In a case where an enterprise with a high market share in the over-market has determined its own price in advance, and then the competitor gives rise to the price increase, and where the business entity is aware of all the circumstances because the practice has accumulated for a considerable period of time, whether the agreement related to the price determination can be recognized as an agreement on an act of unfairly restricting competition prohibited under Article 19(1) of the Monopoly Regulation and Fair Trade Act (affirmative)

Article 19(1) of the Monopoly Regulation and Fair Trade Act

Supreme Court Decision 2012Du17421 Decided November 28, 2013 (Gong2014Sang, 1212) Supreme Court Decision 2012Du13665 Decided May 16, 2014

Lee Won-won (Attorney Lee Im-soo et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Attorney Hwang Young-hoon, Counsel for defendant-appellant)

Defendant 1 and eight others (Law Firm Dasan et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2010Nu13670 decided September 13, 2012

The appeal is dismissed. All 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. As to the establishment of unfair collaborative act

A. Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) prohibits “agreement on an act of unfairly restricting competition,” and such agreement includes not only explicit agreement but also implied agreement. Here, the essence of an agreement lies in two or more business entities to communicate with intent. As such, it cannot be deemed that there was an agreement as a matter of course on the ground that an external form consistent with the act listed in each subparagraph of the above provision exists. However, it can be deemed that there was an agreement where a circumstance to acknowledge a reciprocality of intent exists among business entities (see, e.g., Supreme Court Decision 2012Du17421, Nov. 28, 2013).

Therefore, in a case where an enterprise with a high market share in the over-market market determines its price first based on its own decision, and then the competitor assumes the price, and where the business entity is aware of all these circumstances as the price-fixing practice has accumulated for a considerable period of time, if the communication related to the price-fixing can be proven or confirmed in light of various additional circumstances, it can be recognized that there exists an agreement on an act of unfairly restricting competition.

B. (1) The lower court: ① the Plaintiff and SK gas company (hereinafter “SK gas”; ② the Plaintiff and SK gas company imported LPG from 20 to 20, and sold them to filling stations exclusively related to their exclusive business transactions; ② GS Tech Co., Ltd. (hereinafter “GS Tech”) and KM 2 (hereinafter “S-IL”) purchased and sold them to filling stations, etc. (3) the Plaintiff’s 20-year charging market price from 200 to 200, and the Plaintiff’s 7-year charging market price was also the only difference between the 70-year charging market price and the 20-year charging market price; ④ the Plaintiff’s 2-year charging market price was the same as the 3-year charging market price, and the Plaintiff’s 7-year charging market price was also the difference between the 20-year charging market price and the 2-year charging market price.

(2) Furthermore, the lower court presumed that the Plaintiff engaged in the instant collaborative act on the grounds that there was an implied agreement between the import company 2 and 4 companies to determine the sales price of the LPG at the same or a similar level, or that there was a reasonable probability to deem that the sales price of the LPG was jointly determined, and that there was an agreement to conduct such act. In so doing, it is reasonable to deem that the instant collaborative act was engaged in the instant collaborative act, and determined that the instant collaborative act also restricted competition.

C. According to the facts acknowledged by the court below, the enterpriser's prior notification of his own selling price to competitors was unilaterally determined and published through the specific process of sale, and it is very exceptional that the enterpriser imitates the price according to his own decision on the basis of the information that he acquired in the market. ② The fact that the price of the filling station is almost identical to the LPG price of a large number of enterprisers for a long period of five to six years. ③ In the situation where the two import companies are notified of the monthly price of the filling station, each enterpriser discussed the LPG market stabilization, competition, and high-priced maintenance, etc. in several meetings which have been continuously and non-regularly held, even if not directly discussed the selling price, the effect of the price filling agreement could be sufficiently achieved.

In addition, examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s determination that, if two imported companies, including the Plaintiff, etc., determine the sales price of the charging station first, there was an implied agreement between the Plaintiff, etc. to determine the sales price of the charging station at a level equal to or nearly similar to the above, it is justifiable in accordance with the aforementioned legal doctrine. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence contrary to logical and empirical rules

2. As to the expiration of the period of extinctive prescription for the illegal collaborative act

For the reasons indicated in its holding, the lower court rejected the Plaintiff’s assertion that the period of extinctive prescription has expired on April 2005, since the determination of the sales price of LPG was an independent act that is separately conducted every month.

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on

3. As to the deviation and abuse of discretionary power in the calculation of penalty surcharges

The lower court: (1) Taking into account (1) the following factors: (i) the market share of the enterprisers involved in the unfair collaborative act is almost all in the market; (ii) the degree and ripple effect of undermining competition order due to the above unfair collaborative act; (iii) the period reaches six years; (iv) the Defendant assessed the price collusion of the Plaintiff as a very serious violation; and (v) determined the lowest of seven percent within the scope of the base rate for imposition (7-10%); and (v) GSTT, the termination period of the act was before November 3, 2007; (v) determined the upper limit of the penalty surcharge as 5% of the relevant sales because it is inevitable for the Plaintiff to be subject to the former Fair Trade Act; and (v) determined that the Defendant’s choice of 7% of the lower rate of the basic penalty surcharge imposed in accordance with the amended Act and subordinate statutes in 2008 against the Plaintiff cannot be deemed to have violated equity or unlawful; and (ii) determined that the Plaintiff’s voluntary reduction of the amount of the penalty surcharge was not acceptable between the Plaintiff and the Plaintiff’s sales.

Furthermore, for reasons indicated in its holding, the lower court determined that it is difficult to view that the Plaintiff’s profit derived from the instant collaborative act is significantly low compared to the penalty surcharge imposed on the Plaintiff, and that the Plaintiff obtained considerable profit, and that the Defendant reduced the amount of discretionary adjustment penalty surcharge by deeming that the discretionary adjustment penalty surcharge was significantly excessive compared to the extent necessary to recover unjust enrichment, prevent the violation of the Act, or achieve the purpose of imposing sanctions in light of the Plaintiff’s ability to bear the penalty surcharge, and accordingly, considered the circumstances leading up to imposing the penalty surcharge, the Defendant considered the Plaintiff’s unjust enrichment when calculating the penalty surcharge in the instant case. Therefore, it is difficult to deem that the instant penalty surcharge order violates the principle of proportionality.

Examining the reasoning of the lower judgment in light of the evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the deviation, abuse of discretion and the principle of equality and vision in the calculation of penalty surcharges, contrary to what is alleged in the grounds of appeal.

4. 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 on the bench.

Justices Lee In-bok (Presiding Justice)