[1] Acts and subordinate statutes that serve as the basis for determining the illegality of an administrative disposition, and whether the court may determine the illegality of the disposition by comprehensively taking into account all the materials, other than the materials that were known to the administrative agency at the time of closing argument at the trial court (affirmative)

[2] Whether the Fair Trade Commission’s imposition of penalty surcharges, etc. should be determined on the basis of the actual state at the time of the “date of resolution” in which the imposition of penalty surcharges was conducted (affirmative in principle), and the method of determining whether the case constitutes “a case in which it is deemed as excessive because it failed to fully reflect its business operator’s ability to bear actual burden, etc.” under Article 61(1) [Attachment 2] subparag. 2(d)

[3] Whether the imposition of a penalty surcharge by applying the criteria set by the Fair Trade Commission as to the method of applying the reduction rate for each reason for the adjustment of the imposition of a penalty surcharge is unlawful (negative in principle), and where the imposition of a penalty surcharge is illegal as a deviation or abuse of

[1] Article 5-3 (1) and (5) of the Monopoly Regulation and Fair Trade Act, Article 61 (1) [Attachment Table 2] 2 (b) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, Article 27 of the Administrative Litigation Act / [2] Article 27 of the Administrative Litigation Act, Article 22 of the Monopoly Regulation and Fair Trade Act, Article 61 (1) [Attachment Table 2] 2 (d) 1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act / [3] Article 6 and Article 22 of the Monopoly Regulation and Fair Trade Act, Article 61 (1) [Attachment Table 2] 2 (d) and (3) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, Article 27 of the Administrative Litigation Act

[1] Supreme Court Decision 93Do277 Decided June 25, 1993 (Gong1993Ha, 2201), Supreme Court Decision 2009Du11843 Decided January 14, 2010 (Gong2010Sang, 339), Supreme Court Decision 2010Du15674 Decided December 9, 2010 / [2] Supreme Court Decision 2015Du36256 Decided May 28, 2015 (Gong2015Ha, 883), Supreme Court Decision 2017Du6810 Decided January 31, 2019

Samsung C&T Co., Ltd. (Law Firm LLC, Attorneys Jeong Tae-chul et al., Counsel for the defendant-appellant)

Fair Trade Commission (Attorney Kim Jong-sik et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2016Nu74813 decided July 6, 2017

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

The grounds of appeal are examined.

1. Whether the statute of limitations has lapsed (Ground of appeal No. 1)

A. If a business entity has reached multiple agreements over a long-term period, and if the multiple agreements have been implemented for the same purpose on the basis of a single intent, and without interruption, the specific contents of the agreement have been partially modified, such series of agreements should be deemed as one unfair collaborative act, barring special circumstances (see, e.g., Supreme Court Decisions 2007Du3756, Sept. 25, 2008; 2013Du6169, Feb. 12, 2015).

B. Based on the following circumstances, the lower court determined that the instant collaborative act was aimed at achieving the same purpose on the basis of a single intent, and as a whole, constitutes a single unfair collaborative act, and that the statute of limitations for disposal was not imposed on such premise.

① In 2005, six employees, including the Plaintiff, agreed on the basic principles, such as the presumption that a bid for a large number of LNG storage tank construction works will be ordered, and the formation of a consensus on the stable awarded principles by allocating the successful bid volume among the companies.

② Each agreement in 2006, 2007, and 2009 may be deemed to have continued to meet several times in the process of implementing the said agreement and to reach an agreement for the decision of specific matters.

C. Such determination by the lower court is based on the legal doctrine as seen earlier, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding the establishment of one collaborative act and the prescription period, or by exceeding the bounds of the free evaluation

2. Whether the number of violations of the Act is illegal (Ground of appeal No. 2)

A. In full view of Articles 6 and 22 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”), the Fair Trade Commission’s discretionary discretion to determine whether to impose a penalty surcharge on a violation of the Fair Trade Act and the amount of a penalty surcharge within a certain scope prescribed by the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (hereinafter “Enforcement Decree of the Fair Trade Act”), and if a penalty surcharge is to be imposed, the imposition of a penalty surcharge on a violator of the Act by the Fair Trade Commission is a discretionary act. However, if there is a misunderstanding of the fact that serves as the basis for the imposition of a penalty surcharge while exercising such discretion, or if there is a reason contrary to the principle of proportionality and equality, it is illegal as a deviation or abuse of discretionary power (see, e.g., Supreme Court Decision 2009Du1505, Sept. 8, 2011).

