[1] The meaning of "justifiable conduct conducted under the law or any order issued under the law" under Article 58 of the former Monopoly Regulation and Fair Trade Act

[2] The case affirming the judgment below holding that the above act constitutes an unfair collaborative act under Article 19 (1) 1 of the former Monopoly Regulation and Fair Trade Act, in case where Gap non-life insurance company used 8 general accident insurance with other non-life insurance companies as prepared by the Korea Insurance Development Institute, discriminates within a certain scope, and agreed to offset the difference by discount or premium rate, and issued corrective order and penalty surcharge payment order with respect to the act of practice

[3] Criteria for determining whether a collaborative act constitutes “competitive competition” under Article 19(1) of the former Monopoly Regulation and Fair Trade Act, and whether a business entity’s act of jointly determining or changing the price constitutes an unfair collaborative act (affirmative)

[4] In a case where Gap non-life insurance company applied 3% of the base penalty surcharge imposition rate on the ground that it constitutes an unfair collaborative act and ordered correction order and payment of penalty surcharge, and the collaborative act constitutes a "serious violation" in calculating penalty surcharge, in a case where Gap non-life insurance company used 8 general damage insurance together with other non-life insurance companies the development plan of the Korea Insurance Development Institute, discriminates within a certain scope, and agreed to offset the difference by discount and premium rate, and the Fair Trade Commission applied 3% of the base penalty surcharge imposition rate on the act conducted, the case affirming the judgment below holding that the amount of penalty

[1] Article 58 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [2] Articles 19(1) and 58 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [3] Article 19(1) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [4] Articles 6, 22 and 55-3 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004), Article 19(1) [Attachment 6(1) and (2) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 1868 of Mar. 18, 2005]

[1] Supreme Court Decision 96Nu150 Decided May 16, 1997 (Gong1997Sang, 1759), Supreme Court Decision 2007Du19416 Decided June 23, 2009 / [3] Supreme Court Decision 99Du6514 Decided March 15, 2002 (Gong2002Sang, 9Du11485 Decided February 11, 201, Supreme Court Decision 2009Du7912 Decided April 14, 201 (Gong201Sang, 934)

Hansung Insurance Co., Ltd. (Law Firm Vindication, Attorneys Jeon Jae-in et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Attorney Choi Byung-hee et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2007Nu28207 decided November 6, 2008

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. As to the grounds of appeal on the lack of concreteness, absence of concreteness, and absence of agreement on the unfair collaborative act

After compiling the adopted evidence, the court below acknowledged the facts as stated in its holding. The plaintiff used the net rate for general damage insurance of this case 8 with other insurance companies, used the reference rate prepared by the Insurance Development Institute. The additional rate is differentiated within a certain scope, but the difference is offset by discount or premium rate, and then conducted the act (hereinafter "the collaborative act of this case"), which constitutes an "unfair collaborative act" under Article 19 (1) 1 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004; hereinafter "former Monopoly Regulation and Fair Trade Act").

In light of the records, such determination by the court below is just, and contrary to the allegations in the grounds of appeal, there is no illegality in the misapprehension of legal principles as to the recognition of disposition subject to disposition, or in violation of logical and empirical rules

2. As to the grounds of appeal on the misapprehension of legal principles as to exemption from the Fair Trade Act and legitimate acts

Article 58 of the former Monopoly Regulation and Fair Trade Act provides that "this Act shall not apply to lawful acts conducted by an enterpriser or an enterprisers' organization in accordance with other Acts or orders issued under such Acts." The term "justifiable acts performed in accordance with the Acts or orders issued under such Acts" under the above provision means acts conducted within the scope of the law or orders issued under such Acts, where the restriction on competition is guaranteed by the enterpriser's exclusive status through a business or authorization system deemed reasonable in light of the special nature of the pertinent business, while the restriction on competition is guaranteed by the enterpriser's exclusive status in a business which requires high level of public regulation from the perspective of public nature, etc. (see Supreme Court Decisions 96Nu150, May 16, 1997; 2007Du19416, Jun. 23, 2009, etc.).

After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its reasoning, and determined that even if there exist various regulations according to the characteristics of the insurance business, the Plaintiff committed the instant collaborative act in order to avoid competition on the insurance premium of the instant 8 general damage insurance and to maintain the level within a certain scope, it cannot be justified under the former Fair Trade Act, even if there are separate decisions on the insurance premium rate of the general damage insurance in accordance with its own judgment.

In light of the above legal principles and records, the judgment of the court below is just, and there is no error in the application of the former Fair Trade Act and the misapprehension of legal principles as to legitimate acts under the statutes stipulated in Article 58 of the former Fair Trade Act.

3. As to the grounds of appeal on competition restriction

Whether a collaborative act restricts competition under Article 19(1) of the former Monopoly Regulation and Fair Trade Act should be determined individually by examining whether the collaborative act causes or is likely to cause impacts on the determination of price, quantity, quality, and other terms and conditions of trading by reducing competition in a particular business area due to the collaborative act, taking into account various circumstances, such as the characteristics of the relevant product, consumers’ standard for choosing products, and the impact of the relevant act on the market and enterprisers on the competition. Furthermore, an act of jointly determining or changing price by enterprisers causes impacts or is likely to cause impacts on the determination of price freely depending on their intent by reducing the price competition within the scope thereof. Thus, such collaborative act of enterprisers is deemed unfair, barring special circumstances (see, e.g., Supreme Court Decisions 9Du6514, Mar. 15, 2002; 2009Du1485, Feb. 11, 2010).

