[1] The meaning of "justifiable act under the relevant Acts and subordinate statutes" under Article 58 of the Monopoly Regulation and Fair Trade Act

[2] In a case where the Defendants, a construction company, participated in a bid for a specific construction section to be implemented by the subway Extension Corporation and entered into a joint supply and demand contract, the case affirming the judgment below holding that the act of forming the said joint supply and demand organization does not constitute “justifiable act pursuant to the laws and regulations” under Article 58 of the Monopoly Regulation

[3] Criteria for determining whether a certain collaborative act restricts competition as provided by Article 19(1) of the Monopoly Regulation and Fair Trade Act

[4] In a case where the Defendants, a construction company, participated in a bid for a specific construction section to be implemented by the subway Extension Corporation and entered into a joint supply and demand agreement with them, which constitutes an unfair collaborative act as provided by Article 19(1) of the Monopoly Regulation and Fair Trade Act, the case holding that the judgment below which concluded that the act of joint supply and demand constitutes an "unfair collaborative act that restricts competition" constitutes an "unfair collaborative act that

[1] Article 58 of the Monopoly Regulation and Fair Trade Act provides that "this Act shall not apply to lawful acts conducted by an enterpriser or an enterprisers' organization in accordance with other Acts or orders issued under such Acts." The term "justifiable acts" in this context refers to the acts conducted within the scope of the necessary or minimum scope of orders issued under the Acts or the relevant Acts, which specifically recognize the exception of free competition in respect of projects, etc. requiring high level of public regulation from the perspective of public nature, while restricting competition is guaranteed by a business or authorization system, which is deemed reasonable to restrict competition due to the special nature of the pertinent business.

[2] In a case where the Defendants, a construction company, participated in the tender of a specific construction section where the extension of subway No. 7 will be implemented, and entered into a joint supply and demand agreement with the Defendants, the case affirming the judgment below holding that the act of the joint supply and demand organization does not constitute a "justifiable act" under Article 58 of the Monopoly Regulation and Fair Trade Act, on the grounds that Article 25 (1) of the Act on Contracts to Which the State is a Party, which provides that it is possible and possible to enter into a joint contract with at least two parties to the contract as much as possible, and that it is a principle in principle, and Article 72 (2) of the Enforcement Decree of the same Act provides that the Defendants shall organize a joint supply and demand organization as the Defendants, and the exclusive status of the business entity is guaranteed, and that it does not specifically recognize

[3] Whether a collaborative act restricts competition under Article 19(1) of the Monopoly Regulation and Fair Trade Act shall be determined individually by examining whether the collaborative act causes or threatens to cause impacts on the determination of price, quantity, quality, other terms and conditions of trading, etc. by reducing competition in a particular business area, taking into account various circumstances such as the characteristics of the product, consumers’ standard for choosing products, and the impact of the pertinent act on the market and enterprisers.

[4] In a case where the Defendants, a construction company, were prosecuted for committing an unfair collaborative act as stipulated in Article 19(1) of the Monopoly Regulation and Fair Trade Act by participating in a tendering procedure for a specific construction section where the extension of the subway No. 7 will be implemented, the case holding that the court below erred in the misapprehension of legal principles as to the type and mode of bidding, the progress and intention of organizing the joint venture, the market share of the members, the existence of competitive enterprisers, the existence of the pertinent competitive enterprisers, the competitive enterprisers' act of organizing the said joint venture, and the effect of the pertinent joint venture on bidding price or other competitive act by examining the bid price in light of the contents of Article 25(1) of the Act on Contracts to Which the State is a Party and Article 72(2) of the Enforcement Decree of the same Act, even if the act does not constitute justifiable acts under the laws and regulations stipulated in Article 58 of the Fair Trade Act.

[1] Article 58 of the Monopoly Regulation and Fair Trade Act / [2] Article 58 of the Monopoly Regulation and Fair Trade Act; Article 25 (1) of the Act on Contracts to Which the State is a Party; Article 72 (2) of the Enforcement Decree of the Act on Contracts to Which the State is a Party / [3] Article 19 (1) of the Monopoly Regulation and Fair Trade Act / [4] Articles 19 (1) 1 and 2, 58, 66 (1) 9, and 70 of the Monopoly Regulation and Fair Trade Act; Article 25 (1) of the Act on Contracts to which the State is a Party; Article 72 (2) of the Enforcement Decree of the Act on Contracts to which the State is a Party

[1] Supreme Court Decision 96Nu150 Decided May 16, 1997 (Gong1997Sang, 1759), Supreme Court Decision 2007Du19584 Decided December 24, 2008, Supreme Court Decision 2007Du19416 Decided June 23, 2009 / [3] Supreme Court Decision 99Du6514 Decided March 15, 2002 (Gong2002Sang, 903), Supreme Court Decision 2008Du21058 Decided March 26, 2009 (Gong2009Sang, 576) (Gong209Du7912 Decided April 14, 201)

Defendant 1 and five others

Defendants

Law Firm, Kim & Lee LLC et al.

