In cases where two or more business entities are in a de facto control relationship, whether joint reduction or exemption under Article 22-2 of the former Monopoly Regulation and Fair Trade Act, and Article 35(2) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act can be acknowledged (affirmative), and the meaning of “actual control relationship” in such cases

Article 22-2 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315, Dec. 31, 2004); Article 35(2) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 18356, Apr. 1, 2004; hereinafter “former Enforcement Decree”) provides that a person who has reported an unfair collaborative act or has cooperated in an investigation into an offense by means of providing evidence shall be subject to reduction or exemption of penalty surcharges. However, in cases where two or more enterprisers are in a de facto control relationship, a joint reduction or exemption can be exceptionally recognized. The phrase “ de facto control relationship” refers to the degree of shares owned by each enterpriser; the degree and method of exercising influence in decision-making; whether an executive concurrently takes place; whether or not the company concurrently takes place; whether the company is aware of the mutual relationship; whether the company is in an integrated business area or method; whether the company has an independent decision-making process; how the two or more enterprisers jointly applied for reduction or exemption of penalty surcharges.

Article 22-2 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004); Article 35(2) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 18356 of Apr. 1, 2004) (see current Article 35(1))

Supreme Court Decision 2012Du13962 Decided September 24, 2015 (Gong2015Ha, 1617)

C&T Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Oi-seok et al., Counsel for the defendant-appellant)

Fair Trade Commission (Attorney Choi Byung-hee et al., Counsel for the defendant-appellant)

Supreme Court Decision 2012Du29042 Decided July 25, 2013

Seoul High Court Decision 2013Nu24527 decided April 3, 2014

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

The grounds of appeal are examined.

1. A. Article 22-2 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315, Dec. 31, 2004); Article 35(2) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 18356, Apr. 1, 2004; hereinafter “former Enforcement Decree”) provides that a person who has reported an unfair collaborative act or has cooperated in an investigation into an offense by means of providing evidence shall be mitigated or exempted from a penalty surcharge. However, in cases where two or more enterprisers are in a substantial control relationship, a joint reduction or exemption can be exceptionally recognized. Here, the term “actual control relationship” refers to the degree of shares owned by each enterpriser; degree and method of exercising influence in decision-making; whether an enterpriser is holding an office or not; recognition of the mutual relationship between the relevant enterprisers; possibility of independent decision-making on the business area and method; circumstances leading to 20 or more enterprisers’ independent decision-making; and circumstances leading to 20 or more enterprisers’ independent decision-making.

B. On April 20, 2005, when Honam Petroleum Chemical Co., Ltd. (hereinafter referred to as “Co., Ltd.”) and El branch chemical owned 50% shares of the Plaintiff, the lower court determined that on April 20, 2005, the Defendant applied the instant order to exempt the Plaintiff from the penalty surcharge to the effect that, on the ground that, on April 20, 2005, Honam Petroleum Chemical Co., Ltd. (hereinafter referred to as “Co., Ltd.”) participated in the price collusion of four synthetic resin products, such as high density chopholol, polypropyol, low density terolololol, and first-class low density terololololene, etc. (hereinafter referred to as “instant collaborative act”), the lower court acknowledged that the instant collaborative act, including the instant collaborative act, was exempted from all penalty surcharges on the remaining products, and that the instant chemical substance substantially controlled the Plaintiff, on the ground that the Plaintiff’s voluntary report on Honam Petroleum Chemical was also included in the instant order to exempt the Plaintiff from the penalty surcharge.

C. However, according to the reasoning of the lower judgment and the evidence duly admitted by the lower court, the following facts are revealed.

1) On June 27, 2003, Honam Petroleum Chemical and El branch chemical respectively accepted 50% shares of Hyundai Petroleum Chemical (hereinafter “former Hyundai Petroleum Chemical”). However, on June 25, 2003, the Defendant issued an order to divide the business of polypropye and other products with respect to the acquisition of shares.

2) On June 26, 2003, Honam Petroleum Chemical and El branch Chemical concluded a joint operating agreement and made two joint directors appointed on July 2003 to jointly operate the former Hyundai Petroleum Chemical. On December 20, 2004, the instant amendment agreement concluded a revised agreement replacing the previous joint operating agreement (hereinafter “instant amendment agreement”). The instant amendment agreement clearly ensures that the instant shareholders having equal shares with Honam Petroleum Chemical and El branch Chemical shall have equal rights and duties in all relations with the former Hyundai Petroleum Chemical and equal opportunities to be supplied with goods or services, and ensure that two directors are composed of two directors with the authority to appoint two directors as joint full-time directors, and that two directors are designated as joint directors, and that two directors are composed of two members of the former Committee for the smooth operation of Hyundai Petroleum Chemical.

3) Although the organization of the former Hyundai Petroleum Chemical’s business manpower, etc. related to the products, including polypropy, remains from June 26, 2003 to September 25, 2003, according to the above decision of the Defendant, the former Hyundai Petroleum Chemical concluded a sales agency contract with Honam Petroleum Chemical and ELP around September 26, 2003, the domestic business was suspended after the conclusion of the sales agency contract with Honam Petroleum Chemical and ELP. On October 1, 2003, Honam Petroleum Chemical and ELchemical began to take over the business organization of the former Hyundai Petroleum Chemical and sell the products of the former Hyundai Petroleum Chemical.

