of discretionary power (see

According to Article 55-3(1)1 of the Fair Trade Act, the Fair Trade Commission shall determine a penalty surcharge in consideration of the details and degree of the violation, etc., and Article 61(1) and [Attachment Table 2] subparagraph 2(c) of the Enforcement Decree of the Fair Trade Act upon delegation by Article 55-3(5) of the Fair Trade Act provides that a penalty surcharge shall be adjusted in accordance with the standards determined and publicly notified by the Fair Trade Commission, taking into account the details and degree of the violation, “the intention or negligence of the violator and the nature and circumstances of the violation,” which affect the matters under each subparagraph of Article 5-3(1) of the Fair Trade Act, such as the content and degree of the violation. Based on such provision, the former notice on the imposition, etc. of a penalty surcharge (amended by the Fair Trade Commission Notice No. 2014-7, May 30, 2014) (hereinafter “instant notice provision”) provides that a penalty surcharge may be aggravated by up to 10/100.

In order to deem that the act of a senior officer’s involvement in the act constitutes grounds for calculating penalty surcharges prescribed by the Fair Trade Act, i.e., “the act of a violation enterpriser’s intentional act, nature and circumstances,” which affect the contents and degree of the violation, an officer may be deemed to have led and planned the act of violation or directly engaged in the act of violation beyond the level of indirectly involved, such as not simply refraining from reporting the act of violation (see Supreme Court Decision 2016Du35199, Jan. 12, 2017).

Therefore, the Fair Trade Commission’s imposition of penalty surcharges on the ground that the high-ranking officer was “direct involvement in the act of violation” was aggravated by applying the provision of this case’s notification. However, if there are special circumstances, such as that the act of involvement was indirectly engaged in the act of violation, such as where the person did not merely receive a report on the act of violation, the imposition of penalty surcharges calculated as such constitutes deviation or abuse of discretionary power, and thus, can be deemed unlawful (see the above Supreme Court Decision

(2) The lower court acknowledged that the Defendant’s “the Plaintiff’s managing director was not subject to the ex post facto report on the instant collaborative act from Nonparty 2’s team leader,” and that it constitutes a case in which the senior executive officer directly participated in the instant collaborative act, thereby increasing 10% of the first adjustment criteria against the Plaintiff pursuant to the instant notification provision.

(3) In addition, the lower court determined that: (a) even if Nonparty 1’s managing director received a post-report on the instant collaborative act as part of ordinary business activities and did not take special measures, it is difficult to view that Nonparty 1’s managing director directly participated in the instant collaborative act; and (b) there is no objective evidence that Nonparty 1 did not directly meet or agree with employees, etc. of the relevant company in relation to the instant collaborative act, or actually participated in the instant collaborative act to the extent that it was equivalent thereto; (c) thereby, deeming that the Defendant’s increase by 10% of the first adjustment criteria by recognizing the Plaintiff’s direct involvement of the senior executive officers constitutes deviation and abuse of discretionary authority by misapprehending the facts constituting the basis for imposing the penalty,

(4) Examining the aforementioned legal principles and records, such determination by the lower court is justifiable. In so doing, it did not err by misapprehending the legal doctrine on deviation and abuse of discretionary power in the calculation of penalty surcharges.

3. 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.

Justices Min You-sook (Presiding Justice)