[1] In a case where a market-dominating enterprise in the vertically integrated upstream market engages in a market-dominating act of lowering the retail price of finished products in the downstream market, thereby unfairly supplying goods or services at a price lower than the ordinary transaction price, and thereby excluding competitors, whether the Monopoly Regulation and Fair Trade Act and Fair Trade Act and subordinate statutes prohibit abuse of market-dominating position can be deemed as an abuse of market-dominating position (affirmative)

[2] The meaning of "ordinary trade price" under Article 5 (5) 1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act

[3] Criteria and method for determining the illegality of “act of trading to exclude a competitor” under the former part of Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act

[4] The issue of determining illegality is “a transaction that might unfairly supply goods or services at a price lower than ordinary transaction price and exclude competitors” under the former part of Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act and Article 5(5)1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, which is the means of profit-saving, is considered in determining illegality

[1] In a case where a market-dominating enterpriser’s profit-tension squeeze is deemed to be a type of abuse of a market-dominating position, it is likely to reduce investment inducement or innovation motivation on raw materials, etc., such as upper-tier markets. However, if a market-dominating enterpriser who has been integrated into a vertically integrated market is likely to abuse the position of a market-dominating enterpriser to put profits into an unfair competition, and thus it is difficult to maintain the foundation of fair competition, it is difficult to view that the profit-tension squeeze’s act constitutes a lawful competition method, which is based on the fair competition and its market performance through fair competition.

Therefore, if a market dominant enterpriser’s profit-saving act, which takes the form of lowering the retail price of finished products in the downstream market, can be evaluated as “the transaction that might unfairly supply goods or services at a price lower than the ordinary transaction price and exclude competitors,” it is necessary to regulate it by deeming it as an abuse of market dominant position prohibited by Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 202) and Article 5(5)1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act.

[2] Article 5(5)1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 2020) specifies “an act of trading to unfairly exclude competitors” under the former part of Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 2020), which is a provision of the mother law, and the ordinary transaction price is not only an “discepting price,” but also an instrument to determine an act of abuse related to the price of a market-dominating enterpriser which may arise in various types, such as “probiated price setting” but also an “probiated s eze”. Therefore, the meaning should be interpreted to conform with the meaning, content, and legislative purpose of the mother law.

The ordinary transaction price means the price that can be generally formed in the case of normal transactions in a market where free and fair competition is being performed, and more specifically means the price that is generally formed in a normal transaction where there is no abuse of market dominant position by a market dominant enterpriser in order to unfairly exclude competitors.

[3] The illegality of “act of trading to exclude competition enterprisers” under the former part of Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 2020) should be interpreted in line with the legislative purpose of “competitive promotion” in a monopoly market. Therefore, the intent or purpose of a market-dominating enterpriser to maintain and strengthen monopoly in the market is to restrict free competition in the market, i.e., intent or purpose to artificially affect the market order by restricting free competition in the market, and objectively, to evaluate that the effect of such competition is likely to occur, such as price increase, calculated quantity of goods, innovation, and significant decrease in the number of competitors, etc. In order to do so, it should be proved that the act is likely to have an effect of restricting competition, and its purpose should be proved to have an intention to do so. In practice, if it has been proved that it would result in restricting competition at the time of the act, the price and purpose of the act should be determined in consideration of various factors and characteristics of the act.

[4] In light of the concept of profit pressure squeeze and the tangible characteristics of the abuse of market dominant position, the following shall be comprehensively taken into account in determining illegality in light of the standard of determining illegality: “Transactions that are likely to supply goods or services at a price lower than the ordinary transaction price and exclude competitors” (Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 2020).

First, it is necessary to consider whether an actor is a market dominant position in the upper stream market, whether it is a market dominant position in the lower stream market, whether it is an essential factor in the production, supply, and sale of finished products that the raw materials, etc. are sold in the lower stream market, whether it is an essential factor in the production, supply, and sale of finished products that are sold in the lower stream market, the possibility of substitution, the possibility of substitution, the existence and degree of a legal and institutional or factual and economic barriers to new or re-entry into the two markets, the market share of a market dominant enterprise and a competitor, the difference in relative size, and the contents of relevant public law regulations.

