[1] In a case where a large franchise and retail business operator did not deliver to the supplier, etc. a document stating the contractual terms, such as the type of transaction, immediately after entering into a contract with the supplier, and unilaterally delivered the contract where the signature, etc. of both parties is not entered into, whether the obligation of delivery can be deemed to have been immediately performed if the contract is a contract under Article 6(1) and (2) of the Fair Transactions in Large Franchise and Retail Business Act

[2] Requirements for determining whether an act constitutes an abuse of a trade position under Article 23(1)4 and (3) of the Monopoly Regulation and Fair Trade Act, and Article 36(1) [Attachment Table 1-2] 6(d) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, which constitutes an abuse of a trade position, and constitutes an abuse of a trade position under Article 23(1)4 and (1)6(d) of the Monopoly Regulation and Fair Trade Act

[1] Article 6 (1) and (2) of the Act on Fair Transactions in Large Franchise and Retail Business / [2] Article 23 (1) 4 and (3) of the Monopoly Regulation and Fair Trade Act, Article 36 (1) [Attachment 1-2] subparagraph 6 (d) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act

[2] Supreme Court Decision 2010Du25909 Decided April 25, 2013 (Gong2013Sang, 947) Supreme Court Decision 2013Du35020 Decided May 27, 2016

C&O shopping Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Cha Han-sung et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm spring, Attorneys Kim Min-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Nu49308 decided January 18, 2017

All appeals are dismissed. The costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by the Defendant are assessed against the Defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. On the face of the contract, as to the violation of the duty of delivery (Plaintiff’s ground of appeal Nos. 1 and 2)

A. Whether a violation of law is established

(1) Article 6 of the Act on Fair Transactions in Large Franchise and Retail Business (hereinafter “Large Franchise and Retail Business Act”) provides that a large franchise and retail business operator shall immediately enter into a contract with a supplier, etc., in writing (including an electronic document; hereinafter “the contract paper”) stating the terms and conditions of the contract prescribed by Presidential Decree, such as the type of transaction, transaction items, and period of transaction, shall be signed (including a certified digital signature) or signed and sealed by a large franchise and retail business operator and a supplier, etc. (Article 2). In such case, the duty to immediately deliver a contract is to prevent disadvantages arising from a supplier, etc. due to uncertainty of the terms and conditions of the contract by clearly preparing for the case of a large franchise and retail business operator entering into a contract with a supplier, etc., and to prevent a large franchise and retail business operator from entering into a contract, and to require a supplier and a supplier from entering into a contract with the supplier immediately after the signing of the contract. If both parties’ demand the signing of the contract with a large franchise and retail business operator and the supplier, etc. are not satisfied with the intent of the contract.

(2) The lower court: (a) acknowledged the fact that the Plaintiff did not deliver or delayed delivery of the contract paper for the 351 supplier that the Plaintiff entered into a supply contract from January 2012 to October 2014, 2014, which was signed by both the Plaintiff and the supplier on three thousand to five hundred and fifty three occasions on the day before the date of home shopping broadcasting; and (b) determined that the Plaintiff could not be deemed to have immediately performed the duty of delivery in light of the nature of the supply contract related to home shopping, the time when the contract paper was sent, and the form of the contract paper, etc.

(3) Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine on the duty of prompt delivery, as otherwise alleged in the grounds of appeal.

B. Whether the penalty surcharge payment order is lawful

(1) According to the proviso of Article 35(1) of the Act on Fair Transactions in Large Franchise and Retail Business, a fixed amount of penalty surcharge not exceeding KRW 500 million may be imposed on a violation for which the calculation of sales is difficult. In such a case, the public notice of imposition standards for penalty surcharges on a business entity violating the Act on Fair Transactions in Large Franchise and Retail Business (established by the Fair Trade Commission Notice No. 2012-4, Feb. 28, 2012) established upon delegation of Article 28(2) of the Enforcement Decree of the Act on Fair Transactions in Large Franchise and Retail Business (amended by the Fair Trade Commission Notice No. 2012-4, Feb. 28, 2012), depending on the content and degree of the violation, ① “an act violating the Act on Large Franchise and Retail Business” is between KRW 10,000 and KRW 30,000,000 and KRW 300,000,000,000.

