The standard for determining whether a collaborative act is subject to “competitive competition” as prescribed by Article 19(1) of the Monopoly Regulation and Fair Trade Act, and whether Article 19(1)8 of the same Act related to bid collusion intends to protect competition in the process of the bidding itself and the bidding process (affirmative)

Article 19(1) of the Monopoly Regulation and Fair Trade Act

Supreme Court Decision 2013Du20493 Decided July 9, 2015

Maal Co., Ltd. (Limited Law LLC, Attorneys Park Yong-seok et al., Counsel for the defendant-appellant)

Fair Trade Commission (Attorney Kim Jong-sik et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2014Nu70367 decided July 16, 2015

The judgment below is reversed and the case is remanded to Seoul High Court.

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

1. Whether a collaborative act restricts competition as prescribed by Article 19(1) of the Monopoly Regulation and Fair Trade Act (hereinafter “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, taking into account various circumstances, such as the characteristics of the relevant goods or services, consumers’ standard for choosing products, and the impact on the market and enterprisers on competition. Meanwhile, Article 19(1)8 of the Fair Trade Act’s purpose of protecting not only the bidding itself, but also the competition in the process of leading to the bidding (see, e.g., Supreme Court Decision 2013Du20493, Jul. 9, 2015).

2. The lower court acknowledged the facts as indicated in its reasoning based on evidence. (1) The Plaintiff was a business entity producing outdoor inspection systems only until it enters the automatic inspection system, and (2) the Plaintiff and the self-inspection company (hereinafter “self-inspection company”) can not be deemed to have operated independently. The Plaintiff, who has the exclusive production capacity of the outdoor inspection system, can ultimately conclude a free contract pursuant to the provisions of the Act on Contracts to Which a Local Government Is a Party, even if bidding is not conducted solely because it is difficult for the Plaintiff to enter into the bidding, and thus, the Plaintiff could not be deemed to have engaged in an outdoor inspection system of this case, such as the Plaintiff and the Plaintiff to have participated in the bidding of the automatic inspection system of this case, on the grounds that there were insufficient economic motivation for the Plaintiff to participate in the bidding, and thus, the Plaintiff could not be deemed to have reduced competition between the Plaintiff and the automatic inspection system of this case, including the Plaintiff to have participated in the bidding of the automatic inspection system of this case, and thus, the Plaintiff could not be deemed to have participated in the bidding.

3. However, we cannot accept the judgment of the court below for the following reasons.

A. According to the reasoning of the lower judgment and the evidence duly admitted by the lower court, ① the participants were not necessarily required to directly produce the outdoor automatic inspection system as a participation in each of the instant bids; ② seven suppliers, such as the Onnurinet, etc., who are not capable of directly producing the outdoor automatic inspection system, participated in the seven bidding from each of the instant bids (attached No. 2, No. 9, No. 24, No. 30, No. 43, No. 49, No. 54, and No. 63; hereinafter referred to as the “instant bidding”). ③ M&S also participated in the 3 bidding from each of the instant bids (the instant 62, No. 65, No. 66) and received the lawful bid from the Plaintiff and the local government bid No. 750 through No. 760, Dec. 7, 2007).

B. The following facts are revealed in light of the above facts: ① there were no two or more persons qualified to participate in the bidding in each of the instant bidding, which would have been able to re-tenders; ② if re-tenders were conducted, it would have been able to participate in the re-tenders procedure and to participate in price competition by participating in the bidding process; ② Since the number of bidding participants in the instant bidding does not directly manufacture an outdoor automatic inspection system in the bidding process is not determined as a successful bidder, the enterpriser determined as a successful bidder can purchase the outdoor automatic inspection system from the Plaintiff who is the producer and execute the contract, and seven suppliers, such as Onnurinet, etc., purchased from the Plaintiff and completed the performance of the contract, and completed the contract by purchasing it from the Plaintiff, and thus, it is difficult to readily conclude that the bid price of the Plaintiff or the 6-EMMMMMM is no more effective competition with the Plaintiff, or the 6-EMMMMMMM will not have an opportunity to participate in the bidding in the bidding process, and thus, the Plaintiff and the 6-EMMMMM will have agreed to participate in the bidding.

4. Nevertheless, the lower court determined that the instant collaborative act of the Plaintiff and Jinex did not restrict competition solely on the grounds stated in its reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on the restriction on competition, which is a requirement for establishing an unfair collaborative act, and failing to exhaust all necessary deliberations, thereby affecting the conclusion of the judgment. The allegation contained in the grounds

5. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Kim Chang-suk (Presiding Justice)