EE X-ray Marine Co., Ltd. (Law Firm LLC, Attorneys Jeong Tae-ology et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm, Attorneys Ojin-hwan et al., Counsel for the defendant-appellant)

May 17, 2012

1. All of the plaintiff's claims are dismissed.

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

The Defendant’s corrective order, payment order, and penalty surcharge payment order in attached Form 1, which was issued against the Plaintiff by Decision No. 2011-142 on August 10, 2011, shall be revoked.

1. Details of the disposition;

① As a company manufacturing a ship, the Plaintiff is the principal contractor who entrusted interest companies, Co., Ltd. (hereinafter “interest companies”), which are the Plaintiff’s in-house repair business operators, with the task of pre-ship towers and payloads during the process of assembling vessel blocks.

② He is the subcontractor who was entrusted with the above work by the Plaintiff from January 2008.

③ On August 10, 2011, the Defendant issued a corrective order, payment order, and penalty surcharge payment order in attached Form 1 (hereinafter “instant disposition”) on the ground that “the Plaintiff, from October 10, 2009 to March 3, 2010, reduced the unit price at a uniform rate without justifiable grounds, in relation to the entrustment of the manufacture of a ship for entertainment with respect to the manufacturing of goods prior to the manufacturing of the ship and the manufacturing of goods on board (hereinafter “instant subcontract price”) and issued an order to take corrective measures, payment order, and penalty surcharge (hereinafter “instant disposition”).

[Grounds for Recognition] No dispute

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① The Plaintiff’s determination of the subcontract price in this case does not constitute “the case where the unit price has been reduced at a uniform rate,” as it is practically difficult to determine the unit price according to the process in the case of the preceding and the subordinate operations of the preceding operations, which are the duties entrusted to the interest and interest.”

② Even if the unit price was reduced at a uniform rate, the Plaintiff is deemed to have reduced the unit price by reflecting the decline in the unit price over the entire period of the shipbuilding industry, and thus, there is “justifiable cause” in the unit price reduction.

③ Even if the subcontract price decision in this case constitutes an unfair subcontract price decision, the Defendant’s order to pay the difference between the amount based on the previous contractual unit price and the subcontract price in this case without determining the reasonable amount of the subcontract price is a deviation or abuse of discretionary power.

④ Also, considering the fact that the payment order of the instant subcontract price was inevitably made in a managerial crisis due to external factors, such as aggravation of the situation of shipbuilding, increase of raw materials price, decrease in the number of stock prices and the decline in the number of stock prices, etc., and that it was made through consultation with the shipping industry, the payment order of the penalty surcharge is too excessive compared to the Plaintiff’s act, and the amount of the penalty surcharge is so excessive that it exceeded discretion.

B. Whether the disposition constitutes grounds for disposition

1) Whether the unit price was reduced at a uniform rate

A) Relevant legal principles

Article 4(1) of the Fair Transactions in Subcontracting Act (hereinafter “subcontract”) provides that “When a prime contractor entrusts a subcontractor with the manufacture, etc., he/she shall not compel a subcontractor to determine or accept a subcontract price at a remarkably lower level than the price paid generally for the same or similar manufacture, etc. of an object, etc. using unlawful methods.” Article 4(2)1 of the Subcontract Act provides that “The determination of a subcontract price by reducing the unit price at a uniform rate without justifiable grounds shall be deemed to be determined by determining a subcontract price.”

In light of the contents and structure of each of the above provisions and the legislative purport of prohibiting the determination of unreasonable subcontract consideration, “unit price reduction” in Article 4(2)1 of the Subcontract Act refers to the reduction of unit price at a certain rate that does not reflect the same rate or the above difference, even if there are differences in individual circumstances, such as the management situation of the subcontractor, market conditions, and the type, size, size, quality, purpose of use, raw materials, manufacturing method, process, etc. of two or more subcontractors or items, the act of reducing unit price at a certain rate that does not reflect such differences. Even if the determined rate of reduction has a difference to a certain degree according to the subcontractor, if it can be deemed that the unit price was reduced at a certain rate that is identical or specified as a whole in light of the above standard, it shall be deemed that the act of determining unit price at a uniform rate constitutes “an act of reducing unit price at a certain rate” (see Supreme Court Decision 2009Du1990, Mar. 10,

B) Facts of recognition

① The work of “ship towering material” entrusted by interested parties by the Plaintiff is the work of combining a small unit block with a block (factory) at the gate prior to the loading work (for the efficient operation of clering work by making it possible for interested parties to take the maximum weight at one time). The work of prior to the loading is divided into the straw (the work of attaching one-lane part where the contact is to be made in order to make it easy for interested parties to take advantage of the straw), the straw, and ideas (the work of finishing the strawing, etc. by using the strawer, etc.).

② Work “inboards” entrusted by the Plaintiff refers to the work of combining a large unit of block and block on the part of a ship in a state prior to completion. They are subdivided into a place of work, a place of work, an adjacent work, and a thought work, such as a prior tower work.

