[1] Whether it is a provisional and temporary measure to confirm or cancel the status of a person who voluntarily reported or cooperated in an investigation by means of providing evidence, etc. (affirmative), and whether the president of the Fair Trade Commission has the authority to finally deliberate and decide on the reduction or exemption of a voluntary reporter, etc. (affirmative)

[2] Whether a person who voluntarily reported an unfair collaborative act or a person who cooperates in an investigation by means of the provision of evidence can be evaluated as violating the duty of good faith cooperation in the overall investigation cooperation process (affirmative), and where the Fair Trade Commission determined that the person who voluntarily reported the unfair collaborative act or the person who cooperates in the investigation satisfies the requirements for reduction, such as voluntary reporters, etc., whether there is an abuse of discretion (negative in principle)

[3] The criteria for determining whether a person who voluntarily reported an unfair collaborative act or cooperates in an investigation by means of providing evidence, etc. / In a case where a series of agreements among enterprisers can be seen as a single unfair collaborative act, among the enterprisers participating in an unfair collaborative act, which meet the requirements for the reduction or exemption of the first voluntary reporter under Article 35(1) of the former Monopoly Regulation and Fair Trade Act or the first investigator or cooperator under Article 35(1) of the same Act

[4] Where 13 construction companies, including Gap corporation, etc., agreed in advance to determine successful bidders and bid bid rates for each construction project while participating in a bid for LNG storage tank construction, and the construction company which has been awarded the bid price agreed to allocate construction volume to other construction companies included in the successful bid bid bid agreement, and the Fair Trade Commission calculated penalty surcharges to impose penalty surcharges on the participation in the bidding at the pre-determined bid rate to impose penalty surcharges on the entity that constitutes an "unfair collaborative act" under Article 19 (1) 3 and 8 of the former Monopoly Regulation and Fair Trade Act, the case holding that the Fair Trade Commission may not impose penalty surcharges upon the entity that has participated in the bidding within the scope of N-2 of the former Notice of the Detailed Criteria for Imposition of Penalty Surcharges, etc. where the number of business entities is more than five, and N means the number of business entities; and where the Fair Trade Commission decided to impose penalty surcharges on the entity that has been held as a part of the joint supply and demand company that does not deviate from and abuse discretionary power of the above N-Co.

[5] Whether the imposition of a penalty surcharge, which is applied to the method of applying the reduction rate by the reasons 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 discretionary power

[1] Article 2-2(1) and (3) (see current Article 22-2(4) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Act No. 14137, Mar. 29, 2016); Article 35(4) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Presidential Decree No. 27529, Sep. 29, 2016) / [2] Article 22-2(1) and (3) (see current Article 22-2(4) of the former Monopoly Regulation and Fair Trade Act (Amended by Act No. 14137, Mar. 29, 2016); Article 25(2) and (3) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Act No. 27529, Sep. 29, 2016); Article 27(1) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Presidential Decree No. 97519, Mar. 27, 2019)

[2] Supreme Court Decision 2017Du46912 Decided July 26, 2018 / [3] Supreme Court Decision 2010Du28915 Decided June 30, 201 (Gong2011Ha, 1533) Supreme Court Decision 2009Du1505 Decided September 8, 201 (Gong201Ha, 2109)

Hanyang (Law Firm LLC, Attorneys Kim Nung-hwan et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Attorney Choi Jong-soo, Counsel for defendant-appellant)

Seoul High Court Decision 2016Nu75342 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 an application for reduction or exemption is illegal;

A. As to the first ground for appeal

1) Article 22-2(1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 14137, Mar. 29, 2016; hereinafter “Fair Trade Act”) provides that corrective measures or penalty surcharges may be mitigated or exempted for a person who voluntarily reported the fact of unfair collaborative acts (hereinafter “self-reported person”) or a person who cooperates in an investigation by means of providing evidence, etc. (hereinafter “investigation Cooperationer”). Article 22-2(3) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act provides for detailed matters concerning the scope of, and standards for, mitigation or exemption from, such mitigation or exemption, and the degree of, such mitigation or exemption (Article 22-2(3)). Following delegation, the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 27529, Sep. 29, 2016; hereinafter “Enforcement Decree of the Fair Trade Act”). Article 22-2(3) of the Act provides that the Fair Trade Commission shall determine and publicly notify the detailed procedures for operation of the reduction and exemption system.

