KS Construction Co., Ltd. (Attorney Park Jong-sung, Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm Bag, Attorney Ahn Byung-jin, Counsel for defendant-appellant)

July 18, 2011

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The judgment that the Defendant’s corrective order and penalty surcharge payment order indicated in attached Form 1 issued by the Decision No. 2010-072 against the Plaintiff on June 30, 2009 is revoked.

1. Details of the disposition;

The following facts shall not be disputed between the parties, or may be recognized by comprehensively considering the whole purport of the pleadings in each entry in Gap evidence Nos. 1, 2, 3, and Eul evidence Nos. 1, 2, and 3:

A. Status and general status of the plaintiff

원고는 건설산업기본법에 따라 토목건축공사업 등을 등록하고 영위하는 중소기업자가 아닌 사업자로서, 토공사업 등 전문건설업을 영위하는 중소기업자인 주식회사 국원토건(이하 주식회사를 다시 칭할 경우 주식회사를 생략한 상호만으로 칭한다) 등 아래 〈표 1〉 기재 5개 사업자에게 내부수로 교량 토공 및 구조물공사 등을 건설위탁하였으므로 하도급거래 공정화에 관한 법률(이하 ‘하도급법’이라 한다) 제2조 제2항 제1호 에서 정한 ‘원사업자’에 해당하고, 국원토건 등 5개 사업자는 하도급법 제2조 제3항 에서 정한 ‘수급사업자’에 해당하며, 원고와 국원토건 등 5개 사업자의 일반현황은 아래 〈표 1〉 기재와 같다.

The general status of the plaintiff and the National Foundation case, etc. in the attached Table 1>

(as of 208, units: 00,000 won, name)

본문내 포함된 표 구 분 사업자명 업종 자본금 상시고용종업원수 원사업자 원고 토목건축공사업 등 165,224 3,414 수급사업자 국원토건 토공사업 등 1,100 52 주식회사 싸이니티 금속구조물창호공사업 등 2,148 62 송파장식 주식회사 의장공사업 등 200 13 세원전설 주식회사 전기공사업 등 450 70 대한건축 주식회사 미장·방수·조적공사업 등 600 11

B. The plaintiff's act

On April 18, 2009, the Plaintiff: (a) established the internal policy that “in the event that the minimum bid price exceeds the estimated price of 96% of the estimated cost of the planned construction cost itself, from the tender conducted after May 1, 2009 to reduce the cost of foreign investment, the Plaintiff shall conduct a re-tender for the top 2 enterprises; (b) followed: (c) pursuant to the selective competitive bidding method from May 22, 2009 to June 10, 2009, the Plaintiff provided five sub-subcontracts (hereinafter “instant construction”) such as “in the second section of the construction section of the special structure in the Incheon Metropolitan Area, the inner bridge construction and the structure construction” (hereinafter “the instant construction”) without selecting the lowest bid price as the successful bidder on the ground that the lowest bid price exceeds the estimated price of the Plaintiff; and (d) provided the lowest bid price for the top 2 or three enterprises including the relevant enterprises as the successful bidder.

Table 2> Retender 2.

(unit: Won, %, and value-added tax)

(A) The minimum bid price of 2/A successful bidder at the lowest of 20 : (B-C) the difference (B-C) 5,727,848 Land Development Co., Ltd. 5,569,000 130,000 Daegu SK LAW low-rise 3,085,180 - 3,0180 - 3,0180 - 3,018,018 - 3,018,000 - 3,018,000 - 20,000 - 3,018,008,000 - 3,018,000,000 - 3,010,010,000 -6,010,000 - 8,010,000 - - 3,010,09,79,010 -5,09,7 -109,0

1) Selection of State-owned land as a minimum contractor by conducting re-tenders for Class 1, 2, and 3 companies, the development of which was the lowest bidder;

2) Selection of waldys, the minimum price of which was a tendering company, but conducting re-tenders for 1 and 2 companies; and

3) Selection of a transmission process, which is the lowest cost firm, by conducting re-tenders for the first and second companies, even though the transmission process was the lowest contractor.

4) Selection of the tax base theory, the minimum cost of which was a tendering company, but which was a tendering company for the first and second class companies, and conducted re-tenders;

5) Selection of construction for the lowest contractor by re-tendering for the first, second, and third companies, even though the construction was the lowest contractor.

