[1] The elements to deem that the whole or part of the enterprisers participating in the agreement on price determination, etc. under Article 19(1)1 of the Monopoly Regulation and Fair Trade Act has terminated the unfair collaborative act

[2] Whether the statute of limitations on disposition under Article 49(4) of the Monopoly Regulation and Fair Trade Act begins only when a violation of the Act is terminated (affirmative in principle), and whether the same applies to cases where Article 49(4)1 of the Monopoly Regulation and Fair Trade Act, which provides for the statute of limitations on disposition, applies to cases where an investigation is commenced by the Fair Trade Commission (affirmative)

[1] In a case where an agreement on price determination, etc. under Article 19(1)1 of the Monopoly Regulation and Fair Trade Act and an action based on such agreement was conducted, “the date on which an unfair collaborative act is terminated” refers to the date on which the agreement was not the date on which the agreement was reached, but the date on which the act of implementation based on the agreement is terminated. Therefore, in order to terminate an unfair collaborative act, certain enterprisers participating in the agreement must express or implied declaration of intent to withdraw from the agreement to other enterprisers, and make an act contrary to the agreement, such as lowering the price level that would have existed without the collusion according to their independent judgment. In addition, in order to ensure that an unfair collaborative act is terminated with respect to all enterprisers participating in the agreement, there must be circumstances to deem that each enterpriser participating in the agreement clearly reverse the agreement and reduce the price level that would have existed without the collusion, or that each enterpriser actually reversed the collusion through the repetitive price competition among enterprisers participating in the agreement, etc.

[2] The period of extinctive prescription of a disposition under Article 49(4) of the Monopoly Regulation and Fair Trade Act (amended by Act No. 17290, May 19, 2020; hereinafter “Fair Trade Act”) means the period during which the Fair Trade Commission may order a corrective measure or impose a penalty surcharge. In light of the purpose of introducing the extinctive prescription system and the legal nature thereof, the extinctive prescription of a disposition under Article 49(4) of the Fair Trade Act commences, in principle, only when the violation of the Fair Trade Act is terminated, barring any special circumstance. This also applies to cases where Article 49(4)1 of the Fair Trade Act, which provides for the extinctive prescription of a disposition, is applied when the Fair Trade Commission initiates an investigation

Even if the Fair Trade Commission has commenced an investigation on an unfair collaborative act, it cannot be deemed that the violation committed after the commencement date of the investigation is included in the object of the investigation, as at the time of the commencement of the investigation, since the part of the violation committed after the commencement date of the investigation has not yet existed in reality. Therefore, it is difficult to expect the Fair Trade Commission to exercise its authority to take sanctions, such as corrective measures or imposition of penalty surcharges, on the whole unfair collaborative act that ends after the commencement date of the investigation, and it is not reasonable to regard the time when the Fair Trade Commission starts the investigation as the starting date of

As such, with respect to an unfair collaborative act that has been terminated after the commencement of the investigation before and after the commencement of the investigation, the Fair Trade Commission, after the completion of the illegal collaborative act, shall be equipped with the facts that can identify the overall contents of the unfair collaborative act and determine the basic elements necessary to impose corrective measures, penalty surcharges, etc., and may be included in the subject of the objective investigation and subject to sanctions.

Therefore, in cases where Article 49(4)1 of the Fair Trade Act applies to a case where the Fair Trade Commission initiates an investigation into the relevant violation and continues to engage in the unfair collaborative act before and after the commencement date of the investigation, the "date of termination of the unfair collaborative act" shall be deemed the "date of commencement of the investigation," which is the starting date of the disposal prescription, and the period of prescription of the disposition shall be five years as stipulated in the above provision

[1] Article 19(1)1 of the Monopoly Regulation and Fair Trade Act / [2] Article 49(4) of the Monopoly Regulation and Fair Trade Act (amended by Act No. 17290 of May 19, 2020)

[1] Supreme Court Decision 2007Du12774 Decided October 23, 2008 (Gong2008Ha, 1607) Supreme Court Decision 2015Du3743 Decided November 23, 2017, Supreme Court Decision 2015Du3743 Decided March 14, 2019 / [2] Supreme Court Decision 2017Du68103 Decided February 14, 2019

[Defendant-Appellant-Appellee] The Korea Industrial Complex Co., Ltd. (Attorney Kang Jong-chul et al., Counsel for defendant

Fair Trade Commission (Law Firm Kang, Attorneys Adjust-chul et al., Counsel for defendant)

Seoul High Court Decision 2018Nu79126 decided October 30, 2019

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

The grounds of appeal are examined.