Article 11(1) of the former Public Notice on Operation of the System for Reduction and Exemption, etc. (amended by Presidential Decree No. 2011-11, Jan. 3, 2012; hereinafter “the Public Notice on Reduction and Exemption”) stipulating the detailed procedures for operation of the system for voluntary reporters or investigators (hereinafter “voluntary reporters, etc.”) (Article 11(1)). The Secretary General of the Fair Trade Commission provides that “Where evidence submitted falls under the requirements for reduction and exemption under Article 35 of the Enforcement Decree of the Fair Trade Act, he/she shall prepare a document confirming that the submitted evidence falls under the requirements for reduction and exemption, etc. and deliver it to the applicant (Article 12(1)). Furthermore, the Fair Trade Commission provides that the public notice on reduction and exemption shall be deliberated and resolved on matters concerning voluntary reporters, etc. in accordance with the verification of status, such as voluntary reporters by the Secretary General (Article 12(1)) and the public notice on the amendment of Chapter 2(1)-10(2) of the former Public Notice on Voluntary Report, etc.

In light of the contents and purport of the relevant provisions, it is a provisional and provisional measure to confirm or cancel the status of a voluntary reporter, etc., and the Fair Trade Commission has the authority to finally deliberate and decide on matters concerning the reduction or exemption of a voluntary reporter, etc.

2) The lower court rejected the Plaintiff’s claim that the Defendant did not have such authority to the effect that the Defendant finally determined that the Defendant satisfied the requirements for reduction of and exemption from the first voluntary report to the two industries Co., Ltd. (hereinafter referred to as “Co., Ltd.” in the name of each company”) was the measures under Article 12(1) of the Fair Trade Act and the Notice

3) Such determination by the lower court is based on the legal doctrine as seen earlier, and it did not err by misapprehending the legal doctrine on the authority to recognize the status of voluntary reporters.

B. Regarding ground of appeal No. 2

1) Article 35(1)1 through 3 of the Enforcement Decree of the Fair Trade Act, which provides for the criteria for mitigation or exemption for those who voluntarily report or who voluntarily report, provides different criteria for mitigation or exemption and the degree of reduction or exemption. Article 35(1)1 and 2 of the Enforcement Decree of the Fair Trade Act provides that “The first person who independently provides evidence necessary to prove an unfair collaborative act shall be the one who voluntarily provided such evidence as the first voluntary reporter or the first investigator; ② the Fair Trade Commission fails to obtain information on an unfair collaborative act or fails to obtain sufficient evidence necessary to establish an unfair collaborative act; ③ has faithfully cooperateed in an investigation, such as submission of relevant materials; ④ has been suspended such unfair collaborative act until an investigation is completed.” Article 35(1)3 of the Enforcement Decree of the Fair Trade Act provides that “The first person who voluntarily reported or provided the evidence necessary to prove an unfair collaborative act shall be the one who voluntarily provided such evidence; ② has provided the evidence related to the unfair collaborative act.” Article 35(1)3 of the Enforcement Decree of the Fair Trade Act provides that the unfair collaborative Act shall be the one who voluntarily provided such evidence.

As such, the purport and purpose of the Fair Trade Act is to establish a system for voluntary reporters, etc., and to ensure the effectiveness of sanctions against unfair collaborative acts, which are closely conducted by encouraging the Fair Trade Commission to detect unfair collaborative acts more easily and collect evidence, by providing business entities participating in such unfair collaborative acts with benefits to voluntarily report or to provide evidentiary materials through investigation (see, e.g., Supreme Court Decision 2017Du46912, Jul. 26, 2018).

2) Meanwhile, Article 5 of the Public Notice of Reduction and Exemption provides that the following matters shall be comprehensively considered to determine whether “faithly cooperate” among the requirements for the above Enforcement Decree.

(1) Whether a person who has filed a voluntary report has fully stated any of the facts related to the collaborative act known to him/her without delay (Article 1);

(2) Whether voluntary reporters, etc. hold or are able to promptly submit all materials that they hold or are able to collect in connection with the collaborative act (subparagraph 2)

(3) Whether the Commission promptly answers and cooperates with the Commission’s request necessary for factual verification (No. 3)

(4) Whether executives and employees (including former executives and employees, if possible) have made every effort to cooperate with the Commission in continuous and true meetings, investigations, etc. (No. 4)

(5) Whether the evidence and information related to the collaborative act have been destroyed, fabricated, damaged or concealed (No. 5)

(6) Whether a third party has divulged the fact of conduct and the fact of application for reduction or exemption to the third party without the consent of the Committee before notifying the review report.