Then, in principle, the difference between wholesale prices and retail prices set by a market dominant business entity and the costs of a market dominant business entity shall be based on the costs of the competitor in exceptional cases. Furthermore, considering the continuous period of conduct, characteristics of finished products subject to the transaction in question, the scale of transaction in question or the ratio of sales amount, specific market situation at the time of transaction, etc., if a market dominant business entity trades at the price at the price, it is necessary to examine whether there is a concern that the market dominant business entity might be excluded from the competition due to the increase in costs of the market dominant business entity and its degree, whether the market dominant position of the market dominant business entity is strengthened and its degree, whether there is a risk that the market dominant business entity might cause harm to consumers in the long term.

The price is the most basic means of competition in the market economy system and free price competition in the market should be generally protected.If the vertical integrated market-dominating enterprise lowers the retail price of finished products in the lower market, it is not easy to distinguish whether it constitutes a legitimate means of competition or to exclude competitors through profit pressure.

If profit-saving is performed in a way that lowers the retail price of finished products in the lower market, it is possible to reduce the final consumer price by reducing the cost of the transaction partner. Therefore, it is also necessary to consider the effect of increasing consumer welfare that may arise in the short term when determining the illegality.

The possibility of excluding competitors by the abuse of market dominant position is derived from the structural characteristics of the relevant market connected with the upper and lower-class market as above, and the difference between the market price and the retail price based on the market dominant position. Therefore, the illegality need not be determined on the premise that it may arise in the upper and lower-class market, respectively.

[1] Article 3-2 (1) 5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799 of Dec. 29, 2020), Article 5 (5) 1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act / [2] Article 3-2 (1) 5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799 of Dec. 29, 2020), Article 5 (5) 1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act / [3] Article 3-2 (1) 5 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799 of Dec. 29, 202), Article 5 (5) 1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act / [4] Article 5 (1) 1 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 5799 of Dec. 29, 2020)

[3] [4] Supreme Court Decision 2013Du14726 Decided January 31, 2019 (Gong2019Sang, 643) / [3] Supreme Court en banc Decision 2002Du8626 Decided November 22, 2007 (Gong2007Ha, 1940)

ELBS Co., Ltd. (Attorneys Yang Sung-tae et al., Counsel for the defendant-appellant)

Fair Trade Commission (Attorney Kim Jong-sik, Counsel for defendant-appellant)

Artificial Bank Co., Ltd. (Law Firm LLC et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2015Nu38278 decided January 31, 2018

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Case overview

According to the reasoning of the lower judgment, the following facts are revealed.

A. Pursuant to Article 6 of the Telecommunications Business Act (amended by Act No. 14839, Jul. 26, 2017; hereinafter the same shall apply), the Plaintiff is a key telecommunications business operator permitted by the Minister of Science, ICT and Future Planning (wholly amended by Act No. 17799, Dec. 29, 2020; hereinafter “Fair Trade Act”). Article 2 subparag. 1 of the Monopoly Regulation and Fair Trade Act (wholly amended by Act No. 17799, Dec. 29, 2020; hereinafter “Fair Trade Act”). The Plaintiff was a current Plaintiff’s consolidation of the ELD (hereinafter “stock company”) with which the Plaintiff engaged in wire communications business on January 1, 2010, when the name of the company, which is called “the name of the company”).

B. Corporate domain service is a service that transmits text messages to users’ cell phone terminals through a mobile communications network from a company’s computer. This is used in various fields, such as financial institutions such as banks, card companies, and securities companies, public institutions, shopping malls, hospitals, etc., and credit card approval, banking deposits, securities transaction, and shopping order delivery notice service is an example.

Pursuant to Article 2 of the Telecommunications Business Act, corporate domain services constitute value-added telecommunications services, other than key telecommunications services, and shall report to the Minister of Science, ICT and Future Planning pursuant to Article 22 of the same Act in order to operate this business: Provided, That where a key telecommunications business operator intends to operate value-added telecommunications business, he/she is deemed to have reported value-added telecommunications business, and the key telecommunications business operator is entitled to operate this business without any separate report. Among the three key telecommunications business operators providing mobile communications services, the Plaintiff and the case is producing and selling the business domain services with the exception of est telecom.

다. 기업메시징서비스 시장은 2000년대 초반 피고보조참가인(이하 ‘보조참가인’이라 한다)이 은행, 카드사 등 금융기업을 통해 이용고객의 카드승인내역, 은행계좌 입출금 내역 등 각종 금융 알림 문자서비스를 제공하기 시작하면서 형성되었다. 시장 형성 당시에는 기업메시징서비스에 대한 시장의 인식이 낮은 편이어서 금융사고 예방과 마케팅 등 일부 영역에서만 한정적으로 사용되었다. 이후 금융정보, 개인정보, 마케팅 문자를 중심으로 수요가 급증하면서 시장이 빠르게 성장하였다. 이 과정에서 원고의 합병 전 법인인 엘지데이콤, 케이티, 스탠다드네트웍스, 다우기술, 삼성네트웍스(현 삼성 에스디에스), 에스케이텔링크 등이 시장에 진입하였다.

