Samsung Public Co., Ltd. (Attorneys Lee Im-ho et al., Counsel for the defendant-appellant)

The Fair Trade Commission (Law Firm Han-soo, Attorneys Choi Tae-tae et al., Counsel for the defendant-appellant)

May 14, 2009

1. The Defendant’s corrective order in attached Form 1(3) and the payment order in attached Form 1(8) against the Plaintiff as a decision No. 208-034 on January 25, 2008 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The general status of the plaintiff, etc.

The current status of the plaintiff is a small and medium enterprise owner prescribed by the Act on Small and Medium Enterprises that operates the automobile parts manufacturing business, such as Draditer, Oral Private Schoolr, and Private Schoolr, and the general status is as follows.

On the 1st half of Japan

On June 11, 1970, the date of the incorporation of Samsung T&M in the main sentence of this Act, the date of the change in the trade name of manufacturing of the automobile parts operated by the business type on June 11, 1970 (the date of June 11, 200): Samsung C&D Industries (the state of Samsung C&D), and the current status of sales, etc. (unit: KRW 107,658, 118,917 102,015 102,932 of this amount as of every 107,658,658, 118,917 102,915 102,932 as of every 06 year 0,004,0634,0634,0634,063, 111,6438, 32210,489, 784, 107, 1967

The number of small and medium enterprises with less than 300 regular employees is 80 companies, such as non-party 1 corporation, etc., which were entrusted with the manufacture of automobile parts, etc. from the Plaintiff. The Plaintiff’s sales or the number of regular employees in the immediately preceding business year (2003 through 2006) exceeds twice the sales or the number of regular employees of the non-party 1 corporation, etc. Accordingly, the Plaintiff constitutes a principal contractor under Article 2(2)2 of the Fair Transactions in Subcontracting Act (hereinafter “subcontract”), and 80 companies, such as non-party 1 corporation, etc. fall under the subcontractor under Article 2(3) of the Subcontract Act, and the entrustment of the manufacture thereof also constitutes subcontract transactions under Article 2(1) of the Subcontract Act.

B. The plaintiff's act

(1) Collection of bill discount;

During the period from 2004 to 9 September 15, 2006, the Plaintiff was found to have failed to pay bill discount charges to the Defendant, and the Plaintiff paid KRW 527,137,000 to the 33 non-party subcontractors, such as the non-party 2 limited liability company, but thereafter recovered KRW 380,804,00 from the 24 subcontractors as shown below.

Details of bill discount collection

(Period: 203 to 2006, unit: 00 won)

본문내 포함된 표 순번 수급사업자 어음할인료 지급액(A) 어음할인료 회수액(B) 회수율(%) (B/A) 비고 1 소외 2 유한회사 47,193 11,999 25 ？ 2 소외 3 주식회사 43,554 5,000 11 ？ 3 소외 4 주식회사 9,525 7,506 79 ？ 4 소외 5 주식회사 56,323 52,396 93 ？ 5 소외 6 주식회사 4,610 1,117 24 ？ 6 소외 7 주식회사 3,960 3,960 100 ？ 7 소외 8 주식회사 3,163 3,163 100 ？ 8 소외 9 주식회사 11,462 11,147 97 ？ 9 소외 10 주식회사 4,007 3,817 95 ？ 10 소외 11 주식회사 22,607 5,971 26 ？ 11 소외 12 주식회사 28,853 28,853 100 ？ 12 소외 13 주식회사 7,936 7,936 100 구,태광설비공업사 13 소외 14 주식회사 75,613 75,613 100 ？ 14 소외 15 주식회사 34,422 27,674 80 ？ 15 소외 16 주식회사 1,832 - 0 ？ 16 소외 17 주식회사 30,090 30,090 100 ？ 17 소외 18 주식회사 5,902 - 0 ？ 18 소외 19 주식회사 3,043 - 0 05. 10.거래종료 19 소외 20 주식회사 113 - 0 ？ 20 소외 21 주식회사 19,361 19,361 100 ？ 21 소외 22 주식회사 9,969 9,969 100 ？ 22 소외 23 주식회사 44,454 30,000 67 ？ 23 소외 24 주식회사 7,866 - 0 05. 6. 거래종료 24 소외 25 주식회사 3,059 - 0 ？ 25 소외 26 주식회사 835 - 0 05. 9. 폐업 26 소외 27 주식회사 6,896 6,574 95 ？ 27 소외 28 주식회사 15,777 14,735 93 ？ 28 소외 29 주식회사 446 446 100 ？ 29 소외 30 주식회사 502 - 0 ？ 30 소외 31 주식회사 848 848 100 ？ 31 소외 32 주식회사 5,128 4,853 95 ？ 32 소외 33 주식회사 12 - 0 05년 거래종료 33 소외 34 주식회사 17,776 17,776 100 ？ 합계 527,137 380,804 72 ？

(2) Unreasonable reduction of subcontract consideration and overdue interest;

After receiving an object amounting to KRW 2,257,860 from 38 subcontractors, including Nonparty 35 Co., Ltd., in January 2007, the Plaintiff uniformly reduced the subcontract price by 5% and reduced the total of KRW 112,874,00,000, and paid only KRW 2,144,986.

