[1] The case holding that the principal contractor's act of determining a price lower than the price offered by the subcontractor at the lowest bidding price in concluding a subcontract for the term of apartment construction through competitive bidding is an act of determining an unfair subcontract price

[2] The case holding that the administrative agency's imposition of a penalty surcharge, including the subcontract consideration for a subcontractor who does not fall under the determination of a subcontract consideration, by issuing an order to pay a penalty surcharge against a violation of the prohibition of determining a subcontract consideration is unlawful

[1] Article 4 (1) and (2) 7 of the former Fair Transactions in Subcontracting Act (amended by Act No. 9616 of Apr. 1, 2009) / [2] Article 25-3 (1) of the former Fair Transactions in Subcontracting Act (amended by Act No. 9616 of Apr. 1, 2009), Article 14-2 of the former Enforcement Decree of the Fair Transactions in Subcontracting Act (amended by Presidential Decree No. 21031 of Sep. 23, 2008), Article 27 of the Administrative Litigation Act

Plaintiff Co., Ltd. (Law Firm Chungcheong, Attorney Lee Jong-soo, Counsel for defendant-appellant)

Fair Trade Commission (Attorney Hwang Young-hoon, Counsel for defendant-appellant)

Seoul High Court Decision 2008Nu11152 decided Oct. 22, 2008

The part of the judgment below pertaining to the penalty surcharge payment order and the corrective order related to the non-party 1 corporation is reversed, and that part of the case is remanded to Seoul High Court. The remaining appeals are dismissed

The grounds of appeal are examined.

1. As to the grounds of appeal regarding the instant machinery and construction project

Article 4(1) of the Fair Transactions in Subcontracting Act (hereinafter “subcontract Act”) provides that “When a prime contractor entrusts a subcontractor with the manufacture, etc., the prime contractor shall not force the subcontractor to determine the subcontract price at a remarkably lower level than the price which is ordinarily paid for the same or similar kind of the object, etc. (hereinafter “determination of the unreasonable subcontract price”) or to receive the subcontract by using unlawful methods.” Article 4(2)7 of the Subcontract Act provides that “In concluding a subcontract by competitive bidding, the act of the prime contractor who determines the subcontract price at a price lower than the lowest bid price without justifiable reasons shall be deemed to be a determination of the unfair subcontract price pursuant to the provisions of paragraph (1).”

According to the reasoning of the judgment below, the court below determined that the plaintiff could not be deemed to have a justifiable ground for determining the amount lower than the minimum bid price for the non-party 2's subcontract price, in full view of the following: (a) the period of this case and the construction work ordered by the plaintiff at the site of apartment construction in neighboring areas; (b) the details of construction works; and (c) working conditions cannot be identical; (d) the bid participant failed to bid at a price higher than the contract price in neighboring areas; or (e) there is no evidence to support the plaintiff's assertion that the non-party 2 corporation, the lowest bidder, recognized the bid collusion, and voluntarily presented the price lower than the bid price.

According to the records, the above recognition and judgment of the court below are just and acceptable, and there is no error of law such as incomplete deliberation or misconception of facts against the rules of evidence as alleged in the grounds of appeal.

2. As to the grounds of appeal regarding the instant inland wooden Corporation

In full view of the evidence cited in the judgment below, the court below acknowledged that the plaintiff ordered the inland timbering construction among the new construction works of the ○○ apartment building of Sungdong-dong-dong-si, 2006 (hereinafter "the instant inland wooding construction works") to be separated into two sections by bidding, designated five subcontractors for each section through the site site consultation process on August 16, 2006, and selected the non-party 1 and the non-party 3 as successful bidder for the second section, and thereafter, the plaintiff thereafter determined the subcontract price at a lower price than the lowest bid price under Article 4(2)7 of the Subcontract Act.

However, according to the records, among the four companies participating in the bidding of the Section 1 among the instant interior wooden works, the non-party 3's bidding at KRW 629,00,000,000, which is the lowest bidding price, and the non-party 1's bidding at the lowest bidding price at KRW 653,00,000, which is the lowest bidding price. Thus, in the bidding of the Section 1, the "amount of bid at the lowest bidding price" is not 653,00,000, which is 653,000,000, which is 643,267,000, which is lower than the bidding price of the non-party 1's stock company, and even if the plaintiff decided the subcontract price at a lower price than the lowest bidding price at KRW 629,00,00,000, it cannot be deemed that the plaintiff's above subcontract price is an unfair determination under Article 4 (2) 7 of the Subcontract Act.

Nevertheless, the court below held that the determination of the subcontract price against the non-party 1 corporation constitutes an unfair determination of the subcontract price under Article 4 (2) 7 of the Subcontract Act. In so doing, the court below erred by misapprehending the legal principles on the interpretation and application of Article 4 (2) 7 of the Subcontract Act, which affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

Therefore, the part related to the non-party 1 corporation among the corrective order of this case should be reversed illegally. On the other hand, with regard to the scope of the corrective order of this case to be reversed, the penalty surcharge against the non-party 1 corporation shall be determined in consideration of the amount of the subcontract price and the degree and frequency of the violation pursuant to Article 25-3 (1) of the Subcontract Act and Article 14-2 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 21031 of September 23, 2008). According to the records, the corrective order of this case includes the subcontract price for the non-party 1 corporation, which does not fall under the determination of the unfair subcontract price, and only the part related to the non-party 1 corporation is calculated or determined after considering or considering the subcontract price included in the subcontract price for the non-party 1 corporation, which is the basis for the exercise of the discretionary power to impose the penalty surcharge of this case. Thus, the order of this case is reversed in its entirety because it is erroneous

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal relating to the inland wooden Corporation, the part of the judgment below regarding the penalty surcharge payment order and the corrective order related to the non-party 1 corporation is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining appeals are dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Lee Hong-hoon (Presiding Justice)