[1] Requirements to recognize that part and whole of the enterprisers participating in the unfair collaborative act agreed upon have terminated the unfair collaborative act

[2] The method of determining the scope of related goods or services, which are the basis for calculating the amount of penalty surcharges for an enterpriser who committed an unfair collaborative act

[3] In the case of a principle of allocation of burden of proof in an administrative litigation and an appeal litigation, the burden of proof as to the legality of disposition

[1] Article 19(1) of the Monopoly Regulation and Fair Trade Act / [2] Article 22 of the Monopoly Regulation and Fair Trade Act; Articles 9(1) and 61(1) [Attachment 2] of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Presidential Decree No. 27034, Mar. 8, 2016); Article 26 of the Administrative Litigation Act / [3]

[1] Supreme Court Decision 2007Du12774 Decided October 23, 2008 (Gong2008Ha, 1607) / [2] Supreme Court Decision 2013Du1126 Decided May 27, 2016 (Gong2016Ha, 885) / [3] Supreme Court Decision 2009Du1505 Decided September 8, 201 (Gong201Ha, 2109)

Modern Steel Co., Ltd. (Law Firm Mapyeong, Attorneys Lee Hong-in et al., Counsel for the plaintiff-appellant)

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

Seoul High Court Decision 2013Nu7126 decided November 28, 2014

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

The grounds of appeal are examined.

1. As to the misapprehension of legal principles as to whether a collaborative act of base price unfairly restricts competition (ground of appeal Nos. 1 and 2)

Whether a collaborative act “unfairly restricting competition” should be determined 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, taking into account various circumstances, such as the characteristics of the relevant goods or services, consumers’ standards for choosing products, and impacts on the market and enterprisers on competition (see Supreme Court Decision 2012Du19298, Nov. 14, 2013).

The court below found that the agreement was made by the Plaintiff, Dongdong Steel Co., Ltd. (in the case of a corporation for convenience, the portion of the “stock company,” among its corporate names, shall not be indicated separately), nitrozethyl, lusco, lusco, and ASEAN (hereinafter “five companies including the Plaintiff”) to make an explicit agreement that the base price of the annual steel market is to be determined at the same or a similar level (hereinafter “base price collaborative act”), and determined that the collaborative act constitutes an unfair restriction on the competition of markets by taking into account the following circumstances: (i) the collaborative act is likely to restrict the market competition by the act of determining and changing the price between the directly competitive enterprisers; and (ii) the five companies including the Plaintiff, etc., did not conceal the market price of the Arabic steel market determined by Maco as it is, but rather, to restrict the price competition in the domestic Arabic market.

Examining the record, the lower court’s determination is justifiable in light of the legal principles as seen earlier, as well as the above facts and circumstances cited by the lower court, even if the agreed standard price was not observed among five companies including the Plaintiff, and was determined on an individual discount policy, etc., the sales price of the Aolym Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm Dm, and the trading entity of the market also accepted the above standard price.

2. As to the misapprehension of legal principles as to the termination period of unfair collaborative acts (ground of appeal Nos. 8 and 9)

(1) In the event that an agreement, such as price determination, etc., as stipulated in Article 19(1)1 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) and an enforcement thereof was conducted, the date on which the unfair collaborative act ends. Thus, in order for a part of the enterprisers who participated in the agreement to terminate the unfair collaborative act, an act contrary to the agreement should be committed, such as explicitly or impliedly expressing their intent to withdraw from the agreement to another enterpriser and reducing the price to the level that would have existed without the collusion based on their independent judgment. In addition, in order to make all the enterprisers who participated in the agreement terminated the unfair collaborative act, there should be circumstances to deem that each enterpriser who participated in the agreement clearly reverses the agreement and reduces the price level that the enterprisers would have existed without the collusion, or that the collusion was de facto reversed through the repetitive price competition, etc. between the enterprisers who participated in the agreement to the extent that the agreement continued for a certain period (see Supreme Court Decision 2008Du1274, Oct. 23, 2008).

