[1] The method of defining the relevant market as the premise for determining the "unfair collaborative act" under Article 19 (1) 1 of the Monopoly Regulation and Fair Trade Act

[2] In a case where Gap corporation, etc., engaged in IMW car sales and maintenance service business, agreed on the limit of price discount and restriction on sale conditions, constitutes "unfair collaborative act" as provided by Article 19 (1) 1 of the Monopoly Regulation and Fair Trade Act, the case holding that the judgment below which held that the pertinent market was the sales market of all new types of IMW cars sold in Korea, erred in the misapprehension of legal principles as to the determination of the relevant market

[1] In determining whether an act constitutes an unfair collaborative act under Article 19(1)1 of the Monopoly Regulation and Fair Trade Act, the relevant market should be defined first, and the relevant market should be determined by considering the similarity of functions and utility of the goods subject to the transaction, purchaser’s awareness of the alternative possibility, and the type of management decision-making related thereto.

[2] In a case where Gap corporation, etc., engaged in IMW car sales and maintenance service business, agreed on the limit of price discount and restrictions on sales conditions, constitutes "unfair collaborative act" as stipulated in Article 19 (1) 1 of the Monopoly Regulation and Fair Trade Act, the case holding that the court below erred in the misapprehension of legal principles as to the relevant market on the ground that the court below should have determined that the relevant market was the sales market of all new types of IMW vehicles sold in Korea, taking into account the target and intent of the enterpriser, the area or field of the collaborative act, the method and method of the collaborative act, the impact or ripple effect of the collaborative act, etc., which constitutes the elements for assessing the restriction on competition of the unfair collaborative act on the premise of defining the relevant market, and should have determined that the pertinent market should have been established by comprehensively taking into account the function and utility of goods subject to the collaborative act, similarity of purchaser's alternative possibility, awareness of the purchaser's possibility of replacement, and the type of business decision related thereto, etc.

[1] Article 19 (1) 1 of the Monopoly Regulation and Fair Trade Act / [2] Article 19 (1) 1 of the Monopoly Regulation and Fair Trade Act

[1] Supreme Court Decision 2004Du14564 Decided November 9, 2006, Supreme Court Decision 2007Du6793 Decided April 9, 2009

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Fair Trade Commission (Law Firm Gyeongsung, Attorneys Masung-si et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2009Nu9873 decided July 22, 2010

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) provides that “A business entity shall not agree with another business entity to jointly engage in any of the following acts that unfairly restrict competition (hereinafter “unfair collaborative act”) or allow another business entity to engage in such act, by contract, agreement, resolution, or any other means.” Article 19(1)1 provides that “The act of determining, maintaining, or changing the price.”

In determining whether it constitutes an unfair collaborative act under Article 19(1)1 of the Fair Trade Act, the relevant market, which is the premise thereof, should be defined first, and in defining the relevant market, the similarity of functions and utility of goods subject to transactions, purchaser's awareness of substitution possibility, and the method of management decision-making related thereto should be comprehensively taken into account (see Supreme Court Decisions 2004Du14564, Nov. 9, 2006; 2007Du6793, Apr. 9, 2009, etc.).

B. According to the reasoning of the judgment below, under the premise that the definition of the relevant market should be dealt differently with in accordance with what is the act that requires the definition of the relevant market under the Fair Trade Act, the court below determined that the collaborative act in this case needs to take into account the characteristics existing in the collaborative act in this case, such as the subject of the collaborative act and the intent of the enterpriser, areas or fields where the collaborative act was committed, the means and methods of the collaborative act, and its impact or ripple effect. Accordingly, the court below determined that, in light of ① in the subject of the collaborative act and the intent of the enterpriser, the plaintiffs, in terms of the object of the collaborative act and the intent of the enterpriser, shall be considered as the object and contents of the direct collaborative act in order to maximize the sales progress given among them, ② in the area or field where the collaborative act was conducted, it is difficult to obtain inter-bandand competition between the plaintiffs in this case beyond brands within the brand, ③ in light of the fact that the collaborative act in this case is likely to have an influence on inter-bandur competition among the plaintiffs market in this case.

C. However, the elements cited by the lower court in defining the relevant market related to the collaborative act of this case fall under a factor that evaluates competition restriction of unfair collaborative acts premised on the determination of the relevant market rather than a factor that is considered for the determination of the relevant market. If the relevant market is defined in the same way as the lower court, it would result in defining the relevant market and assessing the scope of competition restriction effects, rather than evaluating the relevant market.

Therefore, the court below should have defined the relevant market which is the premise of the collaborative act of this case by comprehensively taking into account the similarity of functions and utility of the goods subject to the collaborative act of this case, the purchaser's awareness of substitution possibility, and the management decision-making form related thereto. However, the court below erred by misapprehending the legal principles on the determination of the relevant market, which affected the remaining decision-making result by failing to exhaust all necessary deliberations. The ground of appeal pointing this out is with merit.

2. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jeon Soo-ahn (Presiding Justice)