The method of determining the scope of relevant goods or services, which are the basis for calculating the amount of penalty surcharges for a business operator who has conducted an unfair collaborative act / Whether the contract for the supply of goods or services subject to an agreement between the business operators was concluded prior to the date of agreement, and the actual supply was made during the period of violation in accordance with the price, etc. prescribed in the agreement, whether the sales corresponding to that portion is excluded from

According to Article 22 of the Monopoly Regulation and Fair Trade Act and Articles 9(1) and 61(1) [Attachment 2] of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 27034, Mar. 8, 2016), the Fair Trade Commission may impose upon an enterpriser who has engaged in an unfair collaborative act a penalty surcharge calculated based on the sales of relevant goods or services sold in a particular business area during the period of violation. The scope of relevant goods or services, which is the premise for calculating sales, should be determined individually and specifically by taking into account the contents of an agreement between the enterpriser who has engaged in the unfair collaborative act, the kind and nature of the goods or services which are directly or indirectly affected by the unfair collaborative act, the transaction area, transaction counterpart, transaction stage, etc. Provided, That even if sales of the goods or services subject to the agreement occurred during the period of violation, it is difficult to view that the agreement was concluded prior to the date of agreement on the supply of the goods or services that caused the sales, and the price, quantity, goods or services determined in such agreement is indirectly affected.

Article 22 of the Monopoly Regulation and Fair Trade Act; Articles 9(1) and 61(1) [Attachment 2] of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Presidential Decree No. 27034, Mar. 8, 2016);

Supreme Court Decision 2008Du17035 Decided June 25, 2009 (Gong2009Ha, 1313) Supreme Court Decision 2008Du18335 Decided May 26, 201 (Gong2011Ha, 1304)

Ethical Co., Ltd. (Bae, Kim & Lee LLC et al., Counsel for the defendant-appellant)

Fair Trade Commission (Law Firm Kang-ho, Attorneys Mediation and 1 other, Counsel for the defendant-appellant)

Seoul High Court Decision 2011Nu23674 decided November 28, 2012

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Relevant market definition and competition limitation (ground of appeal No. 3)

A. In order to determine whether a collaborative act constitutes an unfair collaborative act under each subparagraph of Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”), first of all, the relevant market, which is the object of a transaction, should be specifically determined regarding a certain business area in which competition relations may arise. Considering the diversity of an unfair collaborative act, efficiency and rationality of such regulation, etc., it does not necessarily require empirical economic analysis when defining a market related to a collaborative act (see Supreme Court Decision 2012Du28827, Oct. 29, 2015, etc.).

Furthermore, whether a collaborative act restricts competition should be determined by examining whether the collaborative act causes or is likely 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, taking into account various circumstances, such as the characteristics of the relevant goods or services, consumers’ standard for choosing products, and the impact of the market and enterprisers on competition (see Supreme Court Decision 2012Du19298, Nov. 14, 2013, etc.).

B. In full view of the evidence in its holding, the lower court: (a) concluded on July 23, 2003, that four business entities, including the Plaintiff, etc. (hereinafter “Plaintiffs, etc.”) engaged in the manufacture and sale of financial automation machinery, made a basic agreement to the effect that the market price should be normal by preventing the decline in the price of financial automation machinery and tools at meetings of the president group on July 23, 2003 and restricting price competition; (b) continuously agreed on the target selling price or minimum selling price of financial automation machinery and tools through the mutual communication between the meetings of the Council of ICTM, etc. or the executives and employees in charge of the business until April 2009; (c) the Plaintiff, etc., etc., agreed on the replacement price of financial automation machinery and tools from around September 2005 to April 2009, based on the premise that the agreement on the sale price of the financial automation machinery and tools and the replacement price of the financial automation machinery and tools between the Plaintiffs, etc. and the suppliers of each of the instant case should be acknowledged that agreement.