(2) According to the reasoning of the lower judgment, the Defendant jointly agreed on the introduction and increase of the annual premium from February 29, 2013 to April 2010 by “five companies, including the Plaintiff, etc., engaged in the standard price from February 2005 to November 2010.” The Plaintiff and the Plaintiff and the Plaintiff and the Eastern Steel, the nitrozethyl, and the Posco steel board (hereinafter “four companies, including the Plaintiff”), and the Posco jointly agreed on the introduction and increase of the annual premium from February 2006 to April 2008 (hereinafter “the first increase of the annual premium”), and decided on the increase of the surcharge from February 200 to November 201 of the same year (hereinafter “the Plaintiff’s corrective order”) and each of the above orders (hereinafter “the Plaintiff’s respective orders”) were issued.

Furthermore, the lower court determined that the Plaintiff cannot be deemed to have terminated the standard price collaborative act at the end of June 2010 on the grounds that: (a) the Plaintiff continued discussions on the standard price for the ADD market with other enterprisers after September 2008; and (b) the Plaintiff cannot be deemed to have committed an act contrary to the agreement, such as reducing the price that would have existed without collusion based on its independent judgment solely on the circumstance that it was difficult to deem that the Plaintiff committed an act contrary to the agreement, such as reducing the price at the level that would have existed without collusion; and (c) the circumstance that there was a partial change in the standard price for the AD market after July 2010; and (d) the Plaintiff cannot be deemed to have expressed its intent to withdraw or committed an act contrary to the agreement.

(3) Examining the aforementioned legal principles and records, the lower court’s aforementioned determination is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the termination of unfair collaborative acts.

3. As to the misapprehension of legal principles as to relevant sales (ground of appeal Nos. 4, 5, 6, and 7)

(1) According to Article 22 of the Fair Trade Act and Articles 9(1) and 61(1) [Attachment 2] of the former Enforcement Decree of the Fair Trade Act (amended by Presidential Decree No. 27034, Mar. 8, 2016), the Fair Trade Commission may impose upon an enterpriser who has engaged in unfair collaborative acts a penalty surcharge calculated based on the sales of related goods or services sold in a particular business area during the period of violation. The “sales” here is determined by referring to the business operator’s accounting data, etc. in principle, but the scope of each act is individually and specifically determined by type of act.

The scope of related goods or services, which are the premise for calculating the amount of sales, ought to be determined individually and specifically by taking into account the contents of an agreement between the business operators who conducted the unfair collaborative act, the kind and nature of goods or services that are directly or indirectly affected by the unfair collaborative act, the purpose of use, substitution possibility, transaction area, transaction counterpart, transaction stage, etc. (see Supreme Court Decision 2013Du126, May 27, 2016). Meanwhile, in an administrative litigation that is applied mutatis mutandis under the Civil Procedure Act, the burden of proof is, in principle, allocated between the parties in accordance with the general civil procedure, and in an administrative litigation that is subject to the Civil Procedure Act, the defendant who asserts the legality of the disposition has the burden of proving the legitimacy of the disposition based on its nature. If there is a proof of compliance with the reasonable acceptance of the specific disposition asserted by the defendant, the disposition is justifiable, and if so, the allegations and proof contrary thereto return to the Plaintiff, the other party (see Supreme Court Decision 2009Du15

(2) As to HGI, HGA products, and Plaintiff’s consumed products

After finding the facts as indicated in its reasoning, the lower court determined that, in light of the following: (a) in the case of HGI, copper steel and oil ethyl were recognized as alternative to GI by reducing part of the process of GI; (b) HGI was manufactured by using HGI; and (c) the Plaintiff was directly affected by HGI’s price; and (b) the Plaintiff was sold at the price at which the base price and the an annual premium rate (GI) was applied as raw materials for the processing of steel packing materials; and (c) was written as accounting materials on the basis of the fact that HGI, HGA products and steel packing materials, which are the raw materials of the instant collaborative act, were included in the relevant products directly and indirectly affected by the instant collaborative act.