○ Upon the commencement of the Defendant’s investigation, the Plaintiff paid the subcontract price that was reduced as above on May 31, 2007, including the subcontract price on April 2007, but did not pay a total of KRW 4,540,000 for interest on the reduced amount.

(3) Payment of the subcontract price and interest for delay.

(A) Subcontract price for computer inventory portion

The plaintiff, after receiving an object from the subcontractor since 2004, did not pay the subcontract price for the portion of the inventory after managing the inventory which was not used for the production of the goods with the name of the computerized inventory. As of August 2007, the details of the unpaid subcontract price as of the end of 2007 are as follows.

Details of accrued subcontract considerations

(Standard year: 207. Unit: 1,000 won)

본문내 포함된 표 순번 수급사업자 5월말 재고(A) 8월말 재고(B) 증감(B-A) 1 소외 15 주식회사 15,680 10,247 -5,433 2 소외 27 주식회사 28,452 29,387 935 3 소외 14 주식회사 331,074 333,848 2,774 4 소외 12 주식회사 41,619 22,196 -19,423 5 소외 34 주식회사 7,174 8,334 1,160 6 소외 23 주식회사 40,366 23,492 -16,874 7 소외 10 주식회사 29,337 15,884 -13,453 8 소외 21 주식회사 23,479 24,828 1,349 9 소외 6 주식회사 12,786 13,225 439 10 소외 18 주식회사 16,769 23,064 6,295 11 소외 5 주식회사 140,172 167,784 27,612 12 소외 32 주식회사 4,019 4,342 323 합 계 690,927 676,631 ？

(B) Payment of interest in arrears to the non-party 36 corporation

The plaintiff paid 38,957,000 won to the non-party 36 corporation for the subcontract price of May 2007 and 36,067,000 won for the portion of computerized stock as of May 2007, after the statutory payment date, and did not pay 1,227,000 won for the interest in arrears to the non-party 36 corporation.

(c)interest and unpaid bill discount;

The Plaintiff paid KRW 53,000 for the period from February 2, 2004 to June 2006 the subcontract price as a bill exceeding the statutory payment date, and did not pay KRW 470,000 for interest in arrears to the non-party 1 corporation. The Plaintiff paid the subcontract price to the non-party 35 corporation and other 79 subcontractors for the period from February 2, 2004 to July 2007 as a bill for which the due date exceeds 60 days from the date of receipt of the object, and the Plaintiff did not pay KRW 1,070,845,00 for the excess period to the non-party 1 corporation and other 23 subcontractors including the non-party 1 corporation, etc. upon the Defendant’s investigation, the Plaintiff paid KRW 235,672,000 for interest in arrears and interest in arrears corresponding to the period from February 2, 2004 to March 15, 2007.

C. The defendant's disposition

(1) Corrective order and penalty surcharge payment order

Article 20 of the former Subcontract Act (amended by Act No. 9616 of Apr. 1, 2009; hereinafter “former Subcontract Act”) provides that the act of the Plaintiff’s act of collecting bill discount charges violates Article 20 of the former Subcontract Act (amended by Act No. 9616 of Apr. 1, 2009; hereinafter “former Subcontract Act”), Article 11(1) and (3) of the former Subcontract Act, and Article 13(1), (6), and (7) of the former Subcontract Act (amended by Act No. 8539 of Jul. 19, 2007; hereinafter “former Subcontract Act”) and thus, the Defendant ordered payment of penalty surcharges calculated through the following process, such as the corrective order of the details stated in attached Form 1, and the electronic inventory subcontract consideration.

(2) The process of assessing penalty surcharges;

(A) Determination of the subcontract price

According to Article 14-2 (1) [Attachment 2] of the former Enforcement Decree of the Subcontract Act (amended by Presidential Decree No. 21031 of Sep. 23, 2008), the subcontract consideration shall be the contract amount in the relevant subcontract. However, it is impossible to grasp all the contract amount in the relevant subcontract, and therefore, it shall be based on the actual subcontract amount in the subcontract.