The corporate news service market may be divided into “transaction between mobile communications business operators and corporate mail service business operators (hereinafter referred to as “transmission service”) and “transaction between corporate mail service business operators and business customers.” A mobile communications business operator shall enter into a contract for transmission service with a corporate mail service business operator and shall provide transmission service that transmits text messages to customers who have joined the mobile communications network through the mobile communications network. The relevant mobile communications business operator may only send text messages to users who have joined the specific mobile communications service. As the relevant mobile communications business operator may send text messages to users who have joined the specific mobile communications network, if a business operator does not send text messages only to customers who have joined the specific mobile communications network, then the business mail service provider shall enter into a contract for transmission service with all domestic mobile communications business operators.

(d) A corporate domain service provider is largely divided into a service provider holding a wireless communications network and a service provider not holding a wireless communications network. Among the service providers related to corporate domain services, there are resale service providers who purchase and sell products produced by a corporate domain service provider, and there is also a service provider who directly produces and sells corporate domain services with a mobile network operator upon entering into a contract for use of transmission services with a mobile network operator and at the same time resells by purchasing and selling products of another corporate domain service provider.

결과적으로 기업메시징사업자는 ① 원고, 케이티와 같이 무선통신망을 보유하여 전송서비스도 제공하면서 기업메시징서비스업을 영위하는 사업자, ② 다우기술, 스탠다드네트웍스, 에스케이네트웍스서비스와 같이 위 3개 이동통신사업자와 전송서비스 이용계약을 체결하여 기업메시징서비스를 생산ㆍ판매하는 사업자, ③ 보조참가인, 슈어엠, 삼성에스디에스, 에스케이텔링크와 같이 기업메시징서비스를 생산ㆍ판매하면서 다른 기업메시징사업자의 상품을 재판매하기도 하는 사업자로 구분된다(씨제이시스템즈, 롯데정보통신, 씨제이헬로비전 등 재판매사업만 영위하는 사업자는 기업메시징서비스를 직접 생산ㆍ판매하지 않으므로 기업메시징사업자가 아니다).

E. Three mobile communications business operators, including the Plaintiff, are key telecommunications business operators, and report to the Minister of Science, ICT and Future Planning by setting terms and conditions for service charges pursuant to the Telecommunications Business Act. According to the above terms and conditions, all three mobile communications business operators have a flight-type price system at which the unit price for each transaction is low. The unit price for each section is different depending on each business operator, but the minimum unit price, excluding all three basic fees, is set at KRW 30 million per case if the unit price exceeds 30 million per case, and KRW 9 per case if the unit price exceeds 20 million per case, and KRW 10 million per case if the number exceeds 100,000 won for the Plaintiff. The Plaintiff sells the transmission service using his/her radio communications network to another business operator, and purchases the transmission service using his/her own radio communications network from 10-20 won per case to 9-200 won per case.

F. From June 2010 to December 2012, 2013, the Plaintiff sold a number of business customers at a price lower than the average service charges [mark] on the average service charges for each case of transmission services (hereinafter “instant act”). In other words, the Plaintiff sells business mail services at a price lower than the service charges it purchases from KScom or rink, and sells from 8 won at a price lower than the minimum service charges for transmission services it provides to other business operators.

[Attachment] The average minimum service charge per unit of each transmission service (hereinafter “minimum service charge”) is an amount calculated by adding the minimum service charge to each mobile network operator’s share of subscribers (5:3:2) to each mobile network operator in order for a business operator to provide services to business customers, the average service charge per unit of each transmission service (hereinafter “minimum service charge”) is an amount calculated by adding the average service charge to each of the three mobile network operators.

The average service charges per case during the table period included in the main sentence shall be 10 won per 10% from October 1, 2009 to September 30, 201 (SK 10 won + 50% + 30% + 10% + 20%) + LGU x 9.5 won per case (SK 9 x 50% + 30% + 30% on October 30, 201) (SGU x 30% + 30% on October 30, 201) x 9.2 won per case after November 1, 201 (SGU x 50% + 50% ＋ 30% x 30%) x 20%).