4) Meanwhile, from April 28, 1994 to April 30, 2005, the former Hyundai Petroleum Chemical participated in the instant collaborative act respectively from January 1, 2002 to September 25, 2003.

5) After that, on January 1, 2005, according to the Defendant’s business division order, the factory complex of the former Hyundai Petroleum Chemical was divided into ELD Plusium, the newly incorporated company, and the two complexes into ELP, the newly incorporated company. On January 3, 2005, the former Hyundai Petroleum Chemical changed its trade name to the Plaintiff and changed its business purpose into the installation and supply of electricity, steam, and other ethyl facilities for the company located in the petroleum chemical industrial complex. The ELD Plusium was merged into the ELP on January 1, 2006, and the lusium oil was integrated into the Honam Petroleum Chemical on January 5, 2009, respectively.

6) The data on the change of circumstances, such as that, unlike the content of the instant revised contract after January 1, 2005, Honam Petroleum chemical was able to independently make a decision on the Plaintiff’s project without consultation with Elmmmchemical side, unlike the content of the instant revised contract, were not submitted until the lower court.

D. In full view of the aforementioned various circumstances, Honam Petroleum chemical was holding a share of the Plaintiff in el branch chemical and 50%, and the composition of the board of directors or appointment of a joint representative director can only appoint a number of officers equal to el branch chemical, and thus, it appears that the decision-making on the Plaintiff’s business could not be independently made without consultation with the el branch chemical. Furthermore, there is no circumstance that Honam Petroleum chemical or EL branch chemical had the authority to entirely decide on the other party’s decision-making, or that there was a special relationship with the other party. Therefore, it cannot be said that at the time the Honam Petroleum chemical did not have the autonomy and autonomy of decision-making, or that the Plaintiff did not operate independently from the other party’s decision-making.

Nevertheless, the lower court determined that Honam Petroleum chemical substantially controlled the Plaintiff. In so doing, it erred by misapprehending the legal doctrine on the recognition of substantial control relationship in the application of joint reduction and exemption rates.

2. As can be seen, even if the Plaintiff was unable to apply the same rate of reduction of the voluntary report as that of Honam Petroleum chemical because the Plaintiff’s substantial control relationship is not recognized between the Plaintiff and Ho Nam Petroleum chemical, the voluntary report of Honam Petroleum chemical becomes effective (see, e.g., Supreme Court Decision 2012Du29042, Jul. 26, 2013).

Therefore, on the premise of the voluntary report by proxy, it is examined whether there is a reason to reduce the amount to the plaintiff as a subordinate independent investigator or assistant.

Article 35(2) of the former Enforcement Decree provides that a person who cooperates in an investigation by providing first necessary evidence that the defendant fails to secure sufficient evidence for the pertinent unfair collaborative act shall be exempted from a penalty surcharge of 50/100 or more (Article 35(2) of the former Enforcement Decree). Furthermore, Article 35(2)3 of the former Enforcement Decree provides that a person who cooperates in the investigation shall be mitigated from a penalty surcharge of less than 50/100 (Article 35(2) of the former Enforcement Decree within the scope of less than a penalty surcharge of 50/100 (Article 35(2)3 of the former Enforcement Decree, who reports or cooperates in the investigation (Article 35(2) of the former Enforcement Decree), and provides evidence necessary to prove the unfair collaborative act, shall cooperate until the investigation is completed (Article 35(2)(b) and (c) of the former Enforcement Decree).

According to the reasoning of the judgment below and the record, the following facts are revealed: ① (a) the Plaintiff submitted a written confirmation that details of the instant collaborative act, separately from Honam Petroleum chemical on January 2, 2007, as evidence; (b) the production and business organization of polypropye, which is the subject of the instant collaborative act, transferred to Honam Petroleum chemical and Elchemical chemical, appears to exceed most of the relevant materials; and (c) no evidence exists as to the fact that the Plaintiff played a leading role in the instant collaborative act or forced other enterprisers to engage in the instant collaborative act.

Examining these circumstances in light of the contents and purport of the aforementioned statutes, since the Plaintiff, by submitting independent evidentiary materials, contributed to supporting other evidentiary materials and enhancing the admissibility of evidence regarding the instant collaborative act, it may be deemed that the Plaintiff submitted necessary evidence to prove the instant collaborative act and cooperateed until the investigation is completed. In addition, the Plaintiff does not fall under any other requirement for exclusion from the reduction of the investigative partner, and the Plaintiff should be deemed to have at least a ground for mitigation as an independent subordinate investigative adviser. Accordingly, the Defendant should have calculated the penalty surcharge on the premise that such mitigation is recognized to the Plaintiff.

Therefore, although the court below erred in holding that the rate of reduction or exemption, such as Honam Petroleum chemical, should be applied to the plaintiff, it is unlawful in the payment order of the penalty surcharge of this case, which is calculated on the premise that the plaintiff does not fall under the ground for reduction of the independent investigative partner. Thus, the court below's revocation of the payment order of the penalty surcharge is just in the conclusion, and the error of the

3. 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 Kim Shin (Presiding Justice)