Revocation, such as a corrective order, etc.

Daedong Industrial Co., Ltd.

Law Firm LLC (LLC) LLC, Counsel for the defendant-appellant

Park Jae-sik et al., Counsel for the defendant-appellant

Fair Trade Commission

Attorney Choi Byung-hee et al., Counsel for the defendant-appellant

Seoul High Court Decision 2013Nu21634 Decided June 10, 2015

March 30, 2017

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. As to the allegation in the grounds of appeal as to the reported price 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” with respect to the establishment of a collaborative act of reported price. The agreement includes not only explicit agreement but also implied agreement. Here, the agreement’s essence is that two or more enterprisers communicate with each other. Thus, it cannot be deemed that there was a external agreement that is consistent with the act listed in each subparagraph of the above provision. However, it can be deemed that there was an agreement if a circumstance proves that there was a reciprocality between enterprisers (see, e.g., Supreme Court Decision 2012Du17421, Nov. 28, 2013). Meanwhile, the court held that the entire purport of pleadings and the result of the examination of evidence constituted a fact-finding court’s right of free evaluation of evidence beyond the bounds of the principle of logic and experience under Article 20(2) of the Civil Procedure Act (see, e.g., Supreme Court Decision 2012Du17421, Nov. 28, 2013).

3. Supreme Court Decision 2013Du2303 Decided 24.

2) According to the reasoning of the lower judgment and the record, the following facts and relevant circumstances are revealed.

A) The Plaintiff and International Comprehensive Machinery Co., Ltd. (in the case of a corporation for convenience, the portion of the corporation, among the names of the corporation, shall not be indicated separately), Dongyang Industries Enterprises, LSS and LSMN (hereinafter “the instant survey on the manufacturing of agricultural machinery”) reported the price of the agricultural machinery to the Korea Agricultural Machinery Industry Cooperatives or to the Ministry of Agriculture and Forestry either through the Korea Agricultural and Forestry through each quarter ( January, April, July, October, October). By December 31, 2010, the Ministry of Agriculture and Forestry determined and approved the appropriateness of the reported price, but did not follow the previous approval procedures from January 1, 201.

B) Until December 31, 2010, even if the manufacturing of the instant agricultural machinery submitted a declaration price, it was found that the Ministry of Agriculture and Forestry did not grant approval from the Ministry of Agriculture and Forestry to revise the price again and obtain approval after re-reporting the price. However, the Ministry of Agriculture and Forestry considered the approval as to whether the rate of increase in the reported price was within the rate of increase in the previous year’s price, and within the scope thereof, the instant manufacturing of the agricultural machinery could be autonomously determined the price.

C) Officers and employees of the instant agricultural machinery manufacturers have practices of holding meetings from time to time to consult on pending issues related to agricultural machinery. In particular, around the time of each quarterly dutiable value return, they may recognize that, through meetings in which executives in charge of the instant agricultural machinery manufacturers participate, some of the instant agricultural machinery manufacturers have agreed on whether the reported value of the Tracter, Empis, and compacters (hereinafter “the instant agricultural machinery”) would be increased during the pertinent quarter, and exchanged information about the increase, etc., and thereafter, they have consulted on or exchanged specific reported value through wire liaison, etc., and there was a fact of determining each company’s reported price proposal based on such consultation and exchange of information. Some of the manufactures in the instant agricultural machinery manufacturers recognize that these series of activities are by agreement among the instant agricultural machinery manufacturers.

D) The price reported by the instant manufacturers of agricultural machinery is the basis for calculating the agency sales price and the sales price of the National Agricultural Cooperative Federation (hereinafter “CF”). Therefore, there was motive or incentive for the instant manufacturers to jointly determine the reported price in order to increase sales profit while avoiding the price competition.

E) The reported price of the model with a similar quantity within the same type of machine among the agricultural machinery manufactured and sold by each manufacturer of the instant agricultural machinery shows a trend of price fluctuation alternatively, and such a trend of price declaration of the agricultural machinery and the external shape of the change can be seen as a result of the implementation of the agreement prior to the implementation of the agreement. Meanwhile, even though there is a disagreement between the price fluctuation trends in the products of the agricultural machinery and the entire product of the instant agricultural machinery and the trends of the average increase rate of increase in the product of the instant agricultural machinery, the instant agricultural machinery cannot be deemed as having been carried out by agreement solely on the basis of the fact that there are many different products, such as specifications, engines, and accessories, within the same type of machine, so it is difficult to match the price of the product every quarter because there are many other products.

