[1] Requirements for presumption of agreement on unfair collaborative acts under Article 19(5) of the former Monopoly Regulation and Fair Trade Act

[2] The standard for determining circumstances that can destroy presumption of agreement on unfair collaborative acts under Article 19(5) of the former Monopoly Regulation and Fair Trade Act

[3] Whether an order of the Fair Trade Commission to pay a penalty surcharge is abused or abused discretion in a case where the Fair Trade Commission calculates sales by including a period of time other than a violation period and takes it as a sales standard for imposing a penalty surcharge (affirmative)

[4] The meaning of the starting date of an act of violation under the presumed agreement of unfair collaborative acts pursuant to Article 19(5) of the former Monopoly Regulation and Fair Trade Act and the standard for its determination

[1] If the Fair Trade Commission proves two indirect facts that “an enterpriser has committed an act falling under any of the subparagraphs of Article 19(1) of the Act” under Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999) and that “an act practically restricting competition in a particular business area” is “an act practically restricting competition in a particular business area,” it is presumed that the enterpriser has agreed to perform such collaborative act.

[2] In determining the circumstances where enterprisers who are presumed to have agreed to engage in unfair collaborative acts pursuant to Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 1999), can reverse the presumption of agreement on unfair collaborative acts, the determination shall be made reasonably in accordance with the transaction norms by comprehensively taking into account the characteristics and status of the market in the pertinent product transaction area, the characteristics and mode of the product, the distribution structures, the structure of prices, the impact of the prices on the market, the position of each individual company in the same trade area, the impact of the price changes on the individual company's operating profit, market share, etc., the legitimacy of the business judgment, the possibility that the agreement may be reached even without consultation, the experience of price reduction and the history of violation of the law, and the economic and policy background at the time, etc.

[3] Article 55-3(1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999) provides that when the Fair Trade Commission imposes a penalty surcharge, it shall take into account the content and degree of the violation, the period and frequency of the violation, and the size of profits acquired from the violation. In a case where the Fair Trade Commission calculates the unfair collaborative act with regard to the period of violation and the size of profits during the violation, including the period of violation and the size of profits during the violation, and takes the amount as the standard amount of imposition of the penalty surcharge as sales, it shall be deemed that there is an error in the fact-finding that serves as the basis for exercising the discretionary power to impose

[4] According to Article 19(5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 1999), since an agreement on unfair collaborative act is presumed to have been reached only when the act of an agreement is restricted by competition, it is reasonable to deem that the starting date of the act corresponding to the time of the act was all when two indirect facts, such as the external concurrence of the act and the restriction on competition, are all satisfied. As to the time of the act, the market share of the enterpriser who committed the act with the assent of external appearance, and the characteristics and situation of the market in which the enterpriser produces and sells should be comprehensively considered.

[1] Article 19(1) and (5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 199) / [2] Article 19(1) and (5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999) / [3] Articles 19 and 55-3(1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999) / [4] Article 19(1) and (5) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 199)

[1] [2] [3] Supreme Court Decision 2002Du4433 Decided May 30, 2003 / [1] Supreme Court Decision 2001Du1239 Decided February 28, 2003 (Gong2003Sang, 928) Supreme Court Decision 2002Du4648 Decided May 27, 2003 (Gong2003Ha, 1458), Supreme Court Decision 2001Du5552 Decided December 12, 2003 (Gong204Sang, 163) / [3] Supreme Court Decision 200Du6121 Decided May 28, 2002 (Gong202Ha, 1553)

National Credit Card Co., Ltd., a lawsuit taking over the merged national credit card companies (Law Firm Ha & Yang, Attorneys Yang Jong-soo et al., Counsel for the defendant-appellant

Fair Trade Commission (Law Firm Han, Attorneys Jeon Soo-soo et al., Counsel for defendant-appellant)

Seoul High Court Decision 2002Nu16377 delivered on May 20, 2004

All appeals are dismissed. The costs of appeal are assessed against each party.

We examine the grounds of appeal.

1. Judgment on the Plaintiff’s appeal

A. As to the first ground for appeal

(1) If the Fair Trade Commission proves two indirect facts of “an act falling under any of the subparagraphs of Article 19(1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999; hereinafter “the Act”) and the fact that it “an act practically restricting competition in a particular business area” is “an act practically restricting competition in a particular business area” (hereinafter “competitive act”), it is presumed that the enterpriser has agreed to engage in such collaborative act (see, e.g., Supreme Court Decision 2002Du4433, May 30, 2003).

(2) (A) Whether an act corresponds to the external shape of the act

In full view of the adopted evidence, the lower court determined that: (a) the Plaintiff, EL Card Co., Ltd. (hereinafter “EL Card”); (b) Samsung Card Co., Ltd. (hereinafter “Seoul Card Co., Ltd”; and (c) foreign exchange credit card Co., Ltd. (hereinafter “foreign exchange card”; and (d) the above four companies including the Plaintiff, etc. (hereinafter “4 card Co., Ltd.”) raised the weighted average interest rate converted from the annual rate between February 1, 1998 to March 2, 1998 to the maximum of 1.01% from 28.9% to 30.0%; and (b) there was a difference between the above rate of cash service charges and the additional rate of interest rate of the said four companies; and (c) there was a difference between the above rate of interest rate of each company after January 5, 1998 to February 1, 198; and (d) there was a difference between the above rate of interest rate of each company in the form of cash service; and (d) the above rate of interest rate of each company increase.