On the other hand, according to the above method, the contents of the subcontract which the Plaintiff entered into with five business operators, including the State-owned land, are as follows:

Table 3> Details of the subcontract

(unit: Won, including value-added tax)

Of the 2nd construction works in Incheon Cheongra District, the contract period of approximately 2 construction works in the 2nd 5th Cheongbu District, which are contained in the main sentence, the interior bridge, soil and structure construction works in the 10th 2nd 5th Cheongbu District, June 10, 2009 through October 5, 201, 109 through 5th 5th Kabu Sker's VEW construction works in the 2nd 5th 205th 205th 205th 6. 1. 205th 205th 205th 6. 1. 205th 205th 206th 1. 205th 205th 206th 205th 205th 205th 206. 3rd 205th 205th 205th 205th 205th 16. 106. 206th 205th 205th 200

C. The defendant's disposition

On June 30, 2009, the Defendant’s selection of the subcontractor through retender as above constitutes “an act of determining the subcontract price at a price lower than the lowest tender price without justifiable grounds when concluding a subcontract through competitive bidding” under Article 4(2)7 of the Subcontract Act, and issued a corrective order and a penalty surcharge payment order to the Plaintiff as stated in attached Table 1 (hereinafter “instant disposition”).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the Plaintiff asserts that the Plaintiff’s act of selecting a subcontractor through retender does not constitute “act of determining an unreasonable subcontract price” under Article 4(2)7 of the Subcontract Act, and that the instant disposition should be revoked as unlawful.

1) Only an act of determining a subcontract price at a price lower than the lowest bid price through additional negotiations constitutes “an act of determining a subcontract price” under Article 4(2)7 of the Subcontract Act, and an act of selecting a subcontractor through re-tender as in the instant case does not constitute an act of selecting a subcontractor.

2) Even if there is a different view, the Plaintiff did not intend to unfairly determine the subcontract price without concluding a contract with the lowest bidder because the lowest bidding price in the first bidding related to the instant construction project exceeded the Plaintiff’s budget. Of the contract amount related to the instant construction project, the subcontract price cannot be deemed to have been determined at a significantly lower level than the subcontract price that is normally paid, such as the amount equivalent to the subcontract price, out of the contract amount related to the instant construction project, does not exceed the appropriate ratio of subcontract price as stipulated in Article 31 of the Framework Act on the Construction Industry, Article 27-2 of the Enforcement Rule of the Framework Act on the Construction Industry. In addition, in light of the fact that the site site consultation council notifies the fact that the lowest bidding price exceeds the estimated price, the bidding may be conducted if the bidding price exceeds the estimated price, and the said retender method was the practice of the construction business at the time, it cannot be deemed that the Plaintiff’s act of this case constitutes an act stipulated in Article 4(2)

B. Relevant statutes

Attached Form 2 shall be as listed in attached Table 2.

C. Determination

1) Whether a subcontractor’s selection through retender is “a determination of the subcontract price”

Article 4 (1) of the Subcontract Act provides that "if a prime contractor entrusts a subcontractor with the manufacture, etc., he/she shall not compel the subcontractor to determine the subcontract price at a remarkably lower level than the price paid for the same or similar manufacture, etc. of the subject matter, etc. by using improper methods (hereinafter referred to as "determination of the unreasonable subcontract price"), or to accept the subcontract price." Paragraph (2) 7 of the same Article provides that "any act of the prime contractor falling under an act of determining the subcontract price at a price lower than the lowest tender price without any justifiable reasons when concluding a subcontract through competitive bidding shall be deemed to be an act of determining the subcontract price by determining the unfair subcontract price." Thus, each of the above provisions does not limit the form of an act of determining the subcontract price to cases through additional negotiations, even though there is an enterprise with the lowest bid price by conducting a competitive bidding, the subcontract price shall be determined at a price lower than the initial lowest bid price by additional negotiations, and thus, it shall not be accepted in light of the same part of the bid price determined by the plaintiff's bidding procedure after additional bidding procedure."

2) Whether the Plaintiff’s act constitutes “unfair determination of subcontract consideration”

The existence of “justifiable cause” under Article 4(2)7 of the Subcontract Act shall be determined depending on whether there are objective and reasonable grounds for determining a subcontract price lower than the minimum bid price, such as whether the subcontractor’s cause is attributable to the subcontractor or is favorable to the subcontractor.