Seoul Central District Court Decision 2008No862 Decided June 27, 2008

The judgment of the court below is reversed, and the case is remanded to the Seoul Central District Court Panel Division.

The grounds of appeal are examined.

1. Of the grounds of appeal by Defendant 1 corporation, as to the unfair collaborative act through the division of sections and bid bid

A. As to the unfair collaborative act through the division of a construction section

According to the reasoning of the judgment below, the court below acknowledged the following facts, based on the adopted evidence, that the Defendants 6 companies agreed to participate in the bidding of only one of the six sections of this case, on the ground that, among the six sections of this case, there are concerns that, among the six sections of this case, the agreement on the division of sections of this case, among the six sections of this case, the agreement on the division of sections of this case would reduce competition in bidding and affect or threaten to affect free price determination, the Defendants 6 companies are subject to competition restriction by causing more than 2 companies in the same section of this case, including 701 through 706 sections of the subway of this case.

In light of the relevant statutes and records, such fact-finding and determination by the court below are justifiable. Contrary to the allegations in the grounds of appeal in this part, there were no errors in the misapprehension of legal principles as to whether the agreement on the division of each of the sections of this case violates logical and empirical rules and exceeds the bounds of the principle of free evaluation of evidence

B. As to unfair collaborative acts through competitive bidding

According to the reasoning of the judgment below, the court below determined that the defendant 1 corporation and the non-indicted 1 corporation agreed on November 5, 2004 on the condition that the bidding price for 701 construction sections was reached between the non-indicted 1 corporation and the non-indicted 1 corporation for the purpose of preventing the lack of bidder's number and failure to participate in the bidding, and that such agreement constitutes an act of restricting competition in bidding. Further, the defendant 1 corporation's act of participating in the bidding at the price where the bid price was conspired to manipulate in advance according to the above agreement constitutes the act of pretending competition, notwithstanding the fact that the above defendant did not have a competitive relation to the bid, at the time of the above act, the defendant acquired unjust profits or impeded fair price determination under Article 95 subparagraph 1 of the Framework Act on the Construction Industry.

In light of the relevant statutes and records, such fact-finding and determination by the court below are justifiable. Contrary to the allegations in the grounds of appeal, this part of the judgment below did not err in the misapprehension of legal principles as to whether the so-called so-called Russian bidding agreement violates logical and empirical rules and exceeds the bounds of the principle of free evaluation of evidence, as to whether the restriction on competition of unfair collaborative acts is recognized, or not,

2. As to the remaining grounds of appeal by Defendant 1 Company and the unfair collaborative act through the formation of joint supply and demand organization which is the grounds of appeal by the remaining Defendants

A. As to whether an act constitutes a justifiable act under the laws and regulations stipulated in Article 58 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”).

Article 58 of the Fair Trade Act provides, “The provision of this Act shall not apply to lawful acts conducted by an enterpriser or an enterprisers’ organization in accordance with other Acts or orders issued under such Acts.” The term “justifiable acts” refers to the acts necessary or minimum to be conducted within the scope of an order issued under other Acts or subordinate statutes, which specifically acknowledges the exception of free competition in respect of a business which requires high level of public regulation from the perspective of public nature, while the exclusive status of an enterpriser is guaranteed by a business or an authorized system that is deemed reasonable to restrict competition due to the special nature of the pertinent business (see, e.g., Supreme Court Decisions 96Nu150, May 16, 1997; 2007Du19584, Dec. 24, 2008).

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding, and determined that the act of forming the instant joint venture does not constitute a "justifiable act" under Article 58 of the Fair Trade Act, on the grounds that the content of Article 25 (1) of the Act on Contracts to Which the State is a Party (hereinafter "State Contract Act") and Article 72 (2) of the Enforcement Decree of the State Contracts Act is possible and possible to enter into a joint contract with at least two parties to the contract as much as possible, and in principle, it merely constitutes a provision allowing the Defendants to participate in the bidding by organizing a joint venture, such as the Defendants, and it does not constitute a "justifiable act" under Article 58 of the Act on Contracts to Which the State is a Party.