G. On February 23, 2015, the Defendant issued a corrective order and penalty surcharge as indicated in the attached Form of the lower judgment to the Plaintiff (hereinafter “instant disposition”). For that reason, the Plaintiff’s act constitutes an abuse of a market dominant position under Article 3-2(1)5 of the Fair Trade Act and Article 5(5)1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (hereinafter “Enforcement Decree of the Fair Trade Act”), where the Plaintiff, a market dominant enterpriser of an enterprise domain service market through the domestic radio communication network (hereinafter “enterprise domain service market”), which is the related market in the instant case, might unfairly supply goods or services at a price lower than the ordinary transaction price, thereby excluding competitors.”

2. The lower judgment and the key issue

A. On the grounds delineated below, the lower court revoked the instant disposition on the grounds that it was unlawful.

The ordinary transaction price under Article 5(5)1 of the Enforcement Decree of the Fair Trade Act is “real price formed in the market when an efficient competitor selects in light of the economic and management situation at the time of transaction, structure of the market, uncertainty of future prediction, etc.” It is reasonable to view that the ordinary transaction price was “real price formed in the market.” The Defendant calculated the ordinary transaction price based on the minimum sale price of transmission service, which is difficult to view as calculating the ordinary transaction price of “transport service” even though it can be seen as a method of calculating the ordinary transaction price of “corporate mail service.” Even if the method of calculating the ordinary transaction price is recognized, it is difficult to view it as a method of calculating the ordinary transaction price of “corporate mail service.” Even if the method of calculating the ordinary transaction price calculated by the Defendant,

Furthermore, the evidence presented by the Defendant alone does not constitute an act that could objectively exclude competitors objectively. It is difficult to view that the Plaintiff’s intent or purpose is to maintain and strengthen monopoly points at the time of the instant act, and thus, it cannot be deemed that the Plaintiff’s act “unfairly supply prices lower than ordinary transaction prices, thereby excluding competitors.”

B. The key issue is (1) whether the Plaintiff’s act of selling corporate domain services at a price lower than the minimum selling price of transmission services constitutes “act of providing for a price lower than the ordinary market price” and (2) whether the illegality is recognized as an abuse of a market dominant position by a market dominant enterpriser as a means of profit pressure.

3. Supreme Court Decision

(a) Concept of profit pressure and need for regulation as a type of abuse of market dominant position;

When a market dominant business operator supplies raw materials, input elements, etc. (hereinafter referred to as "raw materials, etc.") necessary for a business operator's production activity in a downstream market (hereinafter referred to as "small and medium-sized investment company"), and manufactures and sells goods or services (hereinafter referred to as "wholly manufactured goods") based on raw materials, etc. in the downstream market, it may be a type of abuse of market dominant position where a market dominant position is abused.

Profit pressure refers to the act that a market-dominating business entity in the vertically integrated upstream market excluding competitors from the competition because it is difficult for competitors to effectively compete in the downstream market by reducing the difference between the selling price of raw materials, etc. in the upstream market (hereinafter referred to as “market price”) and the selling price of finished goods, etc. in the downstream market (hereinafter referred to as “ retail price”).

In the case where an vertical integrated entrepreneur who holds a market dominant position as a supplier of raw materials, etc. operates a finished product business in the downstream market, it can generally satisfy the terms and conditions favorable to competitors in the downstream market regarding the supply of raw materials. On the other hand, a competitor in the downstream market has the supply of raw materials, etc. necessary for the manufacture of finished products by a market dominant enterpriser. Therefore, the structural dependence relationship in which his production costs can be directly changed depending on the determination of wholesale prices for raw materials, etc. by a market

In the structure of such a related market, a market dominant enterpriser may reduce the difference between the wholesale price and the retail price by raising the wholesale price of raw materials, etc., or lowering or lowering the retail price of finished products, or by implementing both methods. In this case, if the wholesale price set by a market dominant enterpriser is higher than the retail price, and the difference between the retail price and the retail price is too small to the extent that the market dominant enterpriser cannot cover the costs of his/her subordinate market, a competitor in the subordinate market that is required to be supplied with raw materials, etc. by the above market dominant enterpriser is unable to effectively compete after appropriating the costs necessary for production of the subordinate market, and if such pressure continues for a certain period, it is likely to be excluded in the market.