Even in cases of subcontract transactions for which bill discount was not paid, the subcontract price actually occurred shall be based on the subcontract price. For other violations, the subcontract price which is obvious that it actually occurred in the subcontract shall be included within the scope of the violated amount.

The calculation of the subcontract price that serves as the basis for the imposition of the penalty shall be as follows:

The amount of the subcontract price actually occurred in the subcontract where the bill discount was not paid is the total of KRW 103,320,423,000,000,000 in total, and the subcontract price actually occurred in the subcontract where there was a violation other than bill discount payment, and the amount to be included within the limit of the violation amount is ① KRW 1.2,00,000,000 which was unfairly reduced in January 2007, ② the unpaid subcontract price for the computerized inventory quantity, ③ the unpaid subcontract price for the non-party 36 corporation.

Therefore, if the sum of each of the above amounts is added, the amount of the subcontract price being the basis for the imposition of the penalty shall be calculated as KRW 104,148,885.

(b) Calculation of basic penalty surcharges;

In this case, since the points of violation of the Act calculated pursuant to Article 14-2(1) [Attachment 2] related to Article 14-2(1) [Attachment Table 2] 1.b. of the former Enforcement Decree of the Subcontract Act fall under 72 points (ju 1), the imposition rate of penalty shall be 7%. The imposition rate of penalty shall be 14,580,843,000 won (104,148,885,000 won *22.7 million) when applying the imposition rate of 7% for the subcontract amount.

(C) Calculation of the adjusted penalty surcharge

The plaintiff did not voluntarily correct the violation and the ratio of cash settlement for the subcontract price is high, or the criteria for imposing penalty surcharges on the violating business entity under the Subcontract Act (No. 2007-7 of the Fair Trade Commission enacted on August 30, 2007, No. 2007-7 of the Fair Trade Commission; hereinafter referred to as "the notice of penalty surcharges") is not a reason for mitigation prescribed in Section 4.2.

Rather, the plaintiff submitted false data in the course of the investigation of this case and received the disposition of an administrative fine, and the plaintiff committed an evasion of the law to collect bill discount charges, so the notice of penalty surcharge IV.2.C. is subject to exemption from reduction.

However, as the basic penalty surcharge exceeds four times the amount of the violation, the notice of penalty surcharge IV.2.d., 9,122,324, which is four times the amount of the violation, shall be the adjusted penalty surcharge.

(d) Calculation of a penalty surcharge

Since the plaintiff is a small and medium enterprise and the mediation penalty surcharge is excessive compared to the amount of violation, it is imposed with a penalty surcharge of KRW 304 million reduced by 2/3 (a fine of less than a million).

(e) Payment in installments

If the plaintiff is required to pay the full amount of the penalty surcharge in a lump sum, it is anticipated that financial difficulties are significantly difficult, so it is ordered to order three installment payments.

(3) A ruling on an objection

Upon the Plaintiff’s filing of an objection against the above disposition, the Defendant maintained the corrective order on May 30, 2008, as it is, and excluded some amount of transaction that is not a subcontract subject to investigation by the Defendant from the amount of violation of the Act, the Defendant issued a disposition to change the amount of penalty surcharge from the original disposition to KRW 3,015,00,000 (the corrective order in attached Form 1(3) is referred to as “instant corrective order,” and the penalty surcharge payment order in attached Form 1(8) is referred to as “instant penalty surcharge payment order”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 and 2, the purport of the whole pleadings

2. The plaintiff's assertion

A. The assertion on the corrective order of this case

Since the amount of computerized inventory portion was produced by the subcontractor more than the amount of the order issued by the Plaintiff in order to reduce production costs and logistics costs, the Plaintiff merely stored it in the high-pollution place, it cannot be deemed that the Plaintiff received it, and therefore, there is no obligation to pay it.

Furthermore, since the payment of the unpaid amount is made before the disposition of this case and the correction of the unlawful state is made, the corrective order of this case is unlawful.

B. As to the order to pay the instant penalty surcharge

The instant penalty surcharge payment order is unlawful for the following reasons.

(1) Collection of bill discount;

At the time, the plaintiff requested the subcontractor to cooperate in order to raise the managerial difficulties of the plaintiff, and the subcontractor returned the bill discount voluntarily received by the subcontractor, so it is not an evasion of the application of the Subcontract Act.