B. As to the base date for calculating the number of violations

1) Article 55-3(1) of the Fair Trade Act provides that the Fair Trade Commission shall impose a penalty surcharge in consideration of the period and frequency of a violation (Article 55-3(1) of the Fair Trade Act, and Article 61(1) [Attachment 2] [Attachment 2] of the Enforcement Decree of the Fair Trade Act upon delegation by Article 55-3(5) of the Fair Trade Act shall be adjusted in accordance with the standards determined and publicly notified by the Fair Trade Commission within the scope of 50/100 of the standards for calculation, taking into account the period and frequency of a violation. Based on such provision, the former Public Notice on the detailed criteria for imposition of a penalty surcharge (amended by the Fair Trade Commission Notice No. 2012-25, Aug. 20, 2012; hereinafter “Public Notice of Penalty Surcharge before the amendment”) shall include the date of receipt of the report for the last three years (in cases of reporting, the date of receipt of the report ex officio examination; hereinafter the same shall apply).

As seen earlier, the Fair Trade Commission’s imposition of a penalty surcharge against a violator of the law is discretionary, and whether it reflects the past history of the violation in the amount of a penalty surcharge, and if reflected, it belongs to the discretionary authority of the Fair Trade Commission. Paragraph III. 4, “Public Notice of Penalty Surcharge before the amendment.” In light of the aforementioned form and content, it is a discretionary rule, i.e., the administrative agency’s internal business rules established based on the exercise of discretionary authority over the calculation of a penalty surcharge and the imposition thereof. The determination of the standards for calculation and imposition of a penalty surcharge belongs to the administrative agency’s discretion, so long as it is not deemed that the standards are not consistent with the Constitution or laws or that it is objectively reasonable, and thus, the administrative agency’s intent should be respected as far as possible. Such discretionary rule generally takes effect only within the administrative organization, and does not have external binding force, and thus, such administrative disposition is not immediately unlawful solely on the ground that it violates such principle. However, if administrative practice is carried out as prescribed by the discretionary rule, it goes against the principle of equality or the principle of equality.

2) The lower court determined that the Defendant’s disposition, on May 2, 2013 through May 14, 2013, 2013, which was not determined as “the base date for increasing the number of violations of the Act,” did not constitute a deviation or abuse of discretionary power, on the grounds that: (a) the Defendant’s investigation of four copies, including Ma22, and 23 bidding from May 2, 2013 to May 14, 2013, was not conducted on August 5, 2013; and (b) the Plaintiff’s act of collaborative acts such as the Plaintiff, etc., became ex officio; and (c) the Plaintiff’s first on-site investigation was conducted on May 21, 2014.

3) Such determination by the lower court is based on the legal doctrine as seen earlier. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the interpretation and application of “the base date for increasing the frequency of

C. As to the record of the cancellation of the litigation

1) Article 55-3(1) and (5) of the Fair Trade Act and Article 61(1) [Attachment 2] 2.2.b. (1) of the Enforcement Decree of the Fair Trade Act provide that “if the case in question is subject to a measure of violation of the Act (including the imposition of an administrative fine, but excluding the imposition of an administrative fine) on at least three occasions during the past three years, the calculation standards may be aggravated starting from four times as follows: (b) the above provision provides that “if the calculation of the number of times of the corrective measures is calculated, the calculation standards may be aggravated within the scope of 40/100” in cases where the total sum of the corrective measures is at least seven times during the past three years, and the calculation standards may be aggravated within the scope of 40/100”. Meanwhile, Article 61(1)(2) of the Enforcement Decree of the Fair Trade Act provides that “if the corrective measures are calculated, the calculation of the number of times of the corrective measures becomes final and conclusive.”

2) Whether an administrative disposition is unlawful shall be determined on the basis of statutes and facts at the time of the administrative disposition. The court shall determine the objective facts which existed at the time of disposition by integrating not only the materials known to the administrative agency at the time of the administrative disposition, but also all the materials submitted at the time of the closing of arguments at the fact-finding court, and determine the illegality of the disposition based on such facts (see Supreme Court Decision 2009Du11843, Jan. 14, 2010). If an administrative disposition was issued from the administrative agency but the administrative disposition was revoked in the course of administrative litigation, then the administrative disposition becomes retroactively effective at the time of disposition (see Supreme Court Decision 93Do277, Jun. 25, 199

Section IV.2.2.2.2.2.2.(2) of the “Public Notice of Penalty Surcharge before the amendment” provides that a judgment of invalidation or revocation of a corrective measure shall be excluded when calculating the frequency of a corrective measure in the past. In the calculation of a penalty surcharge, the Fair Trade Commission’s corrective measure against a violation based on the increase in the frequency of the violation becomes final and conclusive on the ground that the revocation judgment becomes final and conclusive on the ground that the violation itself exists,” and the counterpart to the disposition imposing a penalty surcharge is aggravated due to a violation that is not objectively nonexistent at the time of the disposition

