2014Du1284 Corrective order and revocation of penalty surcharge payment order

Choun Co., Ltd.

Fair Trade Commission

Seoul High Court Decision 2012Nu25912 Decided December 4, 2013

November 27, 2014

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

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

1. Regarding ground of appeal No. 1

Whether a collaborative act restricts competition provided for in Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) shall be determined individually by examining whether the collaborative act causes or threatens to cause impacts on the determination of price, quantity, quality, and other terms and conditions of trading by reducing competition in a particular business area (see, e.g., Supreme Court Decisions 2004Du14564, Nov. 9, 2006; 2008Du21058, Mar. 26, 2009). Meanwhile, since a collaborative act jointly decided or changed price by a business entity causes or threatens to cause impacts on the determination of price according to its intent by reducing price competition within the scope of the said act, such collaborative act shall be deemed unfair, barring any special circumstances (see, e.g., Supreme Court Decisions 2004Du14564, Nov. 9, 2006; 205Du21058, Mar. 26, 2009).

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, it is justifiable for the lower court to have determined that the instant collaborative act, including BB Fertilizer Group and the unit price bid against NK Fertilizer 2010, has a competition restriction. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on competition restriction under Article 19(1) of the Fair Trade Act, or omitting judgment on the Plaintiff’s assertion that there was no competition restriction in the case of unit price bidding.

2. Regarding ground of appeal No. 2

A. As to the assertion on the relevant sales

1) Article 19(1) of the Fair Trade Act provides that an enterpriser shall not agree with other enterprisers to jointly engage in any of the following acts that unfairly restrict competition (hereinafter referred to as "unfair collaborative act") or allow other enterprisers to engage in such act, by contract, agreement, resolution, or any other method, and that an act of determining, maintaining, or changing the price under subparagraph 1 due to the type of prohibited act, an act of restricting the production, shipment, transport, or transaction of goods or the transaction of services under subparagraph 3, an act of restricting the production, shipment, transport, or transaction of goods under subparagraph 8, and an act of determining successful bidder, successful bidder, bid price, bid price, successful bid price or auction price and other matters prescribed by Presidential Decree, respectively.

On the other hand, Article 22 of the Fair Trade Act provides that when a violation of Article 19(1) of the Fair Trade Act occurs, the defendant may impose a penalty surcharge on the enterpriser concerned within the extent not exceeding the amount obtained by multiplying the sales amount determined by the Presidential Decree by 10/100. According to delegation, Article 9(1) of the former Enforcement Decree of the Fair Trade Act (amended by Presidential Decree No. 23864, Jun. 19, 2012; hereinafter referred to as the "former Enforcement Decree") provides that "the sales amount determined by the Presidential Decree" means the sales amount of the goods or services sold in a specific business area during the period of the violation or the amount corresponding thereto. However, if the violation is "tender collusion and other similar acts", it refers to the contract amount.

In addition to the forms, contents, and structure of the aforementioned relevant provisions as to the type of unfair collaborative acts and the basis for imposing penalty surcharges therefor, (1) where an agreement is reached to determine, maintain, or change the price in a bidding method (hereinafter referred to as "price collusion") or an agreement to restrict the transaction of goods or service, etc. (hereinafter referred to as "trade restriction agreement"), a collaborative act provided for in Article 19 (1) 1 or 3 of the Fair Trade Act is also established as well as a collaborative act provided for in Article 19 (1) 8 of the former Enforcement Decree. (2) The proviso to Article 9 (1) of the former Enforcement Decree provides that the contract amount may be calculated as related sales if the act of violation is "tender collusion and similar act" without distinguishing the types of violations, and (3) the proviso to Article 9 (1) of the former Enforcement Decree provides that the contract amount shall be calculated as related sales if it is introduced to secure the effectiveness of sanctions against the bidding method or the agreement on bidding method provided for in Article 19 (1) 8 of the Fair Trade Act as well as Article 19 (1) of the former Enforcement Decree.

2) According to the reasoning of the judgment below, the court below rejected the plaintiff's assertion that since the agreement on desired quantity competitive bidding among the collaborative acts in this case constitutes "tender collusion and similar acts as stipulated in the proviso of Article 9 (1) of the former Enforcement Decree since the plaintiff et al. agreed on bid price and supply quantity in the chemical fertilizer system purchase conducted by the National Agricultural Cooperative Federation or the National Agricultural Cooperative," the relevant sales should be calculated as contract price for the system purchase concluded with the National Agricultural Cooperative Federation or the National Agricultural Cooperative, the plaintiff's related sales should be calculated as contract price for the system purchase concluded with the National Agricultural Cooperative in the above bidding procedure. The court below rejected the plaintiff's assertion that the plaintiff's sales should be viewed as related sales.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding

B. As to the assertion on the deviation and abuse of discretionary power

Examining the reasoning of the judgment below in light of the relevant legal principles and records, the court below is just in rejecting the Plaintiff’s assertion that the Defendant’s imposition of the penalty surcharge in this case constitutes deviation from and abuse of discretionary power, on the ground that the Defendant’s determination of the imposition of the penalty surcharge in this case was erroneous or that the imposition of the penalty surcharge in this case did not violate the principle of proportionality and equality. In so doing, contrary to what is alleged in the grounds of appeal, the court below did not err by misapprehending the legal principles as to the scope of

C. As to the assertion on violation of the principle of self-regulation in administration

Examining the reasoning of the judgment below in light of the records, the court below is just in rejecting the plaintiff's assertion that the disposition of this case violates the principle of self-regulation in the administration, on the ground that there is no evidence to prove that there was an administrative practice or discretionary rule inconsistent with or inconsistent with the disposition of this case regarding the calculation of sales related to the collaborative act of this case, determination of voluntary correction, and decision of imposing penalty surcharges. There is no error of law by misunderstanding the legal principles on the principle of self-regulation in the administration, contrary to what is

3. Conclusion

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

Justices Lee In-bok

Justices Kim Yong-deok

Justices Ko Young-han

Justices Kim So-young