[1] Requirements for "the first person who, after initiating an investigation by the Fair Trade Commission, cooperates in the investigation and provided independently evidence necessary to prove that he/she is an unfair collaborative act" under Article 35 (1) 1 (a) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act to be eligible for exemption from the investigative partner / The purpose and purpose of the Monopoly Regulation and Fair Trade Act to establish the system of reduction and exemption from the investigative partner

[2] In light of the fact that the Fair Trade Commission has acknowledged active circumstances under Article 5 subparag. 1 to No. 4 of the former Public Notice of Operation of the System for Reduction and Exemption for those who have reported on illegal collaborative acts, etc., and that there are no passive circumstances under subparag. 5 of the former Public Notice of Operation of the System for Reduction and Exemption for those who have reported on illegal collaborative acts, and in case where the Fair Trade Commission decided to recognize the non-compliance of voluntary report by considering the circumstance that there was leakage of facts for reduction and exemption

[1] Article 22-2(1)2 and (4) of the Monopoly Regulation and Fair Trade Act; Article 35(1)1 Item (a), (c), (d), 2 Item (a), and (b) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act / [2] Article 22-2(1)2 and (4) of the Monopoly Regulation and Fair Trade Act; Article 35(1)1 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act

[1] [2] Supreme Court Decision 2016Du45783 Decided July 26, 2018 (Gong2018Ha, 1862)

Tae Young Construction Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Park Sung-jin et al., Counsel for the defendant-appellant)

Fair Trade Commission (Law Firm, Attorneys Lee Jae-chul et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Nu54355 decided June 24, 2016

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. Whether a measure that did not grant reduction or exemption to the Plaintiff is unlawful (ground of appeal No. 1)

A. Article 22-2 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) provides that a penalty surcharge may be mitigated or exempted for a person who cooperates in an investigation by means of the provision of evidence, etc. (Paragraph (1) 2), and that detailed matters concerning the scope of persons eligible for mitigation or exemption, standards for mitigation or exemption, etc. shall be prescribed by Presidential Decree (Paragraph (4)). According to delegation from the Fair Trade Act, Article 35 (1) 2 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (hereinafter “Enforcement Decree of the Fair Trade Act”) provides that a person who cooperates in an investigation after the commencement of the investigation by the Fair Trade Commission and cooperates in the investigation under the conditions that the Fair Trade Commission fails to obtain information on the unfair collaborative act or fails to obtain sufficient evidence necessary to verify the unfair collaborative act [Article 22-2 (a)] (2) is the first person who alone provides evidence necessary to verify the unfair collaborative act [Article 35 (1) 1 (a) and (c) of the Enforcement Decree of the Fair Trade Act].

According to the language and content of the relevant statutes, “the first person who voluntarily provided evidence necessary to prove that an investigation is an unfair collaborative act after the commencement of the investigation by the Fair Trade Commission,” etc. satisfies the requirements such as “the first person who voluntarily provided evidence necessary to prove that the investigation is an unfair collaborative act,” which is subject to exemption from the investigation, to “the fact related to the unfair collaborative act, submission of relevant materials, etc.

The purpose and purpose of the Fair Trade Act’s legislation is to ensure the effectiveness of sanctions against unfair collaborative acts committed by an enterpriser who has participated in such unfair collaborative acts by voluntarily reporting or cooperating with an investigation into such unfair collaborative acts, thereby undermining trust among participating enterprisers, and at the same time, by allowing the Fair Trade Commission to easily detect such unfair collaborative acts and collect evidence.

B. Article 5 of the former Public Notice of Operation of the System to Take Corrective Measures, etc. against Persons who have voluntarily reported unfair collaborative acts (amended by the Fair Trade Commission Notice No. 2016-3, Apr. 15, 2016; hereinafter “former Public Notice of Reduction and Exemption”) provides that determination shall be made by comprehensively taking into account the following matters into account:

(1) Whether a person who has filed a voluntary report has fully stated any of the facts related to the collaborative act known to him/her without delay (subparagraph 1)

(2) Whether those who have filed a voluntary report, etc. in connection with a collaborative act promptly submit all materials that they hold or are able to collect (subparagraph 2)

(3) Whether the Commission promptly answers and cooperates with the Commission’s request necessary for factual verification (subparagraph 3)

(4) Whether executives and employees (including former executives and employees, if possible) have made every effort to cooperate with the Commission in continuous and true meetings, investigations, etc. (Article 4).

(5) Whether the evidence and information related to the collaborative act have been destroyed, fabricated, damaged or concealed (No. 5)

(6) Whether a third party has divulged the fact of conduct and the fact of application for reduction or exemption without consent of the Committee before notifying the review report (subparagraph 6).

