[1] The criteria for determining whether a transaction constitutes a trade under substantially favorable terms under Article 23(1)7 of the former Monopoly Regulation and Fair Trade Act, and the meaning of the normal interest rate, which serves as the basis for determining whether the payment and consideration are substantially favorable

[2] The standard for determining whether an act of assistance is improper in an act of improper assistance under Article 23(1)7 of the former Monopoly Regulation and Fair Trade Act

[3] The method of calculating the penalty surcharge imposed by the Fair Trade Commission on the act of improper assistance

[4] The method of determining the normal discount rate for the issuance of commercial papers purchased by the subsidizing entity in determining the act of improper assistance

[1] In determining whether a transaction constitutes a transaction under substantially favorable terms under Article 23 (1) 7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 199), not only difference between payment and consideration, but also considering the economic benefits arising from the scale of support and the amount of support, the period of support, the number of support, the timing of support, the economic situation of the recipient at the time of support, etc., in detail and individually. The normal interest rate, which serves as the basis for determining whether a benefit and consideration is substantially favorable to the recipient, refers to the interest rate applicable when a financial transaction was conducted between the recipient and an independent financial institution without a special relationship in the same or similar circumstances, such as the period, type, scale, period, and credit condition, etc. of the financial transaction between the support recipient and the support recipient and the support recipient, or between the support recipient and the independent financial institution without a special relationship.

[2] In order to establish an unfair support act under Article 23 (1) 7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 1999), the support act of the support entity must be performed unfairly. In determining whether the support act of the support entity against the support entity is improper, it shall be determined based on whether the support act might impede fair trade by comprehensively taking into account the relationship between the support entity and the support entity, the purpose and intent of the support act, the structure and characteristics of the market to which the support entity belongs, the size and purpose of the support entity, the economic benefits and period of support due to the support, the size of the support, and the effects of restricting competition or concentration of economic power in the market to which the support entity belongs, etc.

[3] A penalty surcharge imposed on an act of improper assistance may be determined by the Fair Trade Commission within the scope not exceeding the amount obtained by multiplying the sales amount determined by the Presidential Decree, which is the maximum penalty surcharge under Article 24-2 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999) by 2/100, taking into account the purpose of the imposition of a penalty surcharge and the reasons under Article 55-3 (1) of the same Act, namely, the contents and degree of the violation, the period and frequency of the violation, the size of profits acquired from the violation, etc., and the "standards for imposition of a penalty surcharge" in the "Guidelines for calculation and imposition of a penalty surcharge" established by the Fair Trade Commission on April 29, 197, is merely an internal business practice of the Fair Trade Commission for calculating the specific amount of a penalty surcharge imposed on the act of improper assistance. However, in light of the above guidelines established by the Fair Trade Commission in order to establish appropriate criteria for calculation of a penalty surcharge within the amount under the same Act, it can be determined as appropriate amount.

[4] Where there is a case where an independent related party, at the same time or near the same method, purchased CPs issued by an applicant, the normal discount rate of CPs shall be the discount rate applied to the transaction if there is a transaction at the same time, and where there is no transaction at the same time, it shall be deemed that the transaction at the same time is the discount rate applied to the transaction at the most adjacent to the purchase of CPs, and where there are many trades at the same time or the most adjacent time, it shall be deemed that such transaction is the weighted average discount rate.

[1] Article 23 (1) 7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 199) / [2] Article 23 (1) 7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 199) / [3] Articles 24-2 and 55-3 (1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 199) / [4] Article 23 (1) 7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813 of Feb. 5, 199)

[1] [2] Supreme Court Decision 2003Du15171 decided Feb. 10, 2006 (Gong2006Sang, 432) / [1] Supreme Court Decision 2001Du2881 decided Oct. 14, 2004 (Gong2004Ha, 183) Supreme Court Decision 2001Du2935 decided Oct. 14, 2004 (Gong2004Ha, 1845) / [2] Supreme Court Decision 2004Du2233 decided May 13, 2005 (Gong2005Du609 decided May 27, 2005; Supreme Court Decision 2004Du609 decided May 27, 2005; Supreme Court Decision 204Du6099 decided Apr. 24, 2005)

Samsung Products Co., Ltd.