C. In light of the aforementioned legal principles and records, the lower court did not err in its judgment by misapprehending the legal principles regarding the determination of the relevant market and restriction on competition in unfair collaborative acts, omitting judgment, or misapprehending the facts contrary to logical and empirical rules.

2. As to the relevant sales (Ground of appeal No. 1)

A. According to Article 22 of the Fair Trade Act and Articles 9(1) and 61(1) [Attachment 2] of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 27034, Mar. 8, 2016), the Fair Trade Commission may impose upon an enterpriser who has engaged in an unfair collaborative act a penalty surcharge calculated on the basis of sales of related goods or services sold in a particular business area during the period of violation. The scope of related goods or services, which is the premise of calculating sales, should be determined individually and specifically by taking into account the contents of an agreement between the enterpriser who has engaged in the unfair collaborative act and the kind and nature of the goods or services which are directly or indirectly affected by the unfair collaborative act, and the transaction area, transaction counterpart, and transaction stage, etc. (see, e.g., Supreme Court Decision 2008Du1835, May 26, 2011). However, even if sales of goods or services subject to an agreement during the period of violation, if such agreement is concluded or agreement on supply of goods or services.

Meanwhile, in principle, the burden of proof in an administrative litigation to which the provisions of the Civil Procedure Act apply mutatis mutandis is distributed among the parties in accordance with the general principles of civil procedure, and in the case of an appeal litigation, there is the burden of proof as to the legitimacy of the disposition to the defendant who asserts the legality of the disposition according to its nature. In a case where there is a reasonable and acceptable proof of the legitimacy of a certain disposition asserted by the defendant, the disposition is justifiable, and the arguments and proof contrary thereto are returned to the plaintiff, who is the other party (see Supreme Court Decision 2009Du1505, Sept. 8

B. The lower court: (a) premised on the fact that: (b) the sales amount of financial automation equipment from July 23, 2003 to March 2004, which was directly or indirectly affected by the above agreement, can be included in the relevant sales, on the grounds that the Plaintiff, etc. agreed to the same effect as a basic agreement that did not compete after a meeting of the president on July 23, 2003; and (c) agreed to the same effect at the working group immediately thereafter; and (b) based on all submitted evidence, it cannot be readily concluded that there was any part of the relevant sales amount calculated by the Defendant from July 23, 2003 to the termination of the agreement, which was not directly or indirectly affected by the instant agreement, and thus, it did not accept the part of the sales amount that was affected by the agreement after July 23, 2003, which was concluded before July 23, 2003.

C. In light of the aforementioned legal principles, even if there were circumstances as alleged by the Plaintiff, such as that the contract was concluded before the collaborative act and the supply was made during the period of the collaborative act, it is inappropriate to conclude that the sales was not indirectly affected by the agreement of this case from the collaborative act. However, even if all the evidence submitted to the court below was examined, it is difficult to recognize the circumstances that the sales amount generated after July 23, 2003, as alleged by the Defendant, included some of the sales amount generated from the supply after July 23, 2003, as alleged by the Plaintiff, in accordance with the terms and conditions of the contract concluded before July 23, 2003. The conclusion of the court below is justifiable to have determined that there was no illegality in calculating the Defendant’s related sales amount. In so doing, contrary to the grounds of appeal, the court below did not err by misapprehending the legal principles

3. As to the additional mitigation following voluntary rectification (Ground of appeal No. 2)

The lower court determined that the instant order to pay penalty surcharge was not a deviation or abuse of discretion, on the grounds that it is difficult to readily conclude that the Defendant’s additional reduction of the penalty surcharge imposed by the voluntary report business operator pursuant to the binding administrative practice has been settled, and that it is difficult to view that the amount of the penalty surcharge imposed by the Defendant by failing to reduce the amount of the penalty surcharge imposed by other three business operators who participated in the instant agreement is excessive compared to the amount of the penalty surcharge imposed by the other three business operators who participated in

In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal principles on mitigation of voluntary correction and deviation and abuse of discretionary power in the imposition of penalty surcharges, as seen 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 Park Poe-dae (Presiding Justice)