Effective Co., Ltd. (Law Firm Initial, Attorney Lee Dong-hoon, Counsel for defendant-appellant)

Fair Trade Commission (Government Law Firm Corporation, Attorney Park Si-hwan, Counsel for defendant-appellant)

December 14, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

All corrective orders in attached Forms 1 and 2 and penalty surcharges in attached Form 3 issued by the defendant to the plaintiff shall be revoked.

1. Progress of the disposition;

A. The defendant's corrective order and penalty surcharge payment order

On December 1, 2010, the Defendant agreed on the Plaintiff on December 1, 2010, on the ground that “the Plaintiff’s bid for the first section construction site in the Seoul District Headquarters Housing Construction Project (hereinafter “the Jeju District Headquarters”) with 17 construction companies including the promotion enterprise, etc. in order to increase the successful bid rate of the promotion enterprise, and agreed on the payment of the highest amount of four types of bidding among the total process 30 construction companies (hereinafter “instant bid collusion”) as agreed on December 11, 2007 (hereinafter “instant bid collusion”) shall constitute a bid collusion as stipulated in Article 19(1)8 of the Monopoly Regulation and Fair Trade Act (hereinafter “the Act”). As indicated in attached Table 1, the Defendant issued a corrective order and a penalty surcharge of KRW 680,000,000,000,000,000,000 (hereinafter “instant disposition”).

In addition, on December 23, 2010, the Defendant agreed on December 23, 2010, the Plaintiff issued a corrective order and penalty surcharge of KRW 760 million as stated in attached Table 2, on the ground that “The Plaintiff’s bid for construction sections A-18BL apartment construction works in the main construction order shall be made in a higher amount of the total 30 construction units among the 16 construction companies, including the promotion company, in order to enhance the Plaintiff’s successful bid rate, and that the bid bid offered as agreed on January 29, 2008 (hereinafter “instant bid bid collusion”) constitutes a bid collusion as stipulated in Article 19(1)8 of the Act” (hereinafter “instant Disposition 2”, and the instant disposition is referred to as “instant disposition”).

B. Defendant’s reduction of penalty surcharge

According to the resolution of the plenary session on December 30, 2010, the Defendant changed the Plaintiff’s voluntary reduction of and exemption from the penalty surcharge of KRW 680 million as stated in the instant disposition No. 1 to KRW 425 million, and the Plaintiff changed the penalty surcharge of KRW 7.6 million as stated in the instant disposition No. 2 to KRW 441 million (the aforementioned change referred to as “instant penalty surcharge”).

[Reasons for Recognition] No dispute, Gap evidence Nos. 1, 2, and 3 (including virtual numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a) Formation of unfair collaborative acts;

1) The plaintiff's assertion

In the lowest price system applicable to the construction ordered by the main contractor, the agreement on part of the tender participants is merely merely a strategic cooperation to increase the probability of passing the first stage examination, and such agreement on part of the tender participants cannot be filled with to the extent that it can only pass the first stage examination. In the second stage examination, the tender collusion in this case prior to the first stage examination has no effect of restricting competition.

2) Determination

The lowest price applicable to the construction project ordered by the main contractor is usually 4 to 5 to be determined as an improper type of construction work in order to pass the first stage examination (the number of construction works to be determined as an improper type of construction work is usually 4 to 5, and the bid price for each type of construction work is operated only due to collusion with several types of construction works, so it is highly probable that it will fall from the first stage examination by being determined as an improper type of construction work at least 6 units. However, the plaintiff and the promotion company, like the plaintiff and the promotion company, may adjust the average bid price for the relevant type of construction work to a certain extent so that it does not fall short of the standard price for the relevant type of construction work, and remove the possibility of falling from the first stage examination by appropriately lowering the remaining bid price for the relevant type of construction work (the entry of evidence No. 1, 2, and A No. 2, the purport of the whole pleadings and arguments). Accordingly, if potential competition enterprises unfairly fall from the first stage examination, it cannot be accepted in this part of the fair competition examination.

(b) Calculation of imposition penalty surcharges;

(i) very serious violation;

The plaintiff asserts that each bid collusion in this case is a deviation from or abuse of discretionary authority, since the effect of restricting competition is virtually nonexistent, extremely weak, and did not inflict any particular damage on the main tender. Therefore, the defendant's determination of each of the bid collusion in this case as "a major violation" constitutes a deviation from or abuse of discretionary authority.