In addition, the evasion of Article 20 of the Subcontract Act provides the type of "the imposition score by type of violation" under Article 20 (2) (a) (i) of the Enforcement Decree of the Subcontract Act. The bill discount collected by the Plaintiff does not correspond to "the case where the bill is recovered after payment to the subcontractor according to the corrective measures of the Fair Trade Commission under Article 25 of the Subcontract Act, such as recovery of the subcontract price or deduction from the price of supplied goods," but the defendant applied the higher rate on the premise that it is corresponding to it.

(2) unpaid payment of the cost of electronic inventory;

Even though the entire amount payable was paid before the disposition of this case and the state of illegality was voluntarily corrected, the total amount of KRW 676,631,000 of the subcontract price was included in the criteria for calculating the penalty surcharge, and the voluntary correction was not reduced.

(3) An error in recognizing the subcontractor

Non-party 37, non-party 38, non-party 39, non-party 40, and non-party 17 were included in the subcontract price which is the basis for the calculation of penalty surcharges, for the following reasons.

(A) Nonparty 37 corporation

The number of regular employees of the above company in 2005 and 2006 shall exceed 291 annual employees, 261 respectively, 576 and 503 1/2.

(B) Nonparty 38 corporation

The above company owned the entire shares until February 28, 2006, and thereafter deposited 50% of the 50% of the 50% of the 50% of the 50% of the 50% of the 50% of the 50% of the 50% of the 1st of March 1, 2006, and the representative director of the company concurrently holds the joint representative director of the above company

(C) Nonparty 39, Nonparty 40, and Nonparty 41 corporation

In the case of the non-party 39 corporation, part of the standardized Aluminium products are produced and sold to the plaintiff. The non-party 40 corporation sells an steinty lease plate which is standardized as the sales agent of the non-party 41 corporation to the plaintiff. The non-party 39 corporation produces a standardized yellow club (market) and sells part of it to the plaintiff. Thus, it cannot be said that the plaintiff and the plaintiff are in exclusive trade relations or substitute products are traded for the purpose of transaction, but dependent trade relations with the plaintiff are not formed.

(4) A deviation from or abuse of discretionary power

In light of the amount of profit, status of the Plaintiff’s business, etc. caused by the instant act, the instant penalty surcharge payment order was excessively harsh and abused discretion.

3. Related statutes;

Attached Form 2 shall be as shown in attached Table 2.

4. Whether the disposition is lawful.

A. Whether the corrective order of this case is unlawful

(1) First of all, in light of the purport of the entire pleadings as to whether the obligation to pay the computerized inventory portion to the plaintiff has occurred, the facts that the plaintiff has paid the computerized inventory portion payment in response to the request of some subcontractors, the subcontractor demanded the payment of the computerized inventory payment in April 2004, and that the plaintiff agreed to settle the amount by the end of September 2004 and pay the price based on the next public notice of entry, and that the plaintiff did not notify the subcontractor in advance in use of the computerized inventory portion. According to this, it is reasonable to deem that the computerized inventory portion amount was delivered to the plaintiff at the time of the plaintiff. Accordingly, it is reasonable to deem that the obligation to pay the subcontract amount has occurred as prescribed by Article 13 of the former Subcontract Act.

(2) However, where the Fair Trade Commission issues a corrective order pursuant to Article 25(1) of the former Subcontract Act, it should not simply verify whether there was a violation under Article 13, such as the occurrence and delay of payment of the subcontract price, and further, even if the result of the violation continues to exist until that time, if the result of the violation is no longer existing, regardless of any reason such as non-payment, repayment, offset, settlement, etc. of the subcontract price, even if the violation was committed, it shall be deemed that there is no room to issue a corrective order with the content of the corrective order (see Supreme Court Decision 2001Du3099, Nov. 26, 2002).

(3) However, in full view of the statement No. 10-1 to 12 of the evidence No. 10, and the testimony and the whole purport of the argument by Nonparty 42, the plaintiff can be found to have paid all of the price for the computerized stock portion and the interest for delay arising therefrom before the corrective order of this case is issued. Thus, the corrective order of this case is illegal since the result of the violation was already issued under the state of correction.

B. Whether the instant penalty surcharge payment order was unlawful

(1) In full view of the overall purport of the pleadings as to Gap evidence Nos. 1, 2, and Eul evidence Nos. 1-1 through 5, the collection of bill discount was demanded by the defendant to return it to the subcontractor in cash by ordering its employees, who were the president of the plaintiff, and the other party 43 to report the return was also demanded. The plaintiff can recognize that only part of the cash which was returned as above, was used as business expenses, and the remainder was kept as they were, and the testimony of the plaintiff Nos. 3-1 through 10 or part of the non-party Nos. 42 was insufficient. Thus, in light of the above circumstances and the financial status of the plaintiff and the subcontractor, it cannot be deemed that the subcontractor voluntarily returned it.