The Fair Trade Act was established for the purpose of protecting free competition as well as fair competition (see Article 1 of the Fair Trade Act). In particular, in a market where a market dominant enterprise exists, the original function of competition can be properly operated only when free competition of other market participants is guaranteed.

If a market dominant business entity's profit-tension is deemed a type of abuse of the market dominant position and regulates it, it may reduce investment incentives or innovation motivations for raw materials, etc. of the upper-class market. However, if it is difficult to maintain the basis of fair competition because the market dominant business entity's abuse of the position of the market dominant business entity is likely to unfairly exclude competitors in the lower-class market by excluding unfair competition, it is difficult to view the profit-tension as a legitimate competition method, which is based on the market performance through fair competition.

Therefore, if a market dominant enterpriser's profit-saving act, which takes the form of lowering the retail price of finished products in the downstream market, can be evaluated as a "transaction which might unfairly supply goods or services at a price lower than the ordinary transaction price and exclude competitors," it is necessary to regulate it by deeming it as an abuse of market dominant position prohibited by Article 3-2 (1)5 of the Fair Trade Act and Article 5 (5) 1 of the Enforcement Decree of the Fair Trade Act.

B. Whether it constitutes an act supplied at a lower price than “ordinary market price” (Defendant’s ground of appeal Nos. 1 and 1 and 2)

(1) The meaning of ordinary transaction price

The former part of Article 3-2(1)5 of the Fair Trade Act provides for "an abuse of market dominant position by a market dominant enterpriser to exclude competitors," and Article 5(5)1 of the Enforcement Decree of the Fair Trade Act provides for "an abuse of position by a market dominant enterpriser, where a competitor is likely to exclude competitors by unfairly supplying goods or services at lower prices than ordinary transaction prices or purchasing them at higher prices than ordinary transaction prices."

In the past, Article 5(5)1 of the Enforcement Decree of the Fair Trade Act deemed a provision to regulate the “establishment of a malicious price” which refers to an act that may exclude competitors by selling goods or services at a price lower than one’s own expense. However, since the ordinary transaction price is a kind of “price” separate from the cost, if the transaction price is changed into “cost”, it would clearly violate the legal text. This is more clear if the “unfair salt”, which is a type of unfair trade practices under Article 23(1)2 of the Fair Trade Act and Article 36(1) [Attachment 1-2] 3(a) of the Enforcement Decree of the Fair Trade Act, is provided as “an act that could exclude competitors of one’s own or its affiliated companies by continuously supplying goods or services at a price significantly lower than the cost required for supply without justifiable cause.”

Article 5(5)1 of the Enforcement Decree of the Fair Trade Act specifies “an act of unfairly excluding competitors” under the former part of Article 3-2(1)5 of the Monopoly Regulation and Fair Trade Act, which is the mother law provision, and the ordinary transaction price is a tool to determine the abuse of exclusion related to the price of a market-dominating business entity, which may arise in various types, such as not only the “establishment of an inappropriate price,” but also the “profit pressure.” Therefore, the meaning should be interpreted to conform to the meaning, content, and legislative purpose of the mother law provision.

In the case of ordinary transactions in a market where free and fair competition is taking place, the ordinary transaction price means the price generally formed, and more specifically, the price which is generally formed in a normal transaction where there is no abuse of market dominant position by a market dominant enterpriser in order to unfairly exclude competitors.

The ordinary transaction price can sufficiently understand the meaning and contents of the act subject to regulation through the systematic and theoretical interpretation of the provisions of the mother law to the extent possible of the language and text as above. In addition, since the beneficiary is a market-dominating business entity, it is highly predictability for the act subject to regulation. Even in cases where the transaction of a market-dominating business entity falls under the act of supply at a level lower than the ordinary transaction price under Article 5(5)1 of the Enforcement Decree of the Fair Trade Act, the illegality of the act can be recognized, but the act of abuse of the market-dominating position can be established. Therefore, even in consideration of the fact that the “ordinary transaction price” under Article 5(5)1 of the Enforcement Decree of the Fair Trade Act can be the form of a punitive administrative disposition, which directly regulates the price setting by the market-dominating business entity, the meaning of the ordinary transaction price does not go against

Inasmuch as the Fair Trade Commission bears the burden of proving the legality of the disposition, such as a corrective order, it should prove that the price for specific supply or purchase set by a market dominant enterpriser is lower or higher than the ordinary transaction price prescribed by Article 5(5)1 of the Enforcement Decree of the Fair Trade Act by reasonable means, comprehensively taking into account the tangible or specific characteristics of the abuse of market dominant position, structure of the relevant market, method of price determination, trends in change, quantity and period of supply or purchase, characteristics of the relevant goods or services, etc.