However, the Fair Trade Commission has the discretion to determine whether to impose penalty surcharges and the amount of penalty surcharges within the scope of the upper limit of penalty surcharges under the Fair Trade Act. In addition, Article 4.2.2.2.2.2.1 of the "Public Notice of Penalty Surcharges before the amendment", which is a discretionary rule, provides only the upper limit of the increased rate of penalty surcharges based on the frequency of violations and the accumulated points of penalty surcharges. Therefore, even if the cancellation judgment on corrective measures against violations is excluded from the calculation of the number of times to increase the number of violations, if the reason does not affect the imposition of penalty surcharges, and the legitimacy of the disposition is recognized as illegal (see Supreme Court Decision 2010Du15674, Dec. 9, 2010, etc.).

3) Review of the reasoning of the lower judgment and the record reveals the following facts.

① At the time of imposing penalty surcharges, the Defendant took five times measures against the Plaintiff for violation of the Act during the past three years, and applied the aggravated rate of 20/10 based on the primary adjustment of penalty surcharges based on the element of the act in calculating penalty surcharges on the ground that the accumulated points of penalty surcharges are 14 points. At the time, the Defendant applied the aggravated rate of 15/100 by taking into account four times the number of violations of the Act and 10.5 points of the accumulated points of the penalty surcharges.

② The Defendant’s corrective order and imposition of penalty surcharges (hereinafter “advance action”) were included in the measures due to the Plaintiff’s violation of the five-time law against the Plaintiff (three-points). However, the Seoul High Court rendered a judgment revoking the preceding action on the grounds that it is difficult to recognize the Plaintiff’s unfair collaborative act on June 2, 2016, prior to the date of the instant disposition (the date of June 20, 2016), and the Defendant’s appeal is currently pending in the Supreme Court.

4) Examining these facts in light of the legal principles as seen earlier, even if the number of violations committed by the Plaintiff at the time of imposing penalty surcharges by the Defendant, excluding the number of violations committed by the Plaintiff, the Defendant’s application of the aggravated rate of 20/100 to the Plaintiff at the time of imposing penalty surcharges may be increased by up to 40/100 pursuant to Article 4.2.2.2.2.(1)(b) of the “Public Notice of the Penalty Surcharge before Amendment”. Thus, it is difficult to deem that the application of the aggravated rate of 20/100 to the Plaintiff at the time of imposing penalty surcharges violates the principle of proportionality by applying the remarkably excessive aggravated rate. Furthermore, if prior measures are excluded from the number of violations committed by the Plaintiff, the Plaintiff’s penalty surcharge points are 11 points, and it cannot be deemed that the application of the aggravated rate of 20/100 to the Hanhwa Construction Co., Ltd. (15/10

5) Although the reasoning of the lower judgment partially inappropriate, the lower court’s conclusion that the imposition of a penalty surcharge cannot be deemed unlawful as a matter of course, even if the number of violations has been reduced, is acceptable in light of the legal doctrine as seen earlier. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine

3. Whether the mitigation rate of investigation cooperation is illegal (ground of appeal No. 3)

A. The lower court determined that: (a) the Defendant’s imposition of penalty surcharges on the Plaintiff by applying the reduction rate of 10% for investigation and cooperation on the ground that the Plaintiff did not file a voluntary report on the instant collaborative act; (b) the Plaintiff limited recognition of the agreement between 2007 and 2009, except for the agreement between 2005 to 2006, and that the agreement between 2007 and 2006 was made; and (c) other enterprisers stated on the agreement between 2005 to 2006 and agreed that most of the contents were not memory; and (d) the Defendant’s imposition on the Plaintiff

B. Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine regarding violation of the principle of proportionality and equality, or by failing to exhaust all necessary deliberations

4. Whether determination of actual ability to bear expenses is unlawful (ground of appeal No. 4)

A. In the event of a corporate merger, the rights and obligations of the merged company shall be deemed to be succeeded to the surviving company due to the merger, regardless of whether the transfer is prohibited by nature, regardless of the private or public law relationship (see, e.g., Supreme Court Decisions 2002Du1946, Jul. 8, 2004; 2012Du18523, Nov. 28, 2013). Article 55-3(2) of the Fair Trade Act provides that “In the event of a merger with a company violating this Act, the Fair Trade Commission may impose and collect penalty surcharges on the company established by the merger, on the grounds that the violation committed by the company in question continues to exist after the merger or was committed by the company established by the merger.”