In full view of the following circumstances as a whole with regard to this case’s health team, evidence Nos. 6 and 7’s evidence Nos. 7-1 and 2, the Plaintiff’s aforementioned acknowledged act constitutes “an act of determining unfair consideration for subcontract price” under Article 4(2)7 of the Subcontract Act, since the Plaintiff’s aforementioned acknowledged act cannot be deemed as having justifiable grounds, and thus, the Plaintiff’s assertion on this part cannot be accepted.

A) The Plaintiff’s internal document “the implementation plan for the reduction of foreign capital costs” only sets 96% of the planning contractor’s price as the estimated price for the reduction of foreign capital costs, and there is no statement that the estimated price is 96% of the planning contractor’s price for the reduction of foreign capital costs. However, if the estimated price is used separately from the estimated price and the planned contractor’s price, and if the estimated price is the maximum limit of the budget that can be actually executed, it is difficult to explain the reasons for the Plaintiff’s selection as the successful bidder even though the successful bid price exceeds the estimated price of the Plaintiff. In light of the above, it seems that the Plaintiff conducted a retender on the ground that the first tender price exceeds the estimated price for the reduction of foreign capital costs after setting 96% of the planning contractor’s estimated price for the reduction of foreign capital costs (i.e.,, each statement of subparagraphs 1 and 15, contrary to this, it is difficult to view the Plaintiff’s price as the lowest price for the first tender price for the reduction of foreign capital costs.

B) The Plaintiff did not notify the bidding participants that the bid amount, prior to the initial bidding, could be re-tender if the bid amount exceeds the Plaintiff’s expected price through a bidding notice or site descriptions, and it is difficult to deem that the bidding participants were aware of such fact.

The plaintiff notified the above facts through the site site descriptions, and even if not, it is argued that the bidder was aware of the practice of the construction industry at the time of such bidding, but it is difficult to believe all of the bid participants in light of the following: Gap's statement of No. 11, 15, and Eul's evidence No. 5 and the testimony of the non-party witness's witness's witness's testimony are related to the company to which the non-party belongs, the non-party's witness did not know about the target of the plaintiff's estimated price; and other bidding participants stated that they did not receive such notification.

Meanwhile, the Plaintiff’s site site descriptions (No. 12 evidence, No. 14-1) include the phrase “21) that “if there is a significant difference between the “budget price” and the “budget price” of the party, a guarantee insurance policy may be requested.” However, this appears to be a provision to prepare for risks, such as defective construction or discontinuance of construction if the successful bid price is remarkably lower than the construction price presumed by the Plaintiff (see partial testimony of the Non-Party, and at the same time, Article 31 of the Framework Act on the Construction Industry also appears to be the same purport). Article 31(22) of the latter part of the above provision provides that “The method of selecting subcontractors: the method of selecting subcontractors shall be appropriate for the assessment of the technical review document, and the minimum amount of the defective construction may be excluded from the minimum amount of the bid.” In light of the fact that there is no expression that retender may be conducted where the minimum amount of the bid price is higher than the expected price, there is insufficient evidence to acknowledge the Plaintiff’s assertion that it is “the above budget price.”

C) Even though it is inappropriate for the Plaintiff to disclose the estimated price before selecting the successful bidder to the extent that there is a collusion or the risk of exposure to the Plaintiff’s trade secrets, it would be normal trade practice to allow the Plaintiff to verify the estimated price if an objection or dispute regarding the selection of the successful bidder arises after sealing the estimated price in advance at the opening site (see Article 7-2 of the Enforcement Decree of the Act on Contracts to Which the State Is a Party), and the Plaintiff did not take any such

D) According to each provision of Article 4(1) and (2)7 of the Subcontract Act, if an act of determining a subcontract price at a price lower than the lowest tender price without justifiable grounds, it should be viewed as determining an unfair subcontract price without considering whether the subcontract price was determined at a significantly lower level than the ordinary tender price. However, as seen earlier, as seen earlier, the subcontract price determined by the Plaintiff through re-tender is lower than the lowest tender price at the first bidding. Accordingly, the Plaintiff’s act constitutes an act of determining unfair subcontract price.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Yan Jung-hun (Presiding Judge)