F) There is no significant change in the share of the domestic agricultural machinery market for the past ten years based on the sales volume. In light of the aforementioned legal principles and various circumstances, the judgment of the court below that recognized the collaborative act with respect to the reported price falling under the price under Article 19(1)1 of the Fair Trade Act by the Plaintiff in 2009 and 2010 and the Plaintiff’s general international machinery, goods manufacturing industry, and LSM theory (hereinafter “the four manufacturing products of the instant agricultural machinery”) was about 67% if the aggregate of the market share is based on the purchase process of the agricultural industry in 2011, and about 89% if the aggregate of the market share is calculated based on the purchase process of the agricultural industry in 2011, about 66% for EM, and about 75% for EM. 3% for EM. In light of the aforementioned legal principles and various circumstances, the judgment of the court below is justifiable, and there is no error in the misapprehension of legal principles as to the establishment of unfair collaborative act in violation of logical and empirical rules.

B. Regarding an order to pay penalty surcharges (Ground of appeal No. 3)

The Fair Trade Commission has discretion to determine the specific amount of penalty surcharges within a certain scope prescribed by the Fair Trade Act when imposing penalty surcharges and whether to impose penalty surcharges on a violation of the Fair Trade Act. Thus, the imposition of penalty surcharges by the Fair Trade Commission is a discretionary act. Provided, That if the Fair Trade Commission erred by misapprehending the fact that served as the basis for the imposition of penalty surcharges or violates the principle of proportionality and equality, etc. while exercising such discretion, it constitutes a deviation or abuse of discretionary power (see, e.g., Supreme Court Decisions 2000Du1713, Sept. 24, 2002; 2008Du15176, Mar. 11, 2010).

The lower court acknowledged the following circumstances: (a) insofar as the manufacturing of the agricultural machinery of this case agreed on the same model products of the same agricultural machinery of this case, the sales amount should also be included in the relevant sales amount; (b) the market share of the manufacturer of the agricultural machinery of this case is high; and (c) the period during which collaborative act with the reported price is continued; and (d) the degree of restricting competition is high due to an agreement on the amount which serves as the basis for calculating the sales price of the agricultural machinery of this case; and (b) determined that the Defendant’s order to pay penalty to the Plaintiff was

Examining the reasoning of the judgment below in light of the aforementioned legal principles and all the circumstances, including "the defendant's reported price is somewhat different from the final selling price to consumers," and "the fact that the degree of unjust enrichment is less than the amount of unjust enrichment as the increase was restricted within the inflation rate in the previous year by the Ministry of Agriculture and Forestry," etc., the court below's above determination is justifiable, and there are no errors in the misapprehension of legal principles as to deviation from or abuse of discretionary power in the imposition of penalty surcharges in violation of logical and empirical rules or in violation of the principle of free evaluation of evidence, contrary to what is alleged in the grounds of appeal.

2. As to the allegation in the grounds of appeal on the collaborative act of the grant rate (Ground of appeal No. 4)

The lower court acknowledged the circumstances as indicated in its reasoning, such as the fact that agricultural cooperatives sent documents in relation to the ratio of incentives to the manufacture of the instant agricultural machinery as joint recipients in the course of consultation on the manufacturing of the instant agricultural machinery and the ratio of incentives, or the fact that the agricultural machinery manufacturers held a business consultative council with the members of the agricultural machinery manufacturers participating in the business consultative council with respect to the production of the instant agricultural machinery, but this merely aims to gather opinions in advance on the agricultural products. On the other hand, the instant agricultural machinery manufacturers agreed to the rate of incentives separately by opening a separate meeting or communicating with each other in which the executives in charge of the business of each company participate. The lower court determined that the said collaborative act

Examining the reasoning of the lower judgment in light of the relevant legal principles and 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 misapprehending the legal doctrine on

3. As to the allegation in the grounds of appeal as to the system project and the collaborative act of not participating in the business (Ground of appeal No. 5)