③ From October 23, 2009 to March 30, 2010, the Plaintiff: (a) entrusted interest companies with the work of cutting ahead of the steel block (hereinafter “instant subcontract”); (b) decided the subcontract price by reducing the 25% of the previous contractual unit price in comparison with the previous contractual unit price, on the grounds of business difficulties arising from the depression of shipbuilding games, price drop, rapid decrease in the quantity of receiving orders, increase in raw materials prices, etc.; and (c) reduced the subcontract price by 30%.

[Reasons for Recognition] No dispute, Gap evidence 2, Eul evidence 1 and 2, and the purport of the whole pleadings

C) Determination

The following circumstances revealed by the statement in the above facts, the evidence, and evidence Eul evidence No. 15, i.e., (i) the Plaintiff reduced the unit price at a different rate for the pre-board and the pre-board and the pre-board, but the pre-board and the payload work are classified into two categories: (i) the process is divided into two categories; and (ii) the price for the pre-board and the subcontract between the Plaintiff and the interested parties is subdivided by the process; and (iii) the price reduction rate is higher in comparison with the pre-board and the pre-board work, but it cannot be deemed that the individual circumstances of the pre-board work at the Plaintiff’s price is not considered in light of the above higher rate, and (iii) the Plaintiff’s employee did not have any specific basis for calculating the 25% and 30% reduction at the Defendant sub-council, and the intra-company rental and the pre-board work at the 10th and 30% reduction in the unit price for the pre-board work at the same rate.

2) Whether there exists a justifiable reason

① According to the evidence evidence evidence Nos. 5 and 6, there was no particular change in the unit price of the preceding and the preceding work in the period of determining the subcontract price of this case after the previous contract between the Plaintiff and the interested parties. ② According to the facts acknowledged earlier, the Plaintiff appears to have reduced the unit price of the instant subcontract price at a certain rate without a specific review as to whether the unit price of the instant subcontract price was reduced due to business difficulties due to the depression of Joseon Games, the price drop, the rapid decrease in the quantity of stocks received, the increase in raw materials prices, etc., and the Plaintiff’s employees did not have any specific grounds for calculation at the Defendant’s small meeting to reduce the unit price at a 25% and 30%. Accordingly, it cannot be deemed that there is no objective and reasonable grounds for the Plaintiff to reduce the unit price at a uniform rate.

(c) Whether the calculation of the payment order is lawful;

It is deemed that the amount calculated according to the previous contractual unit price between the Plaintiff and the interested parties is an appropriate price for the subcontract of this case.

In light of the fact that the subcontract price in this case accounts for most of the personnel expenses, from the previous contract to the time when the subcontract price in this case was determined, there was no particular change in the unit price of the preceding and the wage for the work on board after the previous contract, it can be deemed that the amount calculated according to the previous contract unit price is an appropriate price for the subcontract in this case.

① According to the evidence evidence evidence No. 6, it can be acknowledged that interested parties agreed to reduce the amount of supply and demand to the Plaintiff by 2.5%. However, this is difficult to view interested parties as voluntary intention with the Plaintiff’s demand for the return of management crisis while they depend exclusively on the Plaintiff’s transaction with the Plaintiff. ② According to the evidence No. 9 and No. 10 (including the serial number), it can be recognized that other subcontractors than interested parties would reduce the amount of supply and demand to the Plaintiff. However, this is also in accordance with the Plaintiff’s request as the principal contractor. However, considering the evidence evidence No. 7’s contents are likely to be seen as a result of the reduction of wages without any inevitable reduction according to the principal contractor’s demand, it cannot be said that the above evidence interferes with deeming the amount calculated according to the previous contract unit price as the appropriate price for the subcontract of this case.

Therefore, it cannot be deemed that an order to pay the difference between the amount calculated according to the previous contractual unit price and the price for the subcontract in this case was a deviation or abuse of discretionary power.

D. Whether the calculation of penalty surcharges is lawful

In full view of Article 25-3 of the Subcontract Act and Article 55-3 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”), the Fair Trade Commission has discretion to determine whether to impose penalty surcharges on the determination of unfair subcontract consideration and to determine the amount of penalty surcharges in detail within a certain scope prescribed by the Subcontract Act, the Fair Trade Act, and the Enforcement Decree of the Fair Trade Act. Thus, the imposition of penalty surcharges on a principal contractor who has determined unfair subcontract consideration by the Fair Trade Commission is a discretionary act. However, if there are grounds such as misunderstanding the facts constituting the basis for the imposition of penalty surcharges or violating the principle of proportionality and equality in exercising such discretion, it is illegal as a deviation or abuse of discretionary power.

In this case, considering the circumstances alleged by the Plaintiff, the Defendant calculated 5% of the upper limit of the penalty surcharge by taking into account the type of the violation, the ratio of the amount of the violation, the past history of the violation, etc., and ② the Defendant’s order of the imposition of the penalty surcharge again reduced by 30%, taking into account the following factors: (a) the deterioration of the state of receiving the penalty after the second half of 2008; (b) the deterioration of the state of receiving the penalty surcharge; and (c) the increase in the price of raw materials, etc.,

3. Conclusion

Therefore, all of the plaintiff's claims are dismissed.

[Attachment Related Acts and subordinate statutes omitted]

Judges Cho Jae-ho (Presiding Judge)