Samsung Life Insurance Co., Ltd. (Law Firm Rate, Attorneys Shin Sung-tae et al., Counsel for the defendant-appellant)

Fair Trade Commission (Law Firm Song, Attorney Lee Jae-hwan, Counsel for defendant-appellant)

Seoul High Court Decision 99Nu3753 delivered on December 16, 2003

Each appeal is dismissed. The costs of appeal are assessed against each party.

1. Judgment on the plaintiffs' grounds of appeal

A. As to the purchase portion of subordinated bonds issued by the Plaintiff Samsung C&T Co., Ltd. (hereinafter “Plaintiff Samsung C&T”) (hereinafter “T”)

(1) Whether an act of assistance was significantly supported

In determining whether a transaction constitutes a transaction under substantially favorable terms under Article 23(1)7 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 5813, Feb. 5, 1999; hereinafter “the Act”), not only difference between benefits and consideration, but also economic benefits, the period and frequency of subsidization, the timing of subsidization, and the economic situation of the recipient at the time of subsidization. The normal interest rate, which serves as the basis for determining whether benefits and consideration are substantially favorable to the recipient, is determined specifically and individually, by comprehensively taking into account not only the difference between benefits and consideration, but also the economic benefits, the period and frequency of subsidization, the number of subsidization, the timing of subsidization, and the economic situation of the recipient at the time of subsidization. The normal interest rate, which serves as the basis for determining whether benefits and consideration have been substantially favorable to the recipient and the support recipient, refers to the interest rate to be applied when a financial transaction was conducted between the support recipient and an independent financial institution without a special relationship, in terms of the same or similar circumstances such as the period, type, size, period, and condition of subsidization.

On December 30, 1997, the court below duly confirmed that the plaintiff Samsung C&T deposited 40 billion won as a specified money trust and caused the K&T to purchase subordinated bonds with the maturity of 40 billion won at the 17.26% return on June 30, 199 which were issued by the K&T company. At the time of the issuance of the new C&T bonds, the credit rating of Samsung C&T was "B" which is less than "A" which is the basis for the final rate of return on general bond bonds. The plaintiff Samsung C&T purchased the new bonds with the maturity of 40 billion won at least 25% return on December 24, 197, which is 7 days prior to the issuance of the above specified money trust, and it is difficult to calculate the normal rate of return on the new bonds at the time of the issuance of the new C&T bonds with the maturity of 40 billion won, compared with the fact that the new C&T bonds were traded at the time of the issuance of the new C&T bonds.

Although it is inappropriate for the court below to hold that the return on investment of the subordinated bonds of this case at least three-year maturity is higher than the return on investment 30.89%, the conclusion that the purchase of the subordinated bonds of this case by the plaintiff Samsung Samsung C&T constitutes a trade under substantially favorable conditions is proper, and there is no error of law by misunderstanding facts due to violation of the rules of evidence or misunderstanding of legal principles as to the trade under significantly favorable conditions,

(2) Whether the illegality is improper

In order to establish an unfair support act under Article 23 (1) 7 of the Act, the support act of the support entity must be conducted unfairly. In determining whether the support act of the support entity against the support entity is improper, the determination shall be made based on whether the support entity is likely to impede fair trade because it impedes competition in the related market of the support entity or causes concentration of economic power (see Supreme Court Decision 2004Du2233, May 13, 2005) by comprehensively taking into account the relationship between the support entity and the support entity, the purpose and intent of the support act, the structure and characteristics of the market to which the support entity belongs, the size and duration of the support entity, the economic benefits and the period of support due to the act of the support, restrictions on competition in the market to which the support entity belongs, and the effects of concentration of economic power, etc.

After compiling the adopted evidence, the court below acknowledged the facts as stated in its decision. The Samsung Securities was "BB" in 197 and the credit rating was "BB" in 195 to 1997. In light of the legal principles and records as seen earlier, the court below determined that the purchase of the subordinate bonds in this case was an unfair act that could undermine fair and free competition, and that there is no error in the misapprehension of legal principles or misapprehension of legal principles as to facts-finding and determination of illegality, as alleged in the ground of appeal, since the net capital ratio of the Samsung Securities was 92.4% before the issuance of the subordinated bonds in this case, and the net capital ratio of the Samsung Securities was 141.7% before the issuance of the subordinated bonds in this case, and 49.3% increased after the issuance of the subordinated bonds in this case.

