El District Fire and Marine Insurance Co., Ltd. (Law Firm Sejong, Attorneys Kim Jae- Jae et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm Han, Attorney Jeon Soo-soo, Counsel for defendant-appellant)

January 27, 2004

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the plaintiff.

Each disposition listed in paragraphs (1) and (3) of [Attachment 1 and (3) done by the defendant against the plaintiff on October 28, 1999 and each order for announcement listed in Attached Form 2 dated March 21, 2002 shall be revoked.

1. Details of the disposition;

The following facts are either disputed between the parties, or acknowledged by Gap evidence 1, 2-2, Gap evidence 3-1 through 3, Gap evidence 16, Eul evidence 1-2, Eul evidence 2-4, and the whole purport of the pleadings.

A. As of April 1, 1998, the Plaintiff is an insurance company belonging to the “ELD” designated by the Defendant as a large enterprise group, and is a business operator under Article 2 subparagraph 1 of the Monopoly Regulation and Fair Trade Act (hereinafter “Act”).

B. On December 31, 1997, the Plaintiff got subordinated loans at the interest rate of 16% (16% after January 1, 1999) to Bochi Bank Co., Ltd. (hereinafter “IB”), and on the same day, Han Bank purchased at the interest rate of 16% (16% after January 1, 199) the unsecured private equity bonds of Hanchi Co., Ltd. (hereinafter “IB”); and on the same day, Han Bank purchased at the interest rate of 48 billion won (16% after January 1, 199).

A person shall be appointed.

Denmark 1> Borrowing of 1 Bank and Terms and Conditions of Subscription for Private Equity Bonds

The interest rate period of 16% on December 31, 1997, 48 billion won on the date issuing company for the fixed interest period of subordinated loan terms, privately placed bonds and subscription terms included in the main sentence, 16% on December 31, 1997, 48 billion won on December 31, 1997, 6% on December 31, 1997.

C. Regarding this situation, the defendant issued public offering bonds at the interest rate of 10.27.4% on December 30, 1997, one bank's above subordinated loans (hereinafter "the subordinated loans of this case") and 2.4% on the above 10.4% on a yearly basis, but the acceptance date, amount, interest rate, and interest payment terms of the above 10.2. At that time, one bank has been using force to improve the BISD base ratio (hereinafter "BS ratio"), but it has received public offering bonds at the interest rate of 10.4% on the 20.4% on a yearly basis of 27.4% on the 19.4% on the 20th Amendment of the Enforcement Decree of the Act. However, the normal interest rate is likely to be 27.4% on the 20th Amendment of the Act, and it is likely that the bank will ex officio increase its financial position by applying the 16.4% annual interest rate on the 16.4% amendment of the Act.

2. Whether the instant disposition is lawful

A. The parties' assertion

With respect to the claim that the disposition of this case is lawful in accordance with the above disposition grounds and relevant Acts and subordinate statutes, the plaintiff asserts that the disposition of this case should be revoked because it is unlawful for the following reasons.

(1) The assertion that the subordinated loan of this case and the subscription of the private placement bonds of this case are not linked, and that the interest rate of the private placement bonds of this case is not lower than the normal interest rate.

The Plaintiff was anticipated to secure a large liquidity due to the termination of the beneficiary certificates of investment companies at the time, and the long-term assets were insufficient, and thus, one bank becomes a subordinate loan to one bank as a method of managing long-term funds, and one bank also made a subordinated loan with the effect of increasing BISD ratio from the Plaintiff, and then made a long-term loan in order to secure the interest accrued from a long-term subordinated loan at the same interest rate on the ELB, which is a large affiliated company with which the credit was set up for a long-term loan. Therefore, the Plaintiff or Han Bank was merely an independent decision of each of the above investment companies and did not support ELB electronic in connection with one bank.

On December 30, 1997, the day before the issuance date of the private equity bonds of this case, the Defendant considered 17.44% of the ordinary interest rate of ELJ as 27.4% per annum on the ground of the issuance date of the private equity bonds of this case. However, the above public equity bonds of this case with the maturity of 3 years and the issue amount of 10 billion won and the maturity of 48 billion won in the maturity of 6 years, are different from the loan period and amount. Since the interest rate at the time of the private equity bonds of this case was set up with the highest interest rate of 48 billion won in the long term, there was a time when the long-term bond of this case was lower than the interest rate than the short-term bond, it cannot be concluded that the interest rate of the above public equity bonds of this case was lower than the interest rate of the private equity bonds of this case. Rather, the average interest rate of 16% per annum from 194 to 197.24% per annum.