After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its holding, and determined that the instant collaborative act maintains the level of insurance premiums, which serve as a critical basis for determining the choice of general damage insurance policyholders, to a certain extent, and has a significant effect of restricting competition, and that where multiple enterprisers engage in an unfair collaborative act, all of the participating individual enterprisers become the subject of the act. Even if a certain enterpriser’s market share is very small, if the enterpriser did an act of pricing, etc. under an agreement with other enterprisers, such an enterpriser becomes the subject of the unfair collaborative act.

In light of the above legal principles and records, the judgment of the court below is just, and it is not erroneous in the misapprehension of legal principles as to competition limitation as otherwise alleged in the grounds of appeal

4. As to the grounds of appeal regarding calculation of the relevant sales amount

Articles 22 and 55-3 of the former Monopoly Regulation and Fair Trade Act, Article 61(1) and [Attachment 2] 2(a) of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 18768, Mar. 31, 2005; hereinafter “former Enforcement Decree of the Fair Trade Act”), where an unfair collaborative act violating Article 19 of the former Enforcement Decree of the Fair Trade Act is committed, a basic penalty surcharge shall be calculated within the extent not exceeding the amount multiplied by 5/100 of the sales of related goods sold during the period of violation (hereinafter “related sales”), and in calculating related sales, a basic penalty surcharge shall be calculated within the extent not exceeding the amount multiplied by 5/100 of the sales of related goods sold during the period of violation. In principle, sales shall be determined by referring to the accounting data

In addition, Articles 6 and 22 of the former Monopoly Regulation and Fair Trade Act, and Article 9-2 of the former Enforcement Decree of the Fair Trade Act provide that if an enterpriser enters the aggregate of prices of goods or services in financial statements, etc. as business profits, business profits shall be deemed as the basis for calculating penalty surcharges.

After comprehensively taking account of the adopted evidence, the court below determined that Article 20 of the Rules of the Accounting of Insurance Business provides that "the insurance premium revenue shall be recognized as revenue when the due date of collection of the insurance premium has arrived at the time of the collection of the insurance premium," thereby recognizing the whole of the insurance premium in the fiscal year in which the due date of collection of the insurance premium has arrived at as profit, and such profit does not deduct the unpaid insurance premium and re-insurance premium withdrawal from such profit, according to the same rule, the unpaid reserve is accumulated as the liability reserve to include it in the debt by reserving it as the liability reserve, and the raw insurance company obtains the economic benefits of the amount equivalent to the unpaid insurance premium if it concludes an insurance contract with a policyholder and receives the raw insurance premium, and then, it is merely a payment of re-insurance and re-insurance premium in accordance with the judgment of the natural insurance company.

In light of the relevant statutes, the above legal principles, and the records, such determination by the court below is just, and there is no error in the misapprehension of legal principles as to the calculation of related sales.

5. As to the grounds of appeal regarding deviation from and abuse of discretionary power in the imposition and calculation of penalty surcharges

In full view of Articles 6, 17, 22, 24-2, 28, 31-2, and 34-2 of the former Monopoly Regulation and Fair Trade Act, the Fair Trade Commission has discretion to determine whether to impose a penalty surcharge on a violation and, if imposing a penalty surcharge, the amount of a penalty surcharge is to be determined within a specific scope prescribed by the former Fair Trade Act and the former Enforcement Decree of the Fair Trade Act. Thus, the imposition of a penalty surcharge against a violation of the former Fair Trade Act is a discretionary act. However, if there are grounds such as misunderstanding of the facts constituting the basis for imposing a penalty surcharge in exercising such discretionary power or violating the principle of proportionality and equality, it is illegal as a deviation or abuse of discretionary power (see, e.g., Supreme Court Decisions 200Du1713, Sep. 24, 2002; 2008Du15176, Mar. 11, 2010).

After compiling the adopted evidence, the lower court determined that the Defendant’s imposition of a penalty surcharge against the Plaintiff’s collaborative act of this case cannot be deemed unlawful on the grounds that there is no evidence to acknowledge that the specific contents of the corporate body and organization accident insurance price collusion case, public official organization insurance collusion case, and retirement insurance price collusion case are similar to this case, and even if such facts are acknowledged, the mere fact that the Defendant exempted the penalty surcharge against the above case does not constitute

In addition, in full view of various circumstances, including the fact that the 10 insurance companies with the market share of the general damage insurance up to 90.4% have engaged in the instant collaborative act over a long-term period of time, thereby seriously restricting competition in the general damage insurance market of the instant case, the Defendant assessed the instant collaborative act as “serious violation” and determined that applying 3% of the base penalty surcharge imposition rate is unreasonable.

In light of the above legal principles and the records, the judgment of the court below is just, and it is not erroneous in the misapprehension of legal principles as to the deviation and abuse of discretion in the imposition and calculation of penalty surcharges, as otherwise alleged in the grounds of

6. Conclusion

Therefore, the appeal is dismissed 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 on the bench.

Justices Lee Sang-hoon (Presiding Justice)