Whether an agreement to restrict competition may be concluded where a business entity in competition has divided into bidding fields and decided in advance the participants in each bidding field (affirmative) / Whether an agreement to restrict competition may be concluded on the sole basis of the circumstance that a business entity is less likely to receive an order in a competitive bidding (negative)

Article 19(1) of the Monopoly Regulation and Fair Trade Act prohibits two or more enterprisers from engaging in an unfair collaborative act in which they agree to unfairly restrict competition. Here, agreement includes not only explicit agreement but also implied agreement. Thus, if enterprisers in competition divide the fields of bidding and decide to participate in the bidding field in advance, agreement to restrict competition among them can be deemed to have been concluded. Furthermore, even if a certain enterpriser wishes to participate in a competitive act, it can act as the other party’s pressure. Thus, it is difficult to readily conclude that a competitor is denied or a competition relation is not established in a competitive act solely on the basis of the circumstance that a certain enterpriser is unlikely to be allowed to participate in the bidding.

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

Samsung C&S Co., Ltd. (Law Firm Square, Attorneys Lee Won-soo 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 2012Nu14462 decided August 21, 2013

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) prohibits two or more enterprisers from engaging in an unfair collaborative act to agree to unfairly restrict competition. Here, agreement includes not only explicit agreement but also implied agreement. Thus, if enterprisers in competition divide the fields of bidding and decide in advance the participants in each bidding field in the bidding process, it can be deemed that agreement to restrict competition has been reached among them. Furthermore, even if a certain enterpriser intended to participate in a competitive act, it may affect the other party’s competition pressure on the sole basis of the fact that a certain enterpriser was willing to participate in the bidding. Thus, it cannot be readily concluded that the enterpriser’s intent of competition is denied on the sole basis of the circumstance that a certain enterpriser is unlikely to participate in the bidding, or that there is no competitive relation in the bidding.

2. After finding facts as indicated in its reasoning based on evidence adopted, the lower court: (a) publicly announced a request for proposal on bidding for the research and development project of the combat system and the system of small and medium enterprises (hereinafter “instant bidding”) on February 12, 2009 by the Agency for Defense Development (hereinafter “the Agency”) on February 12, 200; (b) publicly announced a request for proposal on bidding for the combat system and the system of small and medium enterprises (hereinafter “instant bidding”); (c) on the combat system, the combat system completely prohibits technical cooperation with foreign enterprises; (d) on the basis of the principle of localization in small and medium systems, the domesticization was achieved at least 70% with government approval; (d) the Plaintiff failed to have the technical capability to independently perform research and development projects on the system comprehensive bidding among the small and medium systems; and (e) the Plaintiff was not able to independently participate in the bid in the relevant field due to lack of technical capacity for the combat system; and (e) the Plaintiff and the Plaintiff were not able to voluntarily participate in the bidding system or the bidding system among the bidding sector.

3. However, we cannot accept the judgment of the court below for the following reasons.

A. According to the reasoning of the lower judgment and evidence duly admitted by the lower court, ① the 3G 2G 10 G 209 note out of the work pocketbooks prepared by Nonparty 1, 2009, that it will be excluded from overseas cooperation in the combat system, and the 2G 9G 2G 3G 3G 200 note out of the 9G 2G 3G 2009 note that the 9G 9G 2G 2G 3G 207 3G 3G 209 note that the 9G 9G 9G 2G 3G 207 3G 3G 207 3G 3G 2009 note that the 9G 9G 9G 2G 3G 2006 3G 3G 3G 2007 4G 5G 207.

B. The following circumstances revealed by such factual basis, i.e., (i) continued negotiations with the Plaintiff without any change in the bidding strategies even after LIG continued to be aware that there was a possibility that it would be prohibited from foreign cooperation in the combat system, and (ii) the Plaintiff may be deemed to have recognized LIG as a competitor in the combat system tender before the conclusion of the instant agreement. As such, it is difficult to conclude that LIG would not waive its intent to participate in the combat system prior to the instant agreement, and even if the Plaintiff has assessed its own lawsuit or system possibility, it is difficult to conclude that there was no intention to participate in the bidding. Since the Plaintiff continued to consult with LIG after the announcement of the proposal, even if it is difficult to consider that there was no possibility that the Plaintiff would be less likely to participate in the bidding in the bidding in the future, it is difficult to view that the Plaintiff could not be seen that there was a lack of strategic competition between the Plaintiff and the Plaintiff in terms of the following legal principles:

4. Nevertheless, the lower court determined that there was no agreement that limits competition between the Plaintiff and LIG solely on the grounds stated in its reasoning. In so doing, it erred by misapprehending the legal doctrine on the establishment of unfair collaborative acts, etc., and by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, or by failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment.

5. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Kim So-young (Presiding Justice)