(2) The assertion that there is no illegality

The time when the private equity bonds were issued in this case is so-called the so-called IMF incident, and most companies have experienced abnormal economic situation that has difficulty due to liquidity shortage. Therefore, considering such market situation, the Plaintiff’s act is not improper as an inevitable act to prevent bankruptcy of ELB.

(3) The assertion that the amount of penalty surcharge is excessive

Even if the plaintiff's household activity constitutes an unfair support act, the penalty surcharge should be calculated on the basis of 18.42%, which is the ordinary interest rate, as seen earlier, and thus, the defendant's 27.44% should be considered as a normal interest rate, and the defendant's excessive calculation of the amount of subsidy is unlawful

Furthermore, if the above 18.42% cannot be recognized as a normal interest rate, it is impossible to verify the accurate normal interest rate of the instant privately placed bonds. As such, as the Defendant previously recognized the amount of support to the extent of 10% of the amount of support transaction in the case of unfair support of the Plaintiff’s affiliates, the Defendant should recognize it as the amount of support transaction, i.e., the amount of support, within the limit of 48 billion won, which is 10% of the issue amount of the instant privately placed bonds, and impose penalty surcharges accordingly.

In addition, the amount of the penalty surcharge in this case was excessive in light of the Plaintiff’s violation of the law, and thus, it was eventually deemed that the order to pay the penalty surcharge in this case was unlawful.

(4) The assertion that the disclosure order is unlawful

The Constitutional Court ruled that the part of the "Publication of Violation of the Act" in Article 27 of the Act is unconstitutional, and that the part of the publication of violation of the Act in Article 24 of the Act is unconstitutional. Thus, the defendant cannot make an order for publication by applying Article 24 of the Act. Therefore, the above amendment of the ex officio is illegal without any ground.

(b) Related statutes;

Monopoly Regulation and Fair Trade

Article 23 (Prohibition of Unfair Trade Practices) (1) No enterpriser shall commit any act which falls under any of the following subparagraphs, and which is likely to impede fair trade (hereinafter referred to as "unfair trade practices"), or have an affiliated company or other enterprisers perform such act:

7. Unfairly supporting a person with a special interest or other companies by providing advanced payment, loans, human resources, real estate, securities, intangible property rights, etc. or by transacting under substantially favorable terms and conditions;

(2) Types of or criteria for unfair trade practices shall be prescribed by Presidential Decree.

When there is an act of violating the provisions of Article 23 (1), the Fixed Business Transaction Committee may order the enterpriser concerned to discontinue the unfair trade practices, to delete the provisions of the contract, to publish the violation of the Act, or to take other necessary corrective measures against the said act.

In the event of the occurrence of unfair trade practices in violation of the provisions of each subparagraph of Article 23 (1), the Fair Trade Commission may impose upon the enterpriser concerned a penalty surcharge not exceeding the amount obtained by multiplying the turnover determined by the Presidential Decree by 2/100. The former Act (amended by Act No. 6043, Dec. 28, 1999)

Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 16621 of March 31, 199)

Article 9 (Methods of Calculation of Penalty Surcharges) (1) The term “sales determined by the Presidential Decree” in the main sentences of Articles 6 (Methods of Calculating Penalty Surcharges), 22 (Penalty Surcharges), 24-2 (Penalty Surcharges), 28 (2), 31-2 (Penalty Surcharges) and 34-2 (Penalty Surcharges) of the Act means average sales of the enterpriser concerned for the three business years immediately preceding the business year (hereinafter referred to as “standard sales for imposing penalty surcharges”): Provided, That in cases where three years have not elapsed since the commencement of business as of the first day of the business year concerned, it means the amount computed by converting the sales from the last day of the business year immediately preceding the commencement of business into annual average sales, and in cases where business has commenced in the business year concerned, it means the amount computed by converting the sales from the date of commencement of

(2) Other matters necessary for calculating the standard turnover for imposition of penalty surcharges shall be determined by the Fair Trade Commission.