The determination of whether a penalty surcharge imposed by the Fair Trade Commission is illegal due to deviation from or abuse of discretionary power ought to be made on the basis of the actual state as at the time of the “date of resolution” in which the imposition of a penalty surcharge was conducted, barring any special circumstances. In light of the purport that the Fair Trade Act prescribes the duty to bear actual burden, etc. of an offender as a reason for voluntary mitigation, etc., the determination of whether a case constitutes “where it is deemed excessive because it is deemed excessive because it failed to fully reflect the offender’s actual ability, etc.” as the reason for mitigation under Article 61(1) [Attachment 2] 2. D. 1 of the Enforcement Decree of the Fair Trade Act should be made by comprehensively taking into account the overall financial status of the offender, including assets, capital, and liabilities, the details of profits and losses including net income, and the amount of earned earnings

B. The lower court determined that it was difficult to deem that the Defendant erred in determining whether to reduce the Plaintiff’s financial standing based on the Plaintiff’s financial statements after the merger, given that the Plaintiff had already been merged on the date of resolution (on June 20, 2016). Furthermore, the lower court determined that the Defendant did not err by misapprehending the principle of equality or proportional principle because the Defendant’s imposition of the Defendant’s penalty surcharge was not sufficiently reflected in the Plaintiff’s actual ability, and thus, did not constitute an error in violation of the principle of equality or proportional principle, in view of the following: (a) the Defendant considered the financial standing of the Plaintiff, such as net income, earned surplus, cash, and cash assets in 2014 and 2015; and (b) recent construction games, such as the continuous decline in the scale of domestic public construction order; and (c)

C. Such determination by the lower court is based on the legal doctrine as seen earlier, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the deviation and abuse of discretionary power regarding the calculation

5. Whether the calculation method of penalty surcharges is unlawful (Ground of appeal No. 5)

A. 1) Article 61(1) and [Attachment 2] 2.4.1 of the Enforcement Decree of the Fair Trade Act provides that “If it is deemed that a violation business entity’s actual ability or violation has an effect on the market, or the size of profits acquired from the violation under Article 5-3(1)3 of the Act has been excessive because of its failure to fully reflect the amount of the profit acquired, etc., it may be determined as a penalty surcharge by reducing the amount by 50/100 of the second adjusted calculation standards.” In addition, Article 61(1) and (3) of the Enforcement Decree of the Fair Trade Act and [Attachment 2] of the former detailed criteria for imposing penalty surcharges based on [Attachment 2] under Article 61(1) and [Attachment 2] of the Enforcement Decree of the Fair Trade Act (amended by Act No. 2016-22, Dec. 30, 2016; hereinafter “Notice of Penalty Surcharges”) provides for the adjusted calculation standards, such as the following adjustment of market and financial circumstances and reasons for the violation.”

2) However, the notice of penalty surcharges IV. 4. A. (1) and (2) merely stipulate the grounds for, and the rate of mitigation of, the second adjusted calculation standards when calculating the penalty surcharges through the second adjustment, and do not specifically stipulate whether to apply the reduction rate in whole or in part according to the grounds for each adjustment in the calculation of the penalty surcharges, and whether the reduction rate can be applied gradually. This is necessary to set the standards by comprehensively taking into account the legislative intent of the system and the system of mitigation of penalty surcharges and the need to prevent the abuse of the reduction rate, and the public interest purpose of the relevant Acts and subordinate statutes and the relevant provisions of the notice of penalty surcharges. This is not immediately derived from the language of the relevant Acts and subordinate statutes and the notice of penalty surcharges.

In addition to these circumstances, determination of mitigation and mitigation rate is subject to the discretion of the Fair Trade Commission and it also has discretion to determine internal administrative rules on it. Considering that there is no specific provision on the application method of mitigation rate by reason of adjustment in the phase of imposing penalty surcharges, the Fair Trade Commission does not go against the legislative intent of the penalty surcharge system and mitigation system and does not unreasonable or arbitrary. Furthermore, it is difficult to deem that there is an error of deviation and abuse of discretionary power in imposing penalty surcharges, unless there is a misunderstanding that the criteria applied while imposing penalty surcharges are in the process of imposing penalty surcharges, or there is no reason contrary to the principle of proportionality and equality.

B. The lower court determined that the instant disposition cannot be deemed to violate the principle of equality or the principle of protection of trust on the ground that: (a) the Defendant calculated the “provisional penalty surcharge” by applying the reduction rate to be applied as a whole in the imposition stage of penalty surcharges; (b) applied the reduction rate reflecting the size of profits acquired by distinguishing the type of participation in bidding based on the unfair collaborative act; (c) it is difficult to deem that the Defendant’s method of application of the reduction rate is arbitrary or it is difficult to view that there was an abuse of discretionary power in its method; and

C. Such determination by the lower court is based on the legal doctrine as seen earlier. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the principle of self-detention of administration, or by exceeding the bounds

6. 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 Kim Jong-hee (Presiding Justice)