However, as seen earlier, it is reasonable to view that as long as a successful bid has been awarded in the state of undermining fair competition, the main contractor, has no choice but to incur considerable damages because the lowest price was not achieved in the initial bid, since the bid bid for construction works ordered by the main contractor is not fair competition and unfairly excluded from fair competition. Thus, this part of the Plaintiff’s assertion is without merit.

(2) Additional penalty surcharges based on electricity such as corrective orders

A) The plaintiff's assertion

Although the Plaintiff was newly established in December 197 through a merger with the Filient Products Co., Ltd., the Filient Living Industry Co., Ltd., and the Filient Heavy Industries Co., Ltd., the Plaintiff was practically an affiliate in substance and received corrective orders and penalty surcharges in the middle and chemical sector before the merger are not at all related to the construction sector. Relevant sales are calculated on the basis of contracts awarded by the Plaintiff in the field of main construction. However, it is unlawful to add the amount of penalty surcharges at the stage of calculating the mandatory penalty surcharges on the ground of electric power, such as corrective orders

B) Determination

The enterpriser who violated the law of each of the bidding collusions in this case is not the plaintiff's construction-form Group (hereinafter "PG"), which is a mere internal organization of the plaintiff, but the plaintiff itself. In addition, the plaintiff was issued a corrective order, etc. on the ground of unfair collaborative acts on May 25, 2007 and June 5, 2007, after the plaintiff was designated as an effective large group company from the defendant in April 1999, since it was launched through the consolidation and merger in 1998 (the evidence No. 1-2, No. 1-2, No. 2, and the purport of the whole pleadings). Therefore, it is legitimate that the defendant added the penalty surcharge to the ground that the plaintiff had the record of receiving the corrective order, etc. within the last three years at the time of calculating the mandatory penalty surcharge on the ground that the defendant had been subject to the corrective order, etc. on the ground that there is no reason as alleged by the plaintiff

3) Violation of the principle of proportionality

The plaintiff did not have any profit gained by the plaintiff in the bidding collusion No. 1 of this case, and the bidding collusion No. 2 of this case reported the deficit of 5.7 billion won at the present time due to the amount of 70% compared to the successful bid price in comparison with the estimated bid price. The plaintiff asserts that the penalty surcharge of this case is excessively excessive to the plaintiff and is in violation

However, considering the following circumstances that can be seen in light of the overall purport of the arguments in the statement No. 1, No. 1-2, No. 2, No. 2, and No. 3-1 and No. 2, the instant penalty surcharge cannot be deemed to violate the principle of proportionality because it is too excessive to the Plaintiff compared to the Plaintiff’s violation of the law. Thus, the Plaintiff’s assertion in this part is without merit.

① The Plaintiff was able to reduce the costs of the tender by avoiding the competition in the instant bidding No. 1. Moreover, the Plaintiff prepared and maintained the basis for obtaining various assistance from the promotion company, etc. in return for the bid collusion once the instant bid collusion. The Plaintiff was able to receive the successful bid by leading the bid collusion No. 2. Therefore, it is reasonable to deem that the Plaintiff acquired various economic benefits due to the bid collusion No. 1.

② The Plaintiff secured the adequate housing construction volume by winning a successful bid in the bidding documentation No. 2 of the instant case, and utilized the Plaintiff’s human resources and equipment, secure liquidity through advance payment or the stable payment, and obtain economic benefits to maintain the performance records necessary for public institutions to participate in the bidding of construction works to be ordered.

③ At the time of the instant disposition, the Defendant reduced the maximum amount of KRW 1/2 of the basic penalty surcharge in consideration of the Plaintiff’s failure to win a bid in the bid collusion No. 1, as well as the amount to be reduced by 60% in the calculation of the penalty surcharge in consideration of the following: (a) it is difficult to deem the Plaintiff to have acquired significant economic benefits due to the bid collusion of the instant case; (b) the housing construction market has been significantly diminished due to the economic depression; and (c)

C. Sub-decision

Therefore, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit.

[Attachment]

Judges Cho Jong-chul (Presiding Judge)