Article 36 (Designation of Unfair Trade Practices) (1) Types of or criteria for the unfair trade practices under Article 23 (2) of the Act shall be as shown in attached Table 1.

[Attachment 1] Types of and Criteria for General Unfair Trade Practices (Related to Article 36 (1))

10. Support for improper funds, assets, and human resources;

"Act assisting a person with a special interest or another company by providing advanced payment, loans, human resources, real estate, securities, intangible property rights, etc. to a person with a special interest or another company, or by transacting under substantially favorable terms" in Article 23 (1) 7 of the Act means an act falling under any of the following items:

(a) Unfair financial assistance;

An act of assisting a person with special interest or other companies by providing or trading funds, such as provisional payments or loans, for remarkably low or high prices, or by providing or trading on a conspicuous scale and providing excessive economic benefits.

(b) Unfair asset support;

An act of assisting a person with a special interest or other companies by providing or trading assets, such as real estate, securities, intangible property rights, etc., with remarkably low or high prices, or by providing or trading at a significant scale, with excessive economic benefits.

(c) Unreasonable personnel support;

An act assisting a person with special interest, or another company by providing excessive economic benefits by providing human resources to the person with special interest, or other company at remarkably low or high prices, or by providing excessive economic benefits.

Article 61 (Standards for Imposition of Penalty Surcharges)

(1) Types and standards for imposing penalty surcharges under Articles 6 (Penalty Surcharges), 17 (Penalty Surcharges), 22 (Penalty Surcharges), 24-2 (Penalty Surcharges), 28 (Penalty Surcharges), 31-2 (Penalty Surcharges) and 34-2 (Penalty Surcharges) of the Act are as shown in attached Table 2.

(2) The amount calculated pursuant to paragraph (1) may be increased or decreased, taking into consideration the matters provided for in the subparagraphs of Article 55-3 (1) of the Act.

[Attachment 2] Criteria for Imposition of Penalty Surcharges by Category of Violations (Related to Article 61(1))

8. Standards for imposing penalty surcharges on the violation of the Act, which is included in the main sentence; 8. Where the amount of support can be calculated under Article 23 (1) 7 of the Act, if it is difficult or impossible to calculate the amount of support within the relevant amount of support, it shall not exceed 10/100 of the amount of

(c) Markets:

(1) Determination as to the assertion that the pertinent subordinated loan and the acquisition of the instant privately placed bonds are not linked, and that the interest rate of the instant privately placed bonds is not lower than the normal interest rate

㈎ 인정사실

The following facts may be acknowledged in full view of the statements in Gap evidence 3-1 through 3, Gap evidence 10-1, 2, 12-2 through 5, Eul evidence 2-2 through 5, Eul evidence 5, and Eul evidence 6-1, and the whole purport of the pleadings in part of Gap evidence 6-2, Gap evidence 15, and Eul evidence 6-1, and the testimony of Gap evidence 6-1 to 3, Gap evidence 5-1, 14-1, 2, and 15, and each fact inquiry results in the Korea Credit Information Company and the Korea Credit Information Company shall not interfere with the above recognition, and there is no counter evidence otherwise.

① The date, amount, interest rate, and terms and maturity of the subordinated loan of this case and the subscription to private equity bonds of this case shall be fully identical to the date, amount, interest rate, and due date on December 31, 1997; total of 48 billion won; 16 per annum; one year after 16 per annum; and six years (two years before each other).

② On December 30, 1997, the day immediately preceding the date of the subscription for the private equity bonds of this case; the issue amount 100 billion won; interest rate was 25% after three months (27.44% if converted into one year later); and 255-time public equity bonds with three-year maturity.

③ While the private equity bonds of this case were issued at par without any guarantee (i.e., face value and issue value are the same as face value and issue value), the public equity bonds are guaranteed for repayment of principal and interest of the Korea Guarantee Insurance Corporation, and the discount rate of 11.74% is applied (i.e., face value is 10 billion won or issue value is 8.26 billion won).