Considering the market share of the manufacturer of the four agricultural machinery of this case and the case of unilateral termination of the cooperative contract based thereon, the lower court recognized the circumstances as indicated in its holding, such as the fact that it is difficult to regard the cooperative project and the collaborative act for participation in the business as a minimum measure necessary to cope with the excessive demand of the agricultural cooperatives in a superior position in the transaction, and that the agricultural cooperatives were heavily dependent on the four manufacturing of the agricultural machinery of this case in the supply of the agricultural machinery of this case, and determined that the restriction on competition of the cooperative project and the act for participation in the business of manufacturing the agricultural machinery of this case is recognized.

Examining the reasoning of the judgment below in light of various circumstances in the records, such as the following legal principles, the system business and the unfair collaborative act in each business is a new agreement different from the incentive rate collaborative act, and the fact that agricultural cooperatives, the seller of the four agricultural machinery manufacturing of this case, appear to have been significantly restricted in the purchase business of the agricultural machinery of this case, etc., the above judgment of the court below is just, and contrary to what is alleged in the grounds of appeal, there were no errors in the misapprehension of the legal principles on competition restriction of unfair collaborative acts

4. As to the allegation in the grounds of appeal as to the collaborative act of rental business bidding (Ground of appeal No. 6)

The lower court recognized the circumstances as indicated in its reasoning, such as (1) ① the fact that the manufacture of the instant four agricultural machinery was de facto circumvented through the rental business bidding; ② the fact that the said collaborative act continued for about one year and six months; ③ the reason why the manufacture of the instant four agricultural machinery was engaged in the competitive bidding by the agricultural cooperative; and ③ the fact that the manufacture of the instant four agricultural machinery was likely to supply the desired quantity and unit price to the agricultural cooperative; and (2) the Defendant applied the imposition rate of 7% (7~10%) which is the lowest of the imposition rate prescribed in the relevant public notice by deeming the rental business collaborative bidding to be a very serious violation.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and 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 misapprehending the legal doctrine on deviation and abuse of discretion in the imposition

5. As to the allegation in the grounds of appeal as to the act of price collusion (Ground of appeal No. 7)

The court below acknowledged the following circumstances: (a) the manufacturer of the four agricultural machinery of this case agreed to increase the price of the non-commercial goods supplied to the agency for repair or replacement; (b) the manufacturer of the four agricultural machinery of this case shared the list and prices of non-commercial goods sold individually by the Plaintiff; and (c) the manufacturer of the four agricultural machinery of this case included the list and prices of non-commercial goods sold individually by the Plaintiff; and (d) it is insufficient to recognize that agricultural cooperatives and the Public Procurement Service had attempted to consolidate the price of non-commercial goods for agriculture; and (e) the price collaborative act has a large degree of competition restriction by agreement on the sales price of non-commercial goods; and (e) the manufacturer of non-commercial goods of this case was included in the relevant sales revenue; and (e) the manufacturer of non-commercial goods of this case in the process of the implementation of the above agreement shared the list and prices of non-commercial goods sold individually by the Plaintiff; and (e) the Plaintiff did not err in the imposition of penalty surcharges after taking into account the current status of abuse of the market and/public authority.

The reasoning of the judgment of the court below and the relevant legal principles and the manufacturing of the four agricultural machinery of this case agreed to the same price as the price of the raw materials supplied from the same company to each of their agencies by putting them into practice. In light of the records, the judgment of the court below is justified, and there are no errors in the misapprehension of legal principles as to deviation and abuse of discretionary power, etc., by recognizing the fact that the target of the specific products among the raw materials for agriculture, the diameter and width, etc. of the raw materials for agriculture, which are different from those of the raw materials for agriculture, it is difficult to say that the location and use or price of the raw materials for agriculture, etc. are in essence different, and the difference between the raw materials for agriculture and the raw materials for agriculture, etc. of the same level, the size of the raw materials for agriculture, which the plaintiff alone sold, seems to have increased according to the agreement. The price of the raw materials for the four agricultural machinery manufacturing of this case was jointly determined due to the price collaborative act, which had a direct influence on the consumers.

6. 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 Jo Hee-de

Justices Kim Chang-suk

Justices Park Sang-ok