C. The above provision on the public notice of reduction and exemption, in light of its form and content, constitutes a discretionary rule, i.e., the administrative agency’s internal administrative rules established based on the exercise of discretionary power, and setting reasonable standards necessary therefor within the scope not contrary to the statutes, belongs to the discretion of the administrative agency. However, Article 5 of the former Public notice of Reduction and Exemption only provides for the determination of “faith cooperation” by comprehensively taking account of the above reasons, and does not specifically provide for the following: (a) whether the criteria for determination of the circumstances prescribed by each subparagraph are important; and (b) whether a voluntary reporter or an investigative partner (hereinafter “voluntary reporter, etc.”) satisfies all the affirmative circumstances prescribed by subparagraphs 1 through 4; and (c) at the same time, whether the passive circumstances prescribed by subparagraphs 5 and 6 are to be balanced

Meanwhile, if a person who has filed a voluntary report discloses the fact of application for reduction or exemption to another person without the consent of the Fair Trade Commission before the notice of the review report, a person who has been aware of such application can establish more easily countermeasures against the investigation by the Fair Trade Commission, and accordingly, there is room for concealing or altering relevant evidence or to collusion the voluntary report itself. Ultimately, the leakage of the fact of application for reduction or exemption may act as a obstacle to the effective investigation by the Fair Trade Commission, and thereby, may bring about a consequence to excluding the intent of introducing the voluntary report system that makes it difficult to form and maintain the collusion.

Even if there are some circumstances that can be seen as a violation of the duty of good faith, there is certain discretion in the Fair Trade Commission as to whether to deny the status of voluntary reporters, etc. by recognizing a violation of the duty of good faith cooperation.Recognition of the status of voluntary reporters, etc. is bound to be made according to the comprehensive judgment on the process of investigation and cooperation. Also, the duty of good faith cooperation of voluntary reporters, etc. is effective

Therefore, while considering the fact that active circumstances under Article 5 subparag. 1 through 4 of the former Public Notice of Reduction and Exemption Act are recognized to those who have filed a voluntary report and that there are no passive circumstances under Article 5 subparag. 5, the Fair Trade Commission may recognize the violation of the duty to cooperate with those who have filed a voluntary report in good faith by deeming the circumstance that there was leakage of the facts for application for reduction and exemption under subparag. 6 as an important element for consideration. Unless there are grounds such as lack of rationality, violation of the principle of proportionality and equality, or mistake of the fact that constitutes the premise for the evaluation, the said disposition of non-approval of reduction and exemption cannot be

D. According to the reasoning of the lower judgment, the following facts are revealed.

(1) The Plaintiff participated in the collaborative act in the instant case, along with the Hanhwa Construction Co., Ltd. (hereinafter “Korean Commercial Construction”).

(2) On March 27, 2013, the Defendant commenced a field investigation into the instant collaborative act. On October 31, 2014, the Plaintiff submitted a written statement, etc. of its executive officers and employees at the first application for reduction or exemption.

(3) On December 9, 2014, Nonparty 1’s employees Nonparty 1 notified Nonparty 2 Nonparty 2, who participated in the instant collaborative act, of the application for reduction and exemption, the Plaintiff’s executive Nonparty 3’s executive secretary and his written statement.

(4) On March 17, 2015, the Defendant notified the Plaintiff of an accusation against the Plaintiff, corrective measures and penalty surcharge exemption on the grounds that the Plaintiff satisfied all the requirements for the first-class investigator in investigation. However, on May 1, 2015, the Defendant dismissed the Plaintiff’s application for reduction or exemption on the ground that the Plaintiff’s employee was informed of the Plaintiff’s application for reduction or exemption to the employees of the Hando Construction without the Defendant’s consent.

E. Examining these circumstances in light of the legal principles as seen earlier, the following determination is possible.

The Plaintiff revealed the fact that the Plaintiff was involved in the instant collaborative act before the Defendant’s report on review was notified after the application for reduction and exemption, and provided a written proposal to the relevant person. Furthermore, the Defendant, while comprehensively taking into account other circumstances, determined that the Defendant did not faithfully cooperate with the Plaintiff in view of such leakage as an important negative factors. In addition, examining the timing of divulgence of the Plaintiff’s application for reduction and exemption, leakage counterpart, and leakage circumstances, etc., it is difficult to deem that the Defendant’s rejection of the application for reduction and exemption is unreasonable or that there was a violation of the principle of proportionality and equality. Furthermore, there is no evidence to deem that the Defendant’s administrative practice recognized as the person who faithfully cooperates with the investigator, in the absence of such passive circumstances as set forth in subparagraphs 1 through 4 of Article 5 of the former Public Notice of Reduction and Exemption Act, is established. Accordingly, the instant non-approval of reduction and exemption

F. Therefore, although the reasoning of the lower court’s determination is somewhat inappropriate, it is justifiable to determine that the lower court did not err in deviation from or abuse of discretion, etc. in the disposition of non-recognition of the instant reduction or exemption. In so determining, the lower court did not err by misapprehending the legal doctrine on the requirements for recognition of the first investigative partner, violation of duty

2. Whether there is a justifiable ground for not holding the Plaintiff liable for failing to meet the requirements for reduction and exemption of investigators (ground of appeal No. 2)

The court below held that the non-party 1, who was an employee of the plaintiff, could not be held liable to the plaintiff because the non-party 1 revealed the fact of application for reduction to the Korean Commercial Construction and provided the draft of the statement by the plaintiff's

Examining the reasoning of the lower judgment, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules.

3. Conclusion

The Plaintiff’s appeal is dismissed as it is without merit, 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 Kim Chang-suk (Presiding Justice)