(2) The lower court determined that the Defendant’s calculation of the penalty surcharge cannot be deemed a deviation from discretionary power, taking into account the following: (a) the number of times in which the contract was not immediately delivered; (b) the number of transaction partners; (c) the manner of the commission of the act; (d) the period and repetition of the act; and (c)

(3) Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on deviation and abuse of discretionary power, as alleged in the grounds of appeal

2. As to the act of advance payment of sales promotion cost (the Plaintiff’s ground of appeal Nos. 3, 4, 5, and 6)

A. Article 11 of the Act on Large Franchise and Retail Business shall not impose a supplier, etc. unless a supplier, etc. agrees to bear the expenses incurred in a sales promotional event, as prescribed by Presidential Decree, before conducting a sales promotional event (Paragraph 1); even in cases where the share ratio is determined by a prior agreement, the share ratio of sales promotional expenses of a supplier, etc. shall not exceed 50/100 (Paragraph 4): Provided, That where a supplier, etc. voluntarily requests a large franchise and retail business operator to conduct a sales promotional event differentiated from another supplier, etc., a large franchise and retail business operator may set the share ratio of sales promotional expenses through mutual consultation with the supplier, etc. (Paragraph 5).

B. The lower court acknowledged that the Plaintiff continued to plan and implement events, such as setting forth a detailed apportionment ratio according to the type of sales promotional events and participating in planning sales promotional events in concluding a contract with the supplier for sales promotion, and that the Plaintiff has economic interests, such as increase of commission fees, external credibility, and improvement of market status due to the increase of sales volume, and determined that the instant sales promotional event constitutes a sales promotional event governed by Article 11(1) through (4) of the Large-Scale Distribution Business Act.

In addition, the lower court determined that, although the agreement prepared by the Plaintiff and the supplier on the terms of broadcasting, etc. states that the supplier is fully responsible for the costs of a sales promotion that takes place within 2 hours after the end of broadcasting and the end of broadcasting, this is merely a pre-determined determination of the cost-bearing, and it is difficult to view that the supplier voluntarily requested the Plaintiff to hold a sales promotion event, and thus, it does not constitute an exception under Article 11(5)

Furthermore, the lower court determined that the supplier’s share ratio exceeds 50%, and thus constitutes a violation of Article 11(4) of the Large Franchise and Retail Business Act, insofar as the Plaintiff: (a) prepared an agreement with 146 suppliers from January 2012 to December 2, 2013 on the terms and conditions of broadcasting 146 suppliers and 811 broadcast service; and (b) charged suppliers a fixed fee of KRW 5,658,00,000 equivalent to 99.8% of the total sales promotion cost; (c) thereby, the supplier’s share ratio exceeds 50%; and (d) constitutes a violation of Article 11(4) of the Act.

C. Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding the application of Article 11 of the Act on Large Franchise and Retail Business, the grounds for exception, direct economic benefits, and the individual nature of sales promotion events, or by exceeding the bounds of the principle of free evaluation of evidence

3. As to the act of offering disadvantage through mobile order inducement (Defendant's ground of appeal)

A. Article 23(1)4 and (3) of the Monopoly Regulation and Fair Trade Act and Article 36(1) [Attachment Table 1-2] 6(d) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act provide that “any act of unfairly taking advantage of one’s position in trade with the other party to trade shall be “an act of setting or altering terms and conditions of trading or bringing disadvantages to the other party to the transaction” as the kind of “an act of trading with the other party to trade.” In order to constitute “an act of abusing one’s position in trade,” the mere fact that the contents of the relevant act are somewhat disadvantageous to the other party to the extent that it can be deemed as identical with compulsory purchase, coercion of provision of profits, enforcement of sale goals, etc., it is difficult to recognize that one party to the transaction was unfairly taking advantage of one’s position in trade, and thus, it is likely to unfairly disadvantage the other party to trade in light of normal transaction practices, and thus, whether the act constitutes an act of unfairly taking advantage of one’s position in trade should be determined in light of the degree and degree of disadvantage.

B. The lower court acknowledged the fact that the Plaintiff entered into a contract with 112 suppliers from March 2014 to September 2014, in a mixed method with a fixed rate and fixed rate, the Plaintiff’s fees for the mobile media were determined by the method of fixed rate, and compared with the mobile rate and the total TV conversion rate based on the result of converting the fixed rate from the fixed rate, the lower court determined that the sales through the mobile media are always disadvantageous to the supplier solely on the ground that the fixed rate and the fixed rate were relatively lower than the sales through the TV broadcast. In so determining, the lower court determined that the Plaintiff’s act of providing the Plaintiff’s mobile phone shopping business operator, including the Plaintiff, was not sufficiently aware of or could not be seen to constitute an act of unfairly inducing the Plaintiff’s use of the mobile app, since the Plaintiff’s act of unfairly inducing the Plaintiff’s use of the mobile phone from around 2014.

C. Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding the act of disadvantageous provision under the Fair Trade Act.

4. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by the Defendant are assessed against the Defendant. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)