1. As to the termination date of the collaborative act of this case (Ground of appeal No. 2)

A. “The date on which an unfair collaborative act is terminated” under Article 19(1)1 of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) and where there was an agreement on price determination, etc. and an action based thereon, refers to the date on which the agreement was concluded and the date on which the implementation based on the agreement is terminated. Therefore, in order to terminate an unfair collaborative act, certain enterprisers who participated in the agreement must express or implied declaration of intent to withdraw from the agreement to other enterprisers, and make an act contrary to the agreement, such as reducing the price level that would have existed if there was no collusion based on their independent judgment. In addition, in order to ensure that an unfair collaborative act is terminated with respect to all enterprisers who participated in the agreement, there should be circumstances to deem that each enterpriser who participated in the agreement to have committed an act contrary to the agreement, such as reducing the price level that would have existed without the collusion, or that each enterpriser who participated in the agreement has de facto terminated the collusion through the repetitive price competition, etc. (see, e.g., Supreme Court Decisions 207Du13614, Oct. 23, 2074.

B. On January 25, 2014, the lower court, on the grounds indicated in its reasoning, determined that the Plaintiff terminated the instant collaborative act by expressing its intent to dissolve the multi-party conference explicitly with other Connden business operators.

C. Examining the records in accordance with the above legal principles, the above determination by the court below is just, and contrary to what is alleged in the grounds of appeal, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending

2. As to the expiration of the period of prescription on the instant collaborative act (Ground of appeal No. 1)

A. The main text of Article 49(4) of the Fair Trade Act (amended by Act No. 17290, May 19, 2020; hereinafter the same shall apply) that was amended by Act No. 11406, Mar. 21, 2012; and enforced as of June 22, 2012 (amended by Act No. 17290, May 20, 2020; hereinafter the same shall apply) provides that “the Fair Trade Commission shall not issue an order to take corrective measures or impose a penalty surcharge against any violation of this Act where the period under the following subparagraphs expires,” and that “five years (five years from the date the date the investigation commences if the Fair Trade Commission has not commenced an investigation on any violation of this Act)” and “seven years (seven years from the date the relevant violation was terminated if the investigation has not commenced).”

The period of extinctive prescription for a disposition under Article 49(4) of the Fair Trade Act refers to the exclusion period during which the Fair Trade Commission orders a corrective measure or may impose a penalty surcharge (see Supreme Court Decision 2017Du68103, Feb. 14, 2019). In light of the purport of the introduction of the extinctive prescription system and the legal nature thereof, the extinctive prescription for a disposition under Article 49(4) of the Fair Trade Act begins only when the violation of the Fair Trade Act is terminated in principle, barring any special circumstance. The same applies to cases where Article 49(4)1 of the Fair Trade Act, which provides for the extinctive prescription for a disposition, is applied when the Fair Trade Commission

Even if the Fair Trade Commission has commenced an investigation into an unfair collaborative act, it cannot be deemed that the part of the violation of the Act that occurred after the commencement of the investigation was not completed as of the commencement date of the investigation and continues to exist as of the commencement date of the investigation. Therefore, it is difficult to expect the Fair Trade Commission to exercise its authority to impose sanctions, such as corrective measures or imposition of penalty surcharges, on the whole unfair collaborative act that ends after the commencement date of the investigation, and it is not reasonable to regard the starting date of the disposition statute as the starting date of the disposition statute, even in light of the purpose and nature of the statute of limitations

As such, with respect to an unfair collaborative act that has been terminated after the commencement of the investigation before and after the commencement of the investigation, the Fair Trade Commission, after the completion of the illegal collaborative act, has prepared a factual basis to ascertain the overall contents of the illegal collaborative act and to determine the basic elements necessary to impose corrective measures, penalty surcharges, etc., and can only be included in the subject of the objective investigation and subject to sanctions.

Therefore, in cases where Article 49(4)1 of the Fair Trade Act applies to a case where the Fair Trade Commission initiates an investigation into the relevant violation and continues to engage in the unfair collaborative act before and after the commencement date of the investigation, the "date of termination of the unfair collaborative act" shall be deemed the "date of commencement of the investigation," which is the starting date of the disposal prescription, and the period of prescription of the disposition shall be five years as stipulated in the above provision.

B. The lower court determined as follows.

The statute of limitations for disposition begins only when the act of violation ends and the defendant started to commence the investigation before the end of the act of violation. The same applies to the case where the defendant started to commence the act of violation, and the period of the defendant's investigation was completed on October 21, 2013, which was submitted by Busan Electrical Co., Ltd. after voluntary declaration, as of the commencement date of investigation by the defendant, since the plaintiff's collaborative act was continued at that time, there was no room to proceed with the statute of limitations for disposition. The disposition of this case was taken on November 27, 2018, which was before the expiration of five years from January 25, 2014, which was the date when the plaintiff terminated the collaborative act of this case (the date before November 17, 2018, which was the 16th judgment of the lower court, appears to be a clerical error in the judgment

C. Examining the records in accordance with the above legal principles, the above determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on interpretation and application of Article 49(4) of the Fair Trade Act.

3. 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 Min You-sook (Presiding Justice)