④ The rate of return on corporate bonds with the maturity of 3 years on December 30, 1997, which was issued and underwritten by the above public offering bonds, is 30.89% per annum. The rate of return on corporate bonds with the maturity of 3 years on the 31st of the same month, which was issued and underwritten by the instant public offering bonds, is 28.98% per annum, and the rate of return on corporate bonds with the maturity of 3 years on the 31st of the same month, which was 3

⑤ At the time of the acquisition of the private equity bonds of this case, the head of the RMship (the company responsible person) team of the EL branch and the company responsible person of the EL branch at the time of the acquisition of the private equity bonds of this case were four shareholders holding 7.19% of the shares of the EL branch at the time of the EL branch. The EL branch were four shareholders holding 7.19% of the shares of the EL branch. A’s certificate 1-2)

㈏ 위 인정사실에 의하면, 원고는 하나은행에 후순위대출을 하고 하나은행은 그와 연계하여 엘지전자의 사모사채를 인수한 사실을 넉넉히 인정할 수 있다.

However, the subscription price of one bank should be higher than the arm's length price for the acquisition of the bonds. The subscription price of the bonds is determined by the subscription rate of the bonds, which should be compared with the subscription rate of the bonds at the time of issuance and acquisition, and it should not be simply compared with the interest rate of the bonds as stated in the disposition of this case. However, as seen above, the above subscription bond is subject to the subscription rate of 11.74%, while the subscription rate of the bonds at par value and the return rate of the two bonds will be greater than the mere subscription rate of the two bonds. The above subscription rate of the company bond with the maturity of three years on December 30, 197 and on December 31, 31, 1997, the issue price of the two bonds, and the above subscription rate of the company bond with maturity of 30% should not be higher than the above subscription rate of the bonds at least, but it should not be higher than the above increase in the return rate of the bonds at the time of the above issuance and acquisition.

Therefore, the plaintiff's above act was purchased at a significant high-priced level through the Han Bank, and the ELB, which had been able to secure liquidity in the situation where the funds were serious at the time, is recognized to be likely to maintain or strengthen the status as a business operator with significant significance in the market. Therefore, it is deemed that the act of the plaintiff is an unfair asset support act.

(2) Determination as to the assertion that the illegality is not unfair

Even if the domestic financial market was abnormal due to the so-called IMF incident at the time, there is no evidence that there was an inevitable circumstance that the Plaintiff could not go against the above support act with respect to ELE, such as the bankruptcy of ELE or the possibility of accompanying the Plaintiff again. Therefore, the Plaintiff’s assertion on the above part is groundless.

(3) Determination as to the assertion that the amount of penalty surcharge is excessive

As long as the return rate of a publicly offered bond is recognized as a basis for comparison, the Plaintiff’s assertion that the amount of a penalty surcharge is excessive on the premise that the amount of a penalty surcharge is to be recognized within the limit of 10% of the amount of support transactions, since the general rate of profit should be the basis for comparison, or the normal rate of profit cannot be confirmed, or the amount of a subsidy cannot be calculated because the normal rate of profit cannot be ascertained, is no longer necessary.

In addition, the calculation basis of the penalty surcharge in this case is as follows:

Remark 2> The amount of support and penalty calculation

The normal interest rate difference (number of days) of the indexed transaction volume (number of days) included in the main sentence shall be 16.00% 16.44% 27.44% 7.44% 7296 million won 517 billion won on 485.45% of the amount of penalty surcharges.

* Number of support days: December 31, 1997 to April 30, 1999

(4) Determination as to the assertion that the publication order is unlawful

The Constitutional Court's decision (No. 2001Hun-Ba43, Jan. 31, 2002; No. 6) that an order to publish a violation of the Act is unconstitutional. Since the part of "Publication of a violation of the Act" is interpreted and operated to mean that "an offender recognizes and announces the fact of violation on his/her own" before criminal trials begin, it may be permitted to publish the fact of violation of the Constitution, which is distinguished from this concept in light of the Constitution, in order to achieve the legislative purpose, to minimize negative effects such as considerably decreasing fundamental rights violations and to mitigate confusions that may occur after the trial, and even if the defendant violated Article 23 (1) of the Act, it may not be deemed that "an ex officio corrective order" and "an ex officio corrective order" in light of the existing form of Article 24 (1) of the Act, which "an ex officio corrective order is invalidated" and "an ex officio corrective order" in the same part of the Act.

3. Conclusion

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

Judges Lee Dong-bok (Presiding Judge)