(3) Whether the calculation of penalty surcharge is lawful

The penalty surcharge imposed on the act of unfair assistance may be decided with discretion by the defendant in consideration of the purpose of achieving the imposition of the penalty surcharge within the extent not exceeding the amount multiplied by 2/100 to the sales amount determined by the Presidential Decree, which is the maximum amount of the penalty surcharge under Article 24-2 of the Act, and the reason prescribed in Article 55-3 (1) of the Act, namely, the content and degree of the act of violation, the period and frequency of the act of violation, the size of profits acquired from the act of violation, etc.

According to the records, in the case of the purchase of subordinated bonds in this case, the normal transaction price cannot be specified because the normal transaction price of subordinated bonds is not active, and thus it is difficult or impossible to calculate the specific amount of support. Considering such circumstances, the defendant calculated 10% of the amount of support transaction according to the provision of the "Guidelines for Calculation and Imposition of Penalty Surcharges" as the amount of support and calculated the amount of penalty surcharge based on this. Thus, the defendant does not seem to have deviation from or abuse of discretionary authority in calculating the amount of penalty surcharge.

Although it is inappropriate for the court below to state as if the amount of support can be calculated based on the ordinary interest rate, the conclusion that the calculation of the penalty surcharge in this case is not a deviation or abuse of discretion, and there is no error of law in the misapprehension of legal principles as to the incomplete hearing or the calculation of penalty surcharge.

B. As to the purchase part of the corporate bills issued by the Plaintiff Samsung Heavy Heavy Industries Co., Ltd. (hereinafter “T&T”)

(1) Whether an act of assistance was significantly supported

Where there is a case where an independent person, who has no special relationship at the same time or near the same method, purchased corporate bills issued by an applicant at the time of the purchase of such bills, the normal discount rate for such bills shall be the discount rate applied to the transaction at the same time, if there is a transaction at the same time, and where there is no transaction at the same time, it shall be deemed the discount rate applied to the transaction at the time most adjacent to the purchase of the relevant corporate bills, and where there are many trades at the same time or near the same time, it shall be deemed to be the weighted average discount rate (see Supreme Court Decision 2003Du15171, Feb. 10, 2006).

In full view of the adopted evidence, the court below acknowledged the fact that the plaintiff Samsung C&T purchased corporate bills of 50 billion won at the face value 13.50% of the discount rate and 91 days, which were issued by Samsung T&T affiliated company on November 14, 1997, and purchased them again on February 13, 1998 at the same discount rate of 90 days. The court below rejected the plaintiff's assertion that the plaintiff Samsung C&T purchased the corporate bills of this case at the rate of 13.50% of the discount rate and 91 days, and it did not err in the misapprehension of legal principles and records as to the determination of facts, since the purchase of corporate bills of this case on February 13, 1998, which were issued by Samsung T&T affiliated company, was remarkably favorable to 10.5% of the discount rate and the normal discount rate, and thus, it did not err in the misapprehension of legal principles and records.

(2) Whether the illegality is improper

The court below, based on the adopted evidence, found the facts as stated in its decision, and found that Samsung Heavy Heavy was an unfair act that could impede fair and free competition. In light of the above legal principles and records, the court below's fact finding and decision are justified, and there is no error in the misapprehension of legal principles as to mistake of facts or illegality due to the violation of the rules of evidence, as otherwise alleged in the ground of appeal, since the amount of support provided to Samsung Heavy Heavy Chemical was not likely to impede fair trade, considering the fact that the petroleum chemical industry has deteriorated its profitability due to the decline in export price caused by the athletic ties in overseas markets and the competition caused by the internal exhaustion in the domestic markets at the time of the purchase of the corporate bills of this case.

C. As to the part concerning the purchase of corporate bills issued by the Plaintiff Samsung Life Insurance Co., Ltd. (hereinafter “Plaintiff Samsung”) for Samsung Commercial Building Co., Ltd. (hereinafter “Co., Ltd.”)