Examining the aforementioned legal principles and records, the lower court’s aforementioned determination is justifiable. In so doing, it did not err by misapprehending the legal doctrine on related products.

(3) As to the transportation cost

Since it is clear that the goods related to each collaborative act of this case are "hymalm", the scope of "sales" in the Amalmalmar, which constitutes the relevant sales in this case, shall be determined individually and specifically by referring to the accounting data of the business operator, etc.

However, according to the reasoning of the lower judgment, the Plaintiff issued a tax invoice on the sales proceeds of the Agym GGG, and included transportation expenses in the sales proceeds, and accounted for transportation expenses as the sales proceeds of the AgymGGG.

In addition, in general, since the sale of goods requires transportation in the process of delivering the goods to consumers, in order to view that such transportation cost constitutes a related goods or sales separate from a specific sales of goods, in light of the specific composition of sales proceeds of the goods, awareness of the parties to the transaction, or transaction practices, the transportation of the goods must be deemed to be entirely separate from the sales of the goods. ② However, there is no evidence to view that the buyer himself/herself in the sales market of the ASEAN does not constitute a trade practice, and rather, there is a case in which the steel company, such as the Plaintiff, etc., directly used the transportation cost at the actual discount of the sales price, and ③ there is a case in which the buyer himself/herself transports the AGG or uses a separate transportation company, and thus, it cannot be deemed that the general transportation cost should be automatically excluded from the relevant sales revenue, and rather, it is reasonable to view that the part of the transportation cost, including the sales price, calculated by the Plaintiff, based on the sales price, constitutes an “the sales price related to the Plaintiff’s annual sales of the goods in question.”

The judgment below to the same purport is just, and there is no error by misapprehending the legal principles on related sales.

(4) As to the sales amount related to the Amateur collaborative act

According to the reasoning of the judgment below, it can be revealed that the annual premium constitutes a component of the sales price of the AGG, and the relevant sales amount refer to "the sales amount of related goods or services sold in a particular business area during the period of violation". As such, in calculating the relevant sales amount of each of the instant AGG, the sales amount of the AGGGGG, which is the related goods sold by the Plaintiff, is bound to be the basis for the sales amount of the AGGG, and cannot be deemed to be the goods independently sold.

In the same purport, the lower court is justifiable to have determined that the Defendant’s calculation of the sales amount related to each of the instant ADD activities based on the total sales price of the ADDG. In so doing, the lower court did not err by misapprehending the legal doctrine on related goods and related sales.

4. As to the misapprehension of legal principles as to deviation and abuse of discretion in the imposition and calculation of penalty surcharges (ground of appeal No. 3)

In full view of the provisions of Articles 6 and 22 of the Fair Trade Act, since the Fair Trade Commission has discretion to determine whether to impose penalty surcharges on violations of the Fair Trade Act and, if imposing penalty surcharges, the amount of penalty surcharges within a specific scope prescribed by the Enforcement Decree of the Fair Trade Act and the Fair Trade Act, the imposition of penalty surcharges on violators of the Fair Trade Commission is discretionary action. However, if there are grounds such as misunderstanding of facts constituting the basis for imposing penalty surcharges in exercising such discretion, or violating the principle of proportionality and equality, it is illegal as abuse of discretionary power (see Supreme Court Decision 2009Du1505, Sept. 8, 201).

The lower court determined that each of the instant collaborative acts was not unlawful in the course of imposing and calculating the penalty surcharge in light of the following: (a) the instant collaborative act was carried out under a continuous monitoring system for a long time; (b) the restriction on competition was high; and (c) the characteristics of the steel industry have high ripple effect on other industries due to the characteristics of the steel industry; and (b) the Defendant reduced the penalty surcharge at a very high rate reflecting the circumstances of the domestic steel industry and the Plaintiff’

Examining the record in accordance with the aforementioned legal principles, the above determination by the lower court is justifiable. In so doing, it did not err by misapprehending the legal doctrine on deviation and abuse of discretionary power in imposing and calculating penalty surcharges.

5. 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.

Justices Lee Sang-hoon (Presiding Justice)