3) In light of the form and content of the provision on public notice of reduction or exemption, it constitutes a rule on processing affairs within the administrative agency established based on the exercise of discretionary authority, i.e., discretionary rules, and setting reasonable standards necessary therefor within the extent not contrary to statutes, belongs to the discretion of the administrative agency. However, Article 5 of the public notice of reduction or exemption provides that the determination of “faithly cooperate” should be made by comprehensively taking into account the following factors into account; whether voluntary reporters should take into account the criteria for determination on the grounds prescribed by each subparagraph or any reason; and whether voluntary reporters should take into account the affirmative and pride factors prescribed in subparagraphs 1 through 4 if such passive and unlawful factors are recognized, in any case where the Fair Trade Commission’s determination of whether to deny the status of voluntary reporters, etc. is in violation of the duty to cooperate in good faith; and ultimately, the overall evaluation of such factors as the period of voluntary reporters or voluntary reporters’ failure to comply with the duty to cooperate after a series of investigations by the Fair Trade Commission cannot be seen as having been in violation of the duty to cooperate in good faith.

4) The lower court determined that the Defendant’s examiner’s revocation of the status of the two industries, such as voluntary reporters, on the ground that the Defendant’s disclosure of voluntary report details by the two industries, etc., based on the following circumstances, it is difficult to view that the Defendant’s determination that the two industries and the two industries meet the requirements for reduction and exemption, such as the first or second voluntary reporters of the instant collaborative act, was an deviation or abuse of discretion.

① The second industry provided an opportunity to initiate an investigation to detect the instant collaborative act by filing a voluntary report with the Defendant first without being aware of the instant collaborative act, and continued to submit the data until the Defendant’s deliberation is completed. The second industry cannot be deemed to have fabricated the evidence related to the instant collaborative act, and rather cooperateed in the investigation by supplementing the data after recognizing that the employee denied a partial agreement, and the relevant employee also recognized the entire content of the agreement later.

② Although it is recognized that he/she applied for reduction or exemption only for the collaborative act in which he/she participated, it does not appear that he/she intentionally did not state all the relevant facts although he/she was well aware of the collaborative act in this case before he/she participated, or that he/she could not be deemed as having faithfully cooperated with the defendant

5) Such determination by the lower court is based on the legal doctrine as seen earlier. In so doing, it did not err by misapprehending the legal doctrine on the requirements for exemption from voluntary reporters.

C. Regarding ground of appeal No. 3

1) Considering the purport and purpose of the system, such as voluntary reporters, etc., and the fact that an enterpriser who has participated in an unfair collaborative act voluntarily reports or cooperates in an investigation to provide evidential data, etc., it is intended to weaken trust among participating enterprisers to discontinue or prevent an unfair collaborative act, it shall be based on the degree of contribution to the possibility of detection of the unfair collaborative act by the relevant enterpriser in determining whether voluntary reporters, etc. are subject to reduction or exemption and the order of reduction or exemption (see Supreme Court Decision 2009Du1505, Sept. 8, 2011). Meanwhile, in cases where a series of agreements among enterprisers can be considered as one unfair collaborative act, only the first participating enterpriser who has provided evidence necessary to substantiate the unfair collaborative act among those participating in the unfair collaborative act, regardless of the timing of participation, falls under the requirements for reduction or exemption of Article 35(1)1 of the Enforcement Decree of the Fair Trade Act (see Supreme Court Decision 201Du2815, Jun. 31, 2011).

2) The lower court determined that, on the premise that whether the instant collaborative act constitutes a voluntary reporter, etc. as a whole as one of the unfair collaborative acts should be determined on the basis of the entire collaborative act, even if there exists a bid for which two industries and Maco Construction did not file a voluntary report or a bid for recognizing the fact of collusion later than the Plaintiff, it cannot be deemed that only a part of the agreement obtained the status of a separate investigator for investigation on the grounds that

① The two industries participated in the entire process of the instant collaborative act, and appears to have sufficiently provided the Defendant with the evidence necessary to prove the instant collaborative act. Although the Plaintiff did not include the content of the agreement in 2005 to 2006 participating in the first application, etc. for reduction or exemption of the two industries, the two industries thereafter supplemented the statement related thereto. Even if the Plaintiff did not cooperate with the investigation, the Defendant appears to have been able to prove the facts of the instant collaborative act solely with the materials submitted by the two industries and the Scco construction and the materials submitted by the relevant parties.

② Although the Switzerland Construction participated in the instant collaborative act and submitted materials after the occurrence thereof to the Defendant, it is difficult to deem that the Defendant’s resolution that the instant collaborative act satisfies the requirements for reduction or exemption as to the entire portion of the instant collaborative act is unlawful, since the instant collaborative act was a single collaborative act.

③ Although the Plaintiff was deemed to have submitted a written statement, etc. by a person related to the agreement between 2005 and 2006 at the time of filing an application for reduction or exemption, the Defendant appears to have already secured the detailed details of the instant collaborative act from 2005 and sufficient data to prove the Plaintiff’s implementation of the instant collaborative act from 2005.