In addition, the above bill discount was recovered from the Plaintiff’s payment to the subcontractor according to the Defendant’s direction at the time of the written investigation of subcontract transactions as above. Therefore, it is justifiable to apply the pertinent imposition standard rate as stipulated in the public notice of penalty surcharges based on

(2) However, in light of the provisions of Article 25-3 of the former Subcontract Act and Article 14-2 of the former Enforcement Decree of the Subcontract Act, the imposition of a penalty surcharge under the Subcontract Act may be imposed even where the result of the violation has already been corrected (this circumstance can only be considered as the grounds for reduction of a penalty surcharge. Therefore, the Plaintiff’s assertion that the payment of a subcontract price, etc. already paid should be excluded from the subcontract price which is the basis for calculation of a penalty surcharge is not acceptable) basically has the characteristics of sanction against the violation. However, the Plaintiff’s violation of Article 25-3(2) of the former Subcontract Act is subject to the application of Article 55-3 of the Monopoly Regulation and Fair Trade Act mutatis mutandis under Article 25-3(2) of the former Subcontract Act, which deprives of the illegal economic benefits gained by the violation. As seen above, the Plaintiff returned all the bill of discount collected before the order of payment of the penalty surcharge of this case was issued, and the computerized inventory portion was paid in full, and the amount payable to Nonparty 36 companies should have been voluntarily corrected.

Therefore, considering the fact that the Defendant did not consider the aforementioned circumstances in calculating the instant penalty surcharge at all, and the Plaintiff appears to be somewhat difficult to reduce the instant penalty surcharge in light of its business status as a small and medium enterprise, the instant penalty surcharge payment order is excessively and abused its discretion, even if considering the content and degree of the Plaintiff’s violation, the period and frequency of the violation, and the Plaintiff’s non-cooperative attitude on the Plaintiff’s investigation.

5. Conclusion

Therefore, since both the instant corrective order and the penalty surcharge payment order are unlawful, it is so decided as per Disposition by the Plaintiff’s claim of this case.

[Attachment 1]

Judges Lee In-bok (Presiding Judge) Lee In-bok Kim

1) The violation score of the Enforcement Decree of the Act shall be calculated by the method of calculation of the imposition score of the type of violation x 0.4 + the imposition score of the rate of the amount of violation x 0.2 + the imposition score of the number of violations x 0.2 + the imposition score of the number of past violations x 0.2 + the imposition score of the past past past past violation x 0.2.

In this case, the imposition score by type of violation is at least two types, such as the evasion of law, unfair reduction act, and the act of payment of subcontract consideration, and thus, it is 100 points.

본문내 포함된 표 위반행위의 유형(A) 적용법조 부과점수 2. 법 제20조를 위반한 때 법 제20조 100 5. 수급사업자에게 책임을 돌릴 수 없는 사유로 하도급대금을 부당하게 감액한 때 법 제11조 80 17. 법 제13조를 위반한 때 ？ 40

On the other hand, since the amount of violation falls short of 5% of the subcontract amount, the imposition point according to the ratio of the amount of violation is 40, and the imposition point according to the number of violations is 3, and it is calculated as 80 points because the number of violations is 3. In addition, the imposition point according to the previous 1 year of the plaintiff is calculated as 0.5 points and 2.5 points for the past 3 years, the imposition point according to the past 40 points.

Therefore, the sum of the violation points of the Plaintiff is 100*0.4 + 40*0.2 + 80*0.2 + 40*0.2 + 40*0.2 = 72.

2) The current public notice of penalty surcharge shall apply in consideration of the fact that the Plaintiff’s act was conducted over the date of deliberation by the Fair Trade Commission from 2004 to the date of deliberation, the application of the statute as of the date of deliberation favorable to the

Note 3) The amount of the Plaintiff’s violation is KRW 2,280,581, and the details thereof are as follows.* Withdrawal of bill discount: KRW 380,804,000 * Unfair Reduction: KRW 112,874,000 * Payment of subcontract consideration for the computerized stock portion* KRW 676,631,000 (based on August 2007) for Non-Party 36 * Payment of subcontract consideration for Non-Party 36: KRW 38,957,000 * Payment of interest and interest discount for Non-Party 1 Stock Company: KRW 1,071,315,000