2016Du36062 Revocation of an order to pay penalty surcharges

Home Pler Co., Ltd. and one other

Home Plus Co., Ltd.

Law Firm LLC (LLC) LLC, Counsel for the defendant-appellant

Park Jae-sik et al., Counsel for the defendant-appellant

Fair Trade Commission

Law Firm Han-Gyeong, Counsel for defendant-appellant

Attorney Kim Jong-soo et al., Counsel for the defendant

Seoul High Court Decision 2015Du55600 Decided February 26, 2016

May 28, 2020

The original judgment shall be reversed, and the case shall be remanded to the Seoul High Court.

The request for taking over the lawsuit by the plaintiff Home Plus Corporation is dismissed. The cost incurred in taking over the lawsuit shall be borne by the plaintiff Home Plus Corporation, the request for taking over the lawsuit.

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

1. On the ground of appeal No. 1

A. The lower court acknowledged the following facts: (a) the Plaintiffs entered into an agreement on consignment to sell goods under the names of the Plaintiffs, which was supplied by Suwon FSS (hereinafter referred to as “YES”) and pay the sales commission after selling the goods to Suwon FS; and (b) the Plaintiffs received dispatch of employees from Suwon FS during the period from April 2013 to February 2014 without written agreement and made it possible for the Plaintiffs to engage in the business of cooking and selling the goods for which they are dispatched from the suppliers, and (c) the Plaintiffs were lawful in light of the purport of Article 12 of the Fair Transactions in Large Franchise & Retail Business Act (hereinafter referred to as the “Distribution Business Act”), which provides that the terms and conditions of the dispatch should be written agreement on the sales of the goods for which they are supplied by the suppliers, and that such agreement constitutes a violation of Article 12 of the Act on Fair Transactions in Large Franchise & Retail Business (hereinafter referred to as the “instant violation”); and (d) the Plaintiffs’ provision that the Defendants’ demand to dispatch large-scale 120% of the Act.

B. Examining the reasoning of the original judgment in light of the relevant statutes and records, the lower court did not err by misapprehending the legal doctrine on the imposition of penalty surcharges under the Act on the Business of Large-Scale Distribution, including deviations from and abuse of discretionary power, etc.

2. As to the calculation of supply price related to "the second point of the grounds for appeal"

A. The purpose of the Act is to contribute to the balanced growth and development of the national economy by establishing a fair order in the large franchise and retail business in large franchise and retail business and by enabling large franchise and retail business operators, suppliers, or sales floor tenants (hereinafter referred to as "suppliers, etc.") to mutually complementaryly develop on equal terms and conditions. For this purpose, large franchise and retail business operators shall be subject to the following obligations, i.e., delivery of documents and preservation of documents (Article 6), prohibition of reduction in the prices of goods (Article 7), payment of the proceeds of goods (Article 8), prohibition of refusing or rejecting the payments of goods (Article 9), prohibition of return of goods (Article 10), prohibition of prior to the cost of sales promotion (Article 12), prohibition against the use of employees such as suppliers, etc. (Article 13), prohibition of coercion of exclusive transactions (Article 14), prohibition of providing information on management information (Article 14), prohibition of offering economic benefits (Article 15) and prohibition of offering compensation (Article 16-2).

Furthermore, the Act on Large Franchise and Retail Business provides that in order to realize the administrative purpose that large franchise and retail business operators are deprived of illegal economic benefits and impose sanctions against violations caused by the act of violating each of the above obligations (hereinafter referred to as “violation”), the Fair Trade Commission may impose penalty surcharges on the violator within the scope not exceeding the amount of supplied goods according to the method of calculation determined by the President Ordinance or annual rents (the main sentence of Article 35(1)). However, in cases where it is difficult to calculate the amount, etc. where it is difficult to impose penalty surcharges within the scope not exceeding KRW 50 million (the proviso of Article 35(1)). Moreover, according to delegation of the Act on Large Franchise and Retail Business, the Act on Large Franchise and Retail Business provides that penalty surcharges may be imposed within the scope not exceeding KRW

Article 28 of the former Enforcement Decree of the Act on Fair Transactions in Large Franchise and Retail Business (wholly amended by Presidential Decree No. 28580, Jan. 9, 2018; hereinafter referred to as the "Enforcement Decree of the former Act on Large Franchise and Retail Business") provides that "The price of supply according to the calculation method prescribed by Presidential Decree" means the purchase price of related goods purchased by the relevant large franchise and retail business operator during the period of a violation or the amount equivalent thereto."

In full view of the language, structure, and purport of the Act on Large Franchise and Retail Business, when the Fair Trade Commission calculates and imposes penalty surcharges on a large franchise and retail business operator who has committed an act of violation, the amount of the purchase of the goods related to the act of violation that the large franchise and retail business operator has purchased during the period of the act of violation, or the amount corresponding thereto, or the annual rent range should be specifically asserted and attested. The scope of the goods related to the act of violation should be determined by the type of act in consideration of the type and nature of the goods directly or indirectly affected by the act of violation, the transaction area, transaction partner, transaction stage, etc

B. The lower court determined that the Defendant’s calculation of penalty surcharge is lawful on the ground that the Defendant’s act of violation of the instant case, on the following grounds: (a) the Defendant’s act of violation of the instant case led to the Plaintiff’s interest in the purchase of the chickens and the purchase of it from Suwon Franc for this purpose; and (b) the employees dispatched without written agreement obtained the Plaintiffs’ interest equivalent to the sales commission for the purchase chickens; and (c) the employees offered the Plaintiffs’ assistance in cooking and sales at the store; and (d) the amount obtained by deducting the sales commission from the amount of sales commission, excluding the amount of value-added tax, out of the sales commission for the chickens Franc’s sales, supplied by the Plaintiffs from Suwon FranS during the instant violation period, constitutes “related goods.”