3) Such determination by the lower court is based on the legal doctrine as seen earlier. In so doing, it did not err by misapprehending the legal doctrine on the recognition of the status of voluntary reporters for some of the joint acts.

2. Whether the statute of limitations has lapsed (Ground of appeal No. 4)

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

① In 205, six employees, including the large forest industry, 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 principle of stable acceptance of contracts by allocating the successful bid volume among the companies.

② Accordingly, each agreement in the year 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, it did not err by misapprehending the legal doctrine on the establishment of one collaborative act and the prescription

3. Whether the order to pay the penalty surcharge of this case is unlawful

A. Whether the standard for calculation of penalty surcharge is unlawful (Ground of appeal No. 5)

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, whether to determine the specific amount of penalty surcharge within a certain scope prescribed by the Fair Trade Act and the Enforcement Decree of the Fair Trade Act. Thus, 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 facts that form the basis for imposing 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

2) According to the language and text of Article 9(1) and Article 61(1) [Attachment 2] [Attachment 2] [Attachment 3] of the Enforcement Decree of the Fair Trade Act, with respect to “tender collusion and other acts similar thereto,” the amount calculated by multiplying the “contractual amount” by 10/100 shall be the upper limit of penalty surcharges, and the said “contractual amount” shall be deemed to be the basic basis for calculation of penalty surcharges (see Supreme Court Decision 2016Du3360, Apr. 27, 2017, etc.). Meanwhile, the former Public Notice on the detailed criteria for imposition of penalty surcharges amended on October 7, 2015 (Amended by Presidential Decree No. 2016-22, Dec. 30, 2016; hereinafter “Public Notice of Penalty Surcharges”) provides for reduction of the amount of penalty surcharges by more than 5/20 of the base for calculation of N-2.

In light of the aforementioned forms and contents, the provision regarding the notice of penalty surcharges is a discretionary rule, i.e., the administrative agency’s internal rules on administrative affairs, established based on the exercise of discretion regarding the calculation of penalty surcharges and the imposition thereof, and setting the standards for the calculation and imposition thereof belongs to the discretion of the administrative agency, so long as it is deemed that the standards are not consistent with the Constitution or laws, or are not objectively reasonable, and thus an abuse of discretionary power, the administrative agency’s intent should be respected as far as possible. Such discretionary rules are generally effective only within the administrative organization, not external binding force, and such administrative disposition is not immediately unlawful merely because it violates administrative disposition. However, if administrative practice takes place after the enforcement of the discretionary rules, as prescribed by the principle of equality or the principle of trust protection, barring any special circumstance, a disposition contrary thereto goes against the principle of equality or the principle of trust protection is an unlawful disposition that deviates from and abused discretion (see, e.g., Supreme Court Decision 201Du8371, Nov. 14, 2013).

3) The lower court determined that, in light of the fact that there is no possibility of mutual competition within a single joint supply and demand organization in bidding practice, the joint supply and demand organization is calculated as a single competitor, and the purport of the amendment of the public notice of penalty surcharges to reasonably adjust the standards for calculating penalty surcharges against the participants, the Defendant did not have reasonable grounds for determining the N of the public notice of penalty surcharges as a joint supply and demand organization, or that there was a deviation or abuse of discretion.

4) 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 on the basis of penalty surcharge calculation standards.

B. Whether the calculation method of penalty surcharges is unlawful (Ground of appeal No. 6)

1) Article 61(1) and 61(1) [Attachment 2] d. 1 of the Enforcement Decree of the Fair Trade Act provides that “If it is deemed that a violation enterpriser’s actual ability to bear the expenses or its violation affects the market, the effect of the violation on the market, or the scale of profits acquired by the violation pursuant to Article 5-3(1)3 of the Act, is excessive due to the failure to fully reflect the amount of profits acquired by the violation, etc., it may be determined as a penalty surcharge by reducing the amount by up to 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 Fair Trade Act provides that “If the second adjusted calculation standards reflects the special financial situation of the violator enterpriser, or the actual ability reflecting the market and economic conditions, the Fair Trade Commission shall clearly specify the grounds for the second adjustment in the resolution and make a decision on the amount of profits acquired by the violation, such as the adjustment rate and reduction of profits pursuant to (2).”

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.

3) The lower court determined that the instant disposition cannot be deemed to violate the principle of self-defense (the principle of equality) and the principle of proportionality, etc. on the grounds that the Defendant’s application of the reduction rate was arbitrary or it is difficult to deem that the Defendant’s application of the reduction rate was in a arbitrary manner, and that it is difficult to recognize the existence of other administrative practices, on the grounds that the Defendant’s application of the reduction rate did not violate the principle of self-defense (the principle of proportionality) and the principle of proportionality, etc.

4) 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

4. 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 Park Sang-ok (Presiding Justice)