(2) Determination on the instant case

Examining the foregoing legal principles regarding ordinary transaction prices, the Plaintiff’s act in this case constitutes “the act of supplying goods or services at lower prices than ordinary transaction prices.” The reasons are as follows.

In the market, the price is not determined solely on the cost. A business entity, a competitor of an enterprise-based business entity that is required to receive transmission services from the Plaintiff, is the basic method of economic activity of an enterprise to supply corporate-based services at the price calculated by adding labor cost, sales cost, and other cost and adequate profit to service charges corresponding to the purchase cost of essential raw materials.

As seen above, when considering the special transaction structure of the relevant market where a domestic mobile communications business operator should conclude a contract for transmission service with all of the domestic mobile communications business operators, if the business operator does not send the message only to a customer who has subscribed to a specific mobile communications network, the ordinary transaction price of corporate mail services in this case is likely to at least to cover the purchase cost of transmission service, which is an essential material of the Plaintiff's business business business operator, in the corporate mail communications service market.

According to the reasoning of the lower judgment, the Defendant appears to have determined that the minimum selling price of transmission service computed by assuming the cost, other than the service charges, and adequate profits, at the time of the instant disposition, constituted the ordinary transaction price at the lowest level which can be objectively assumed in the company domain service market.

Meanwhile, according to the reasoning of the lower judgment and the record, three mobile communications business operators, including the Plaintiff, are in excess of the supply of long-term transmission services in the instant transmission service market without any special change. Therefore, it cannot be concluded that the Defendant calculated the minimum transaction price at which each mobile communications business operator is objectively assumed in a way that averages user fees of each mobile communications business operator based on the market share of the mobile communications business operator, not the actual market share or the volume of text messages sent during the period during which the instant act was committed, and that the sales price of the corporate domain service supplied by the Plaintiff is lower than the ordinary transaction

Ultimately, the Plaintiff’s act of this case constitutes “the act of supplying goods at a lower price than the ordinary market price” under Article 5(5)1 of the Enforcement Decree of the Fair Trade Act.

Nevertheless, the court below erred in calculating the ordinary transaction price in the instant disposition on the ground that the meaning of the ordinary transaction price was interpreted differently from the aforementioned legal principles, and on the premise that the Defendant did not examine and consider the actual transaction price, etc. formed in the market, and determined that the instant disposition was unlawful

The lower court erred by exceeding the bounds of the principle of free evaluation of evidence or failing to exhaust all necessary deliberations by misapprehending the legal doctrine on the interpretation and application of “ordinary market price” under Article 5(5)1 of the Enforcement Decree of the Fair Trade Act.

C. Whether illegality is recognized (Defendant’s ground of appeal Nos. 2 and 3, and Intervenor’s ground of appeal No. 2-4)

(1) Criteria for determining the illegality of profit-tensioning act

The instant disposition grounds are as follows: (a) the Plaintiff’s act may be supplied at a lower price than the ordinary transaction price so as to exclude competitors; and (b) the Plaintiff’s act may be in violation of Article 3-2(1)5 of the Fair Trade Act and Article 5(5)1 of the Enforcement Decree of the Fair Trade Act; and (c) “the act of supplying goods at a lower price than the ordinary transaction price” can include not only the creation of a negative price but also the act of lowering profits.

Even if a market-dominating enterprise engaged in “the act of supplying goods at a lower price than the ordinary market price,” such fact alone does not constitute an abuse of the market-dominating position, and the act of supplying goods at a lower price than the market-dominating position should not be deemed as an abuse of the market-dominating position.” In other words, the illegality should be recognized.

When comprehensively taking into account the contents written in the instant disposition, relevant statutes, and the overall process up to the instant disposition, the Defendant rendered the instant disposition on the ground that the instant act satisfies the requirements for illegality on the basis of factual basis that the instant act had a tangible feature as an act of profit pressureing the retail price of corporate domain services lower than the wholesale price of the Plaintiff’s transmission service.