C. However, it is difficult to accept the judgment of the court below for the following reasons. (1) According to Article 12(1) of the Act of large franchise and retail business, large franchise and retail business operators are prohibited from having suppliers dispatch employees, other suppliers, etc. (hereinafter "employees, etc.") to work at their own workplace. However, in cases where a large franchise and retail business operator falls under any of subparagraphs 1 through 4 of the proviso of Article 12(1) and falls under any of subparagraphs 1 through 4 of the same paragraph, the conditions of dispatch agreed in writing with suppliers, etc., as prescribed by Presidential Decree, and allow suppliers, etc. to engage in the sales and management of the goods to be supplied, such as suppliers, etc. who employed the relevant employees, etc. who agreed to be dispatched to the supplier, etc., and thus, the use thereof is allowed. Even if it falls under subparagraphs 1 through 4 of Article 12(1) of the Act of large franchise and retail business, the purpose of allowing a large franchise and retail business operator to dispatch employees only in accordance with the Presidential Decree, etc.

In other words, it is the purport that the conditions on the dispatch of employees such as large-scale distributors and suppliers are not based on the mutual agreement between them, or that it is intended to prevent the disadvantages of suppliers such as suppliers, etc. in advance due to the unclear contents of the terms and conditions, and to prevent disputes on the terms and conditions of the dispatch between them.

In light of the language, purport, etc. of Article 12(1) of the Act on Large Franchise and Retail Business, a large franchise and retail business operator’s act of having a supplier, etc. work at his/her workplace without having determined the terms and conditions of dispatch in advance as prescribed by Presidential Decree shall be deemed to constitute a violation of Article 12(1) of the Act on Large Franchise and Retail Business. However, in cases where the dispatch of his/her employees, etc. falls under any of subparagraphs 1 through 4 of the proviso of the same paragraph, there is no written agreement unless there is any other circumstance, it cannot be readily concluded that there was direct or indirect influence on the transaction of the goods traded with the supplier by taking advantage of the superior position of the large franchise and retail business operator on the sole basis of the fact that there is no written agreement. (2) Review of the reasoning of the original judgment and the record

① From April 2013 to February 2, 2014, Plaintiff committed the instant violation, without a written agreement, committed an act of violating the law in relation to the consignment transaction for which the Plaintiffs were supplied with chickens goods from Suwon FS during the said period. Furthermore, there is no circumstance that the Plaintiffs violated the law in relation to the consignment transaction.

② The Defendant merely stated that there was no prior written agreement between the Plaintiff and the Plaintiff on the terms of dispatch upon being dispatched to his employee, etc., and did not constitute the grounds for disposition under Article 12(1) of the Large-Scale Distribution Business Act, and that it does not fall under any of the subparagraphs of the proviso of the same paragraph. In order to deem that the act of violation 3 constitutes either the purchase amount of, or the amount equivalent to, the goods directly or indirectly affected by the act of violation, the relevant violation would have a direct or indirect impact on the goods themselves or the transactional relation of the goods. However, during the period of the instant violation, it appears that there was a transaction between Suwon FFE and the Plaintiffs in accordance with the same transaction conditions as before, and contrary to, the instant violation, it did not directly or indirectly affect the Plaintiff’s purchase price, transaction amount, or other transaction terms or conditions.

④ Furthermore, it is difficult to find out circumstances to acknowledge that the act of violation of the instant case had a direct or indirect impact on ordinary consumers’ sales of the Plaintiff’s stores. Examining such circumstances in light of the legal principles as seen earlier, the employees dispatched only on the basis of the circumstances that the Plaintiffs did not enter into a written agreement regarding the dispatch of employees, etc.

It is difficult to conclude that the amount excluding sales commission and value-added tax was directly or indirectly affected by the instant violating act from the sales amount of the chickens, which was sold at the store of the Plaintiffs during the period of the instant violating act, and there is no proof otherwise by the Defendant to acknowledge it.

D. Nevertheless, the lower court determined that the Defendant’s penalty surcharge is lawful on the erroneous premise that the employees dispatched without a written agreement constituted “related goods” in which the Plaintiff prepared and sold subsidies. In so doing, the lower court erred by misapprehending the legal doctrine on “related supply price in a violation of the Large-Scale Distribution Business Act” and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal pointed out this error is with merit.

3. To apply for taking over the lawsuit on behalf of the applicant;

On December 2, 2019, the applicant for taking over the lawsuit of the Plaintiff Home Pusers Co., Ltd. was merged and dissolved with the Plaintiff Home Pusers Co., Ltd. on December 2, 2019, and filed an application for taking over the lawsuit with the Supreme Court on December 5, 2019.

However, according to the record, following the plaintiffs' appeal and the appellate brief was filed, they can be known that the plaintiff Home Plus Corporation was merged with the plaintiff Home Plus Corporation after the plaintiffs' appeal was filed. As long as the proceedings of the final appeal were entered the same stage, so long as the proceedings of the final appeal were not required to take over the lawsuit, the lawsuit acceptance application is not accepted (see, e.g., Supreme Court Decision 2014Hu713, Dec. 29, 2016).

However, it is pointed out by the court below that such procedures need to be taken after remanding.

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for further proceedings consistent with this Opinion. The application for taking over the lawsuit filed by the applicant for taking over the lawsuit filed by the plaintiff Home Plus Corporation shall be dismissed, and the cost incurred by taking over the lawsuit shall be borne by the applicant for taking over the lawsuit filed by the plaintiff Home Plus Corporation. It is so decided as per Disposition by the assent of all participating Justices.

Justices Ansan-chul

Justices Park Sang-ok

Justices Noh Jeong-hee

Justices Kim Jae-hwan of the District Court