[1] Requirements for establishing "prohibited acts by enterprisers' organizations" under Article 26 (1) 1 of the former Monopoly Regulation and Fair Trade Act

[2] The case holding that the National Council for the Development of Uniforms by Students (hereinafter referred to as "the act of a certain union") where it passed a resolution on the selling price of student uniforms jointly with a company for the sale of student uniforms whose market share exceeds 50% constitutes an "prohibited act by an enterprisers' organization" and it cannot be excluded from the application of the former Monopoly Regulation and Fair Trade Act

[1] "Prohibited acts of an enterprisers' organization" under Article 26 (1) 1 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) is established upon the formation of a common recognition that an enterprisers' organization shall determine the acts of an enterprisers' organization that unfairly restrict competition and shall comply with the decision-making of the enterprisers' organization among its members. It does not require that a member of the enterprisers' organization actually did the acts of an enterprisers' organization in accordance with the decision-making of the enterprisers' organization.

[2] The case holding that the National Council for the Development of Uniforms of Students decided to sell student uniforms jointly with a company selling student uniforms whose market share exceeds 50% constitutes prohibited acts of enterprisers' organization, and that it cannot be excluded from the application of the former Monopoly Regulation and Fair Trade Act as "a certain act of association" under Article 60 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004)

[1] Articles 19(1) and 26(1)1 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004) / [2] Articles 19(1), 26(1)1, and 60 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004)

National Student Uniform Development Council and twenty others (Law Firm Gyeong, Attorneys Cho Yong-hwan et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Attorney Lee Im-hwan, Counsel for defendant-appellant)

Seoul High Court Decision 2001Nu17717 delivered on August 18, 2004

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

The court below held that the Plaintiff’s National Council on the Development of Uniform Students (hereinafter “the Central Council”)’s total sales prices and 20 promoters, among the three companies, who were known to each distribution company and region, have deteriorated their business environment due to the spread of joint purchase by each distribution company and region, etc. The Plaintiff’s 27 regional council was formed to establish a meeting on November 24, 1998 to jointly cope with the deterioration of the business environment; thereafter, the Plaintiff’s 67 regional council was organized with the order of the Plaintiff’s Central Council, its recommendation, and its inspection; from November 1, 1998 to March 2001, the Plaintiff’s Central Council decided on the method of determining the sales prices of the Plaintiff’s clothes and the rest of the Plaintiffs participated in the activities of the Plaintiff’s agencies, etc.; and, at the same time, decided on the terms of the student uniforms and the standards for the student uniforms’ joint inspection and inspection of the details of the resolution by the Plaintiff’s association at a certain level.

In light of the record, the above fact-finding by the court below is just, and there is no error of law in misconception of facts due to violation of the rules of evidence as otherwise alleged in the ground of appeal.

2. Regarding ground of appeal No. 2

Article 26 (1) 1 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 7315 of Dec. 31, 2004; hereinafter “the Act”) provides that a prohibited act by an enterprisers’ organization shall be established upon the formation of a common sense that an enterprisers’ organization determines to conduct an act provided for in each subparagraph of Article 19 (1) of the Act that unfairly limits competition and the members of the enterprisers’ organization must comply with the decision-making of the enterprisers’ organization. It does not require that a member of the enterprisers’ organization actually conducted an act in accordance with the decision-making of the enterprisers’ organization.

As seen earlier, the lower court determined that the act of the Plaintiff’s Central Council’s aforementioned act constitutes a “prohibited act of an enterprisers’ organization” under Article 26(1)1 of the Act by practically restricting competition in the student uniform sales market, in light of the fact that the Plaintiff’s Central Council, which was established by the 20 representative promoters of each distribution company and each region, jointly with three students’ uniforms whose market share exceeds 50% as of the year 2000, constituted an “prohibited act of an enterprisers’ organization” under Article 26(1)1 of the Act.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable, and there is no error in the misapprehension of legal principles as to "prohibited act of enterprisers' organization" as otherwise alleged in the ground of appeal.

3. As to the third ground for appeal

The court below held that since the "act of a certain association" as stipulated in Article 60 of the Act, in order to be excluded from the application of the Act, all of the four requirements as stipulated in each subparagraph of Article 60 of the Act, such as that a person other than a small-scale enterpriser, shall not join the pertinent enterprisers' organization, and pursuant to the proviso of Article 60 of the Act, such act shall not constitute an act of unfair trade practices or an increase in the price by restricting unfairly competition, and pursuant to the proviso of Article 60 of the Act, part of the plaintiffs' sales revenue shall not constitute a small-scale enterpriser as stipulated in subparagraph 1 of Article 60 of the Act, since all of the member enterprisers of the central council of the plaintiffs are small-scale enterpriser, it does not constitute an association as stipulated in Article 60 of the Act, and the resolution of the central council of the plaintiffs to maintain the reduction rate of student uniform price at a certain level shall not be applied to the act of determining the selling price of the plaintiff's central council of the central council of the plaintiff, as it actually increases the price.

In light of the relevant laws and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to "act of a certain union" under Article 60 of the Act as alleged in the ground of appeal.

4. As to the fourth ground for appeal

The lower court determined that the instant penalty surcharge payment order cannot be deemed unlawful solely on the ground that the amount of the instant penalty surcharge was determined in accordance with the statutory standard by taking account of the Plaintiffs’ profit size, degree of participation in the act of violation, etc., and even if the amount of the instant penalty surcharge exceeds the aggregate amount of the Plaintiffs’ three-year net income for each of the three-year period

In light of the relevant laws and records, the above judgment of the court below is just and acceptable, and there is no error of law by misunderstanding legal principles as to penalty surcharge as otherwise alleged in the ground of appeal.

5. Conclusion

Therefore, all appeals are 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 Kim Nung-hwan (Presiding Justice)