In light of the records and the purport of the relevant laws and regulations, the above recognition and determination by the court below is just, and there is no error in the misapprehension of legal principles as to the consistency of the appearance of an act, such as the grounds for appeal, or in incomplete deliberation.

(B) As to the practical restriction on competition

The lower court determined that, on the premise that each credit card business entity did not divide and present the relevant market corresponding to each function even though each credit card business entity formed a single market through competition on the grounds that the credit card company has the short-term financial function of the cash service and the installment purchase function of the installment service, the market share in 198 of the card 4 company in 198 at issue of the collaborative act of this case was over-market structure by the Plaintiff’s 20.1%, the EL card’s 13.1%, the Samsung Card’s 11.4%, the 14.3%, the foreign exchange card’s 14.3%, and the total market share of the card company’s 58.9%, and therefore, the credit card business was not easy to enter as a license system, and therefore, the act of each of the above rates of 4 company constitutes an act of practically restricting competition by reducing competition through price in the domestic credit card business sector.

In light of the records, the above recognition and judgment of the court below are just and acceptable, and there are no errors in the misapprehension of legal principles as to competition limitation and the determination of related markets, such as the grounds of appeal, incomplete hearing, or violation of the rules of evidence.

B. Regarding ground of appeal No. 2

According to Article 19(5) of the Act, in determining circumstances where enterprisers who are presumed to have reached an agreement on unfair collaborative acts may destroy the presumption of unfair collaborative acts, it shall be reasonably determined in accordance with the trade norms by comprehensively taking into account the characteristics and status of the market in the field of trade of the goods in question, the characteristic and mode of the goods, the distribution structure, the structure of pricing, the structure of prices, all the internal and external impacts on the market price, the position of each individual company in the same field of trade, the impact of the price changes on the business profits, market share, etc. of the individual company, the legitimacy of the business judgment in light of the individual business conditions of the enterpriser, the actual state of direct exchange of opinions, such as meeting between the enterprisers, etc., the degree of probability that the agreement may be reached even without consultation, the experience of price reduction and legal violation, and the background of economic and policy at the time (see Supreme Court Decision 2001Du552, Dec. 12, 2003).

The lower court rejected the Plaintiff’s assertion that, in light of the circumstances indicated in its holding, it is difficult to view the instant rate increase by 4 card companies independently in accordance with their respective business judgment without any actual agreement or mutual understanding, and even if the instant rate increase at the time of the increase, the instability in the fund market was accelerated due to the occurrence of the IMF remedy financial situation, and the credit card policy of 4 card companies except the instant rate increase, such circumstance alone alone, is insufficient to reverse the presumption of agreement on collaborative acts, and thus, the presumption of agreement on collaborative acts becomes extinct.

Examining the relevant evidence in light of the records, we affirm the fact-finding and judgment of the court below as just, and there is no error in the misapprehension of the presumption of agreement, such as the grounds of appeal, in violation of the rules of evidence, or in misapprehension of the legal principles.

C. Regarding ground of appeal No. 3

The lower court determined that the instant overdue interest rate constitutes “price” under Article 19(1)1 of the Act, on the ground that, in the case of credit card business, cash service commission, installment commission, or late payment damages after the due date for each of the above fees is the amount to be borne by consumers pursuant to the relevant credit card transaction agreement, and it cannot be deemed that there is no difference in the payment before and after the due date, and that such difference in the overdue interest rate for each of the service providers constitutes an important element that constitutes a price competitiveness among the card providers in relation to consumers, as in the case of fees.

In light of the relevant laws and regulations, the above determination by the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to the subject of unfair collaborative acts, such as the grounds for appeal.

2. Judgment on the defendant's appeal

Article 55-3 (1) of the Act provides that the Fair Trade Commission shall take into account the content and degree of the violation, the period and frequency of the violation, and the size of profits acquired from the violation in the imposition of a penalty surcharge. In the event that the Fair Trade Commission calculates sales by taking into account the period of the violation and the size of profits during the violation, including the period of the violation, and takes it into account as the sales standard, it shall be deemed that there is an error in the fact-finding, which serves as the basis for exercising discretion to impose a penalty surcharge, and thus, it shall be deemed that the order to pay a penalty surcharge deviatess from and abuses discretionary power and is illegal (see Supreme Court Decisions 200Du6121, May 28, 2002; 2002Du4433, May 30, 2003). Meanwhile, according to Article 19 (5) of the Act, it is presumed that an agreement on the unfair collaborative act was reached only when the act was conducted during the period of the violation, and it shall be deemed that the enterpriser’s production and sale of the market share.

The court below found on February 16, 1998, where the plaintiff increased the commission rate of cash service, Samsung Card, EL Card (total market share of 44.6%) and EL Card (total market share of 33.2%) on January 21, 1998, which raised the discount rate, that only Samsung Card and Samsung Card (total market share of 44.6%) raised the discount rate, and on February 16, 1998, the above price discount rate of 44.6%, which is the premise to determine whether the above price discount act constitutes "the act practically restricting competition", and determined that the above price discount rate of 44.6% or 33.2% cannot be viewed as the date of each increase in the rate of 4 card company, which is the basis for determining whether the defendant's increase in the rate of 4 card company's increase in the rate of this case's calculation of the discount rate of the surcharge of this case should be based on the calculation of the rate of the penalty surcharge of this case's violation.

In light of the records and the above legal principles, we affirm the above recognition and determination by the court below as just, and there is no error in the misapprehension of legal principles as to competition limitation and calculation of penalty surcharge, such as the grounds of appeal.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)