The illegality of the “act of trading to exclude competition enterprisers” under the former part of Article 3-2(1)5 of the Fair Trade Act ought to be interpreted in line with the legislative purpose of promoting competition in a monopoly or monopoly market. Therefore, the illegality may be recognized when a market-dominating enterpriser has an intent or purpose to artificially restrict free competition in the market to maintain and strengthen monopoly in the market, i.e., the intent or purpose to artificially affect the market order by restricting free competition in the market, and objectively, an act that can be evaluated as having an effect of restricting competition. To this end, it should be proven that the act is likely to have an effect of restricting competition, such as price increase, output reduction, innovation, or significant decrease of competitive enterprisers, and that there was an intention or purpose to engage in such act. In practice, if it has been proved that the above act has been effective, it is likely to cause competition at the time of the act, and its intention or purpose should be presumed in fact to have been expressed, taking into account the following factors: (i) details and motive of the act; (ii) quantity of the act; (iii) whether the relevant product or purpose of innovation in an adjacent market is likely to 20.

In light of the concept of profit pressure and the tangible characteristics as an abuse of market dominant position, the following circumstances should be comprehensively taken into account in determining illegality in light of the standard of determining illegality as seen above: (a) whether the abuse of position as a means of profit pressure, such as the Plaintiff’s act, is “unfairly supplying goods or services at a price lower than the ordinary transaction price” and is likely to exclude competitors (Article 3-2(1)5 of the Fair Trade Act and Article 5(5)1 of the Enforcement Decree of the Fair Trade Act).

First, it is necessary to consider whether an actor is a market dominant position in the upper reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches a vertical integration, whether each market dominant position is essential for the production, supply, and sale of finished products sold in the lower reaches reaches reaches an element or raw material, etc. of finished products that are essential for the production, supply, and sale of the upper reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches reaches an extent of comparison with the functional relationship of raw materials, etc. with the finished products, possibility of substitution, existence and degree of a legal, institutional, or factual and economic barriers to new or re-entry into the two markets, market share with a market dominant business entity, the difference between the market share

Then, in principle, the difference between wholesale prices and retail prices set by a market dominant business entity and the costs of a market dominant business entity shall be based on the costs of the competitor in exceptional cases. Furthermore, considering the continuous period of conduct, characteristics of finished products subject to the transaction in question, the scale of transaction in question or the ratio of sales amount, specific market situation at the time of transaction, etc., if a market dominant business entity trades at the price concerned at the price, it is necessary to examine whether there is a possibility that a significant realistic or potential competitor business entity may block or block access to or expansion of the market because it is difficult for the market-dominating business entity to conduct business normally, and the extent thereof, whether the market-dominating business entity is likely to be excluded from the competition due to the increase in costs of the market-dominating business entity, whether the dominant position of the market-dominating business entity is strengthened, the degree thereof, and whether there is

The price is the most basic means of competition in the market economy system, and free price competition in the market should be generally protected (see Supreme Court Decision 2013Du14726, Jan. 31, 2019). If a market-dominating enterprise, which is vertically integrated, lowers the retail price of finished products in the downstream market, it is not easy to distinguish whether it constitutes a legitimate means of competition or to exclude competitors through profit pressure.

If profit-saving is performed in a way that lowers the retail price of finished products in the lower market, it is possible to reduce the final consumer price by reducing the cost of the transaction partner. Therefore, it is also necessary to consider the effect of increasing consumer welfare that may arise in the short term when determining the illegality.

The possibility of excluding competitors by the abuse of market dominant position is derived from the structural characteristics of the relevant market connected between the upper and the lower-class market as above and the difference between the wholesale price and the lower-class market based on the market dominant position. Therefore, the illegality need not be determined on the premise that it may arise in the upper and lower-class market, respectively.

(2) Determination on the instant case

(A) According to the reasoning of the lower judgment, the following circumstances are revealed.

The total market share of the third business operators, including the plaintiff, in the corporate domain services market in 2013, reaches about 79%. The plaintiff's market share in the transmission services market with the nature of the essential raw materials of corporate domain services is about 20% and the total share of three mobile network operators, including the plaintiff and the case, is about 100%. The share of the cost related to the use of transmission services, which is the raw materials, in the sales price of corporate domain services, is reasonable.

The plaintiff and the case are superior to the supply condition of raw materials in the relevant market, the related market, and there are existing existing competitors who have already been engaged in the company domain services market for a considerable period of time and have related technology and human resources. The plaintiff has considerable advantages in terms of financial power, economic scale, market share, supply ratio of raw materials, etc. compared to major competitors of the company domain services market except for the case.