(1) Whether an act of assistance was significantly supported

According to the records, the trust period of Samsung Bio-resources was set at 10 billion won until May 28, 1997, and 20 billion won was set at 10 billion won and deposited as a specified money trust and the Han-il Bank had it purchase 20 billion won at the rate of 10.52% of the face value of Samsung used in the above trust fund at 3-month unit. Accordingly, the Han-il Bank concluded an option trading agreement with Samsung 200 billion won and it was difficult to recognize the above 9 billion won at the rate of 19.7 billion won and 9 billion won as 9 billion won and 19.7 billion won and 9 billion won and 9.7 billion won and 9 billion won and 9.7 billion won and 9 billion won and 9.7 billion won and 9 billion won and 19.1 billion won and 9 billion won and 19.

In addition, according to the records, it is recognized that there was a fund raised at the discount rate of 11.27% or 12.02% of the commercial papers separately from the commercial papers of this case between November 24, 1997 and May 24, 1998, but the above discount rate is not clear even though the purchaser of the commercial papers is considerably lower than the market discount rate at the time of the transaction, and it is difficult to view that the above discount rate is a normal discount rate reflecting the economic situation at the time of the transaction of the commercial papers of this case and the economic situation at the time of the transaction of the above commercial papers of this case. Rather, since the market discount rate for the commercial papers of the company with credit rating such as Samsung commercial tea was well reflected in the normal discount rate at the time of the transaction of the commercial papers of this case, it is reasonable to view it as a normal discount rate at the time of the purchase of the commercial papers of this case between the above normal discount rate and the above normal discount rate at the time of November 24, 1997, 198.

The fact-finding and decision of the court below to the same purport is correct, and there is no error in the misapprehension of legal principles as to any mistake of facts or any transaction under significantly favorable terms due to violation of the rules of evidence.

(2) Whether the illegality is improper

After compiling the adopted evidence, the court below acknowledged the facts as stated in its decision, and found that Samsung commercial was vulnerable to competition in the domestic commercial tea production market and heavy financial burden, and in light of the fact that the amount of support provided to Samsung commercial vehicle due to the purchase of the CP of this case was not likely to undermine fair trade since the amount of support has a substantial effect in light of the market situation at the time, etc., and it is difficult to deem that the amount of support provided to Samsung commercial vehicle is not likely to undermine fair trade, the purchase of the CP of this case shall be deemed an unfair act that is likely to undermine fair and free competition. In light of the records, the above judgment of the court below is correct, and there is no error of law by misunderstanding facts against the rules of evidence

2. Judgment on the Defendant’s grounds of appeal

A. As to the purchase part of corporate bills issued by the plaintiff Samsung Heavy Industries on November 14, 1997

In light of the above legal principles and records, it is proper that the court below held that the purchase of corporate bills of the plaintiff Samsung C&T on November 14, 1997 before the IMO M&T crisis is not a substantial support act because the difference between the discount rate and the normal discount rate is 1.60% because it is merely a transaction before the IMF crisis. There is no error in the misapprehension of legal principles as to whether the judgment is superior to the judgment, the number of unfair support, and the transaction of significantly favorable terms as otherwise alleged in the ground of appeal.

B. On the payment order of penalty surcharge

In imposing penalty surcharges on the act of improper assistance, if there is no evidence to calculate the amount of penalty surcharges on the basis of some of the offenses committed by the Defendant, even though one penalty surcharge was imposed on several offenses, the entire payment order of penalty surcharges is to be revoked (see Supreme Court Decision 2003Du15171, Feb. 10, 2006).

The record reveals that the defendant issued a single penalty surcharge on the purchase of subordinated bonds issued by the plaintiff Samsung C&T and each of the purchase of corporate bills issued by Samsung T&T. Among the above acts of the plaintiff Samsung C&T, only the remaining acts except the purchase of corporate bills issued by November 14, 1997 among the above acts of the plaintiff Samsung C&T are illegal in this case, and there is no data that can calculate the penalty surcharge based on the unlawful remaining acts. Thus, the above penalty surcharge payment order against the plaintiff Samsung C&T has to be revoked in its entirety.

The decision of the court below to the same purport is correct, and there is no error in the misapprehension of legal principles as to the scope of revocation of the penalty surcharge payment order.

3. Conclusion

Therefore, each appeal is 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 Kim Ji-hyung (Presiding Justice)