In light of the above legal principles and records, such determination by the court below is justifiable. In so doing, it did not err by misapprehending the legal principles on interpretation of Article 58 of the Fair Trade Act and Article 25 (1) of the State Contracts Act, contrary to the allegations

B. As to whether it constitutes an unfair collaborative act under Article 19(1) of the Fair Trade Act

Whether a collaborative act restricts competition under Article 19(1) of the Fair Trade Act should be determined individually by examining whether the collaborative act affects or is likely to affect the determination of price, quantity, quality, and other terms and conditions of trading by reducing competition in a particular business area, taking into account various circumstances, such as the characteristics of the relevant product, consumers’ standard for choosing products, impact of the relevant act on the market and enterprisers (see, e.g., Supreme Court Decisions 99Du6514, Mar. 15, 2002; 2008Du21058, Mar. 26, 2009).

After compiling the adopted evidence, the court below acknowledged the facts as stated in its decision, and found it more favorable for the construction company participating in the alternative design rather than the original design, and determined that the Defendants’ act of establishing a joint supply and demand organization in this case is the only construction company that prepared alternative alternatives for each construction section at the time, in particular, Nonindicted Co. 2 and Nonindicted Co. 3, etc., which the Defendants drawn up as a joint supply and demand organization, because the bid price is reduced and the Defendants suffered damages that could not recover the enormous amount of design cost, etc. spent in the process of the tender preparation. Thus, in order to avoid such a situation, the alternative design seems to have function and effect than the original design, and the highest and lowest gap between the design score and the highest price score among the tender evaluation items is higher than the highest and lowest gap among the tender evaluation items. Thus, the court below held that the Defendants’ act of establishing the joint supply and demand organization in this case was fully constituted for the purpose of restricting competition as the only preparation of each alternative tender and the exclusive joint supply and demand organization in this case.

However, in light of the above legal principles and records, it is difficult to accept such judgment of the court below.

Article 25(1) of the State Contracts Act provides, “The head of each central government agency or the public official in charge of contracts may, if deemed necessary for construction, manufacture, or any other contract, conclude a joint contract with at least two other parties to the contract.” Article 72(2) of the Enforcement Decree of the State Contracts Act provides, “Where the head of each central government agency or the public official in charge of contracts intends to conclude a contract by competition, he/she shall conclude a joint contract as far as possible, unless it is deemed inappropriate to conclude a joint contract in light of the purpose and nature of the contract.” Thus, even if the act does not constitute justifiable act pursuant to the statutes stipulated in Article 58 of the Fair Trade Act, the act of forming a joint contractor in a

Meanwhile, it is inevitable to restrict competition to a certain extent due to a decrease in the number of competitors in the bidding market where multiple companies participate in the bidding. However, in the case of a company which has failed to participate in the bidding market or has weak competitiveness due to restrictions on the performance of construction, technology, and possession of license, etc., the competitive ability is required by participating in the composition of a joint venture. Furthermore, companies participating in the organization of a joint venture shall be capable of participating in large construction works and have the effect of increasing efficiency such as decentralization of unexpected risks in large construction works, particularly expanding opportunities for small and medium enterprises, and securing technology transfer of large enterprises, and securing efficiency such as securing the certainty of construction works. Furthermore, according to the reasoning of the judgment of the court below, the Public Procurement Service requested by the Seoul Special Metropolitan City and Incheon Metropolitan City to participate in the bidding for each of the respective sections of this case, clearly stated that it is possible to enter into a joint contract through the formation of a joint venture in each of the instant case, and added additional points to a joint venture including a company having the principal place of business in the area under jurisdiction

Therefore, the court below should have determined whether the act of forming each of the instant joint ventures constitutes an unfair collaborative act that has competition limitation, such as bid price or other transaction terms or conditions, by thoroughly examining the type and mode of bidding, the process and intention of forming the pertinent joint ventures, the progress and intention of constituting the pertinent joint ventures, the market share of the members of the joint ventures, the existence of competitors who are not the members of the joint ventures, the effect of the act of organizing the pertinent joint ventures on bidding and competition with other enterprisers, etc. However, the court below should have determined that the act of forming each of the instant joint ventures constitutes an unfair collaborative act that has competition limitation, on the grounds as stated in its reasoning. Thus, the court below erred by misapprehending the legal principles on competition limitation, which affected the conclusion of the judgment.

3. Conclusion

Therefore, among the judgment below, the violation of the Fair Trade Act due to the formation of each joint supply and demand organization should be reversed, and since the remaining guilty part should be sentenced to a single punishment due to concurrent crimes under the former part of Article 37 of the Criminal Act, the judgment of the court below cannot be reversed in its entirety.

Therefore, without further examining the remaining grounds of appeal by the Defendants, 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 Kim Nung-hwan (Presiding Justice)