During the period of the instant act, the market share of the Plaintiff with the radio communication network and the case companies' business metrative service market has increased, while despite the expansion of the company metrative service market, the market share of the companies metrative service providers, including auxiliary intervenors, who did not own the radio communication network, tend to decrease.

(B) Examining the factual basis as seen in the above 1.1 and the circumstances described in the above 3.c. (2)(a) in light of the legal principles as seen in the above 3.c. (1), there is room to view the instant act as an act of pressureing profit as an act of offering prices lower than the ordinary transaction price, and thus, likely to exclude competitors. The reasons are as follows.

① Even based on the reasoning of the judgment below by the Plaintiff as a vertical integration business operator, the Plaintiff is in a market dominant position in both the transmission service market and the company domain service market. At the time of the instant disposition as a key telecommunications business operator under the Electric Communications Act, the Plaintiff may be deemed to have a legal and institutional entry wall in the transmission service market, and a factual and economic entry wall in the company domain service market.

② If a market-dominating enterpriser, as the Plaintiff’s act, sells corporate domain services below the minimum sales rate of transmission services, the price competition itself is difficult in the corporate domain service market because it is difficult for a competitor, who does not have an independent radio communication network, to properly supply corporate domain services without regard to losses, to assume that a competitor, who purchased such transmission services at the minimum sales rate of transmission services.

In addition, in case where a market-dominating enterpriser, which has vertical integration with the radio communication network in the upstream market like the Plaintiff, is higher than the retail price of finished products in the upstream market, and the retail price and wholesale price are negative (-) by establishing a market-dominating enterpriser higher than the retail price of finished products in the downstream market, competitive enterprisers in the ordinary company-based service market who do not own an independent radio communication network may be deemed to be highly likely to be excluded from competition by making it difficult for them to effectively compete in the above price terms and conditions in the company-based service market, unless there are special circumstances. To make this decision, the difference between wholesale price and retail price is not to be analyzed separately from the case of a transferee. Even if competitors in the company-level service market are equally or even more efficient than the Plaintiff, the results will not be changed.

If the difference between the retail price and the wholesale price is negative (-), the plaintiff, who is a business entity that has a dominant position in both the upper and the lower market, can sufficiently expect the possibility that the competitor will be excluded from the business M&C market due to the difference between the wholesale price and the retail price. Therefore, it can be presumed that the intention and purpose of restricting competition itself is to be the act itself.

③ The cost level that Plaintiff’s competitors face in the corporate domain services market is merely due to the structure and characteristics of the relevant market where there exist vertical integrated enterprises, such as the Plaintiff or case holding a mobile communications network. The original corporate domain services are the first technology developed by supplementary participants in the early 2000s, which began to be formed by the market. In light of such circumstances, the corporate domain services, which did not hold a radio communications network, cannot be regarded as “non-effective competitors” in itself from the supply of corporate domain services, and thus, regulating the Plaintiff’s act, cannot be said to constitute “non-effective competitors.”

④ Even if the price of corporate domain services has lowered and the market has grown during the period during which the Plaintiff committed the instant act, it cannot be readily concluded that the consumer welfare increase effect that may arise in the short-term act in the instant case can be offset to the anti-competitive effect of the instant act in a mid- and long-term manner by comparing the concerns of price decline, service quality degradation, etc., which may arise by excluding competitors in the market for corporate domain services, concerns over divers and potential competitors, which may decline in diversity due to the exclusion of significant real or potential competitors in the market, and thereby would hinder innovation.

(C) Therefore, the lower court should further examine whether the illegality of the instant disposition is recognized as an act of profit pressureing by a market-dominating enterpriser, which set the retail price at a lower level than the wholesale price, of which the Plaintiff’s act was vertically integrated, in accordance with the legal doctrine as to the criteria for determining the illegality of the act of profit pressureing.

Nevertheless, the lower court determined that the instant act cannot be deemed as an act of supplying lower price than the ordinary transaction price on the premise of a different legal doctrine, and determined that the illegality of the instant act was not recognized.

The lower court erred by misapprehending the legal doctrine on the illegality of the requirements for establishing a market dominant position abuse under the former part of Article 3-2(1)5 of the Fair Trade Act and Article 5(5)1 of the Enforcement Decree of the Fair Trade Act, thereby failing to exhaust all necessary deliberations. The allegation in the grounds of appeal

4. Conclusion

The Defendant and the Intervenor’s appeal are with merit, and all of them are reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Ansan-chul (Presiding Justice)