[1] The legal nature of the former public notice of the operation of the system for corrective measures, etc. against those who voluntarily report illegal cartel conduct (=the discretionary standard) and the case where an administrative disposition violating the aforementioned provision is unlawful

[2] In a case where applications for additional reduction or exemption based on Article 35(1)4 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act include a number of collaborative acts different from the pertinent collaborative acts, the standard for determining whether the criteria applied by the Fair Trade Commission while imposing a penalty surcharge are unlawful

[1] Article 16 (1) and (2) of the former Public Notice of Operation of the System for Corrective Measures, etc. against Voluntary Reporters (amended by Presidential Decree No. 2009-9 of May 19, 2009) of the Fair Trade Act (amended by Presidential Decree No. 2009-9 of May 19, 200) provides that the administrative agency's internal rules for administrative affairs, i.e., discretionary rules, established based on the exercise of discretionary power, in light of its form and content, shall be deemed to be the discretionary rules, and when applying for additional reduction or exemption pursuant to Article 35 (1) 4 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 21492 of May 13, 2009; hereinafter "Enforcement Decree"), the administrative agency's opinion shall be respected as far as possible, unless it is acknowledged that the administrative agency abused its discretionary power because it does not have any effect only within the administrative organization, and it does not have any external binding force, and thus violates the principle of equality.

[2] In cases where applications for additional reduction or exemption based on Article 35(1)4 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 21492, May 13, 2009) are multiple other collaborative acts, the standard applied by the Fair Trade Commission while imposing a penalty surcharge does not go against the legislative intent of the penalty surcharge system and the additional reduction or exemption system without specific provisions as to how to determine the reduction rate, etc., and where there are no grounds such as misconceptions of the facts serving as the basis for imposing a penalty surcharge or violating the principle of proportionality and equality, it is difficult to deem that there was an error of deviation or abuse of discretionary authority in imposing a penalty surcharge.

[1] Article 4 (2) of the Administrative Procedures Act, Article 27 of the Administrative Litigation Act / [2] Article 22-2 (3) of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 9554 of March 25, 2009), Article 35 (1) 4 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 21492 of May 13, 2009), Article 27 of the Administrative Litigation Act

[1] Supreme Court Decision 97Nu13061 Decided February 13, 1998 (Gong1998Sang, 785) Supreme Court Decision 2004Du8910 Decided April 28, 2005 (Gong2005Sang, 846) Supreme Court Decision 2007Da8828, 8835 Decided March 26, 2009 (Gong2009Du7967 Decided December 24, 2009) (Gong2010Sang, 262)

Shee Construction Co., Ltd. (Attorney Hong-soo et al., Counsel for the defendant-appellant)

Fair Trade Commission (Attorney Choi Byung-hee et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2011Nu13738 decided October 13, 2011

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff’s appeal is dismissed.

The plaintiff and the defendant's grounds of appeal are examined together (to the extent of supplement of the defendant's grounds of appeal on the grounds of appeal, supplementary appellate brief and reply submitted after the deadline is expired).

1. According to the reasoning of the lower judgment, the Plaintiff’s following facts are as follows: ① (a) the Plaintiff was investigated by the Defendant on seven bid collusions in which he participated, and the agenda items of the above case were presented to the Defendant; (b) thereafter, two other unfair collaborative acts were stated to have been added; and (c) together with the submission of relevant evidentiary materials, filed an application for reduction or exemption in accordance with the additional reduction or exemption system under Article 35(1)4 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 21492, May 13, 2009; hereinafter “Enforcement Decree”), and (b) the Defendant determined that the Plaintiff’s above additional reduction or exemption application satisfies the requirements prescribed above; and (c) the Defendant determined that the aforementioned additional reduction or exemption application satisfies the requirements under Article 16(2) of the former Enforcement Decree of the Act on the Punishment and Fair Trade (amended by Presidential Decree No. 2009-9, May 19, 2009; hereinafter “the above reduction of penalty surcharge”).

According to the above facts, although the notice of reduction or exemption is merely a general rule on business affairs inside the defendant, if the defendant violated the reduction of a penalty surcharge on the basis of the reduction of a penalty surcharge, the defendant violated the principle of equality and violated it without any special circumstances, and thus, the "unfair collaborative act" and "other unfair collaborative acts" under the Enforcement Decree and the notice of reduction or exemption are premised on individual collaborative acts by each case. Thus, the amount of sales related to each of the seven bidding collusion and the sales related to each of the two different collaborative acts for which the application for additional reduction or exemption was filed should be determined individually by comparison. However, the court below held that it is reasonable to reduce the amount of the penalty surcharge against the bidding collusion by applying only the higher reduction rate among the two two different reduction rates applicable to each of the seven bidding collusion under the Enforcement Decree and the notice of reduction or exemption as well as the sales related to each of the two other collaborative acts for which the additional reduction or exemption was filed on the ground that the additional reduction or exemption was made separately at the time of calculating the penalty surcharge for the other collaborative acts.

Therefore, the lower court determined to the effect that the part imposing a penalty surcharge less than the penalty surcharge calculated by applying the foregoing criteria among the instant dispositions is unlawful in favor of the Plaintiff, but the part imposing a penalty surcharge more than the penalty surcharge is contrary to the principle of equality, as it goes against the principle of equality, and thus, is in violation of the discretionary authority.

2. However, it is difficult to accept the above determination by the court below for the following reasons.

A. In full view of Articles 6, 17, 22, 22-2, 24-2, 28, 31-2, and 34-2 of the former Monopoly Regulation and Fair Trade Act (amended by Act No. 954 of March 25, 2009; hereinafter “the Act”), Articles 9, 35, and 61 of the Enforcement Decree of the Act, etc., the Defendant has discretion on whether to impose penalty surcharges on a law-violation and how to reduce or exempt penalty surcharges within a specific scope prescribed by the Act and the Enforcement Decree. Thus, the Defendant’s imposition of penalty surcharges on a law offender constitutes discretionary act (see, e.g., Supreme Court Decisions 200Du6121, May 28, 2002; 200Du61089, Mar. 11, 2010; 2010Du9619, Sept. 1, 2010; 2005Du310, etc.).

Meanwhile, Article 35 (1) of the Enforcement Decree of the Act provides that "The criteria for mitigation or exemption of corrective measures or penalty surcharge pursuant to the provisions of Article 22-2 (3) of the Act shall be as follows." Article 22-2 (4) of the Act provides that "If a person who is subject to a penalty surcharge or corrective measures due to an unfair collaborative act meets the requirements under the items of subparagraph 1 or 2 with respect to other unfair collaborative act in which the person is involved, other than such unfair collaborative act, the penalty surcharge may be reduced or exempted, and the corrective measures may be mitigated," Article 35 (4) of the Enforcement Decree provides that "where Article 35 (1) 4 of the Enforcement Decree of the Act applies, the reduction or exemption of penalty surcharge shall be mitigated by not less than 20 times" and Article 16 (2) of the same Decree provides that "where the amount of other collaborative act is less than 3 times the amount of the penalty surcharge in question, the reduction or exemption of penalty surcharge in question shall be mitigated by not less than 20%".

The above provision of public notice of reduction and exemption is a discretionary rule, i.e., the administrative agency's internal administrative rules established based on the exercise of discretion, in light of its form and content. Determination of necessary standards at the time of an application for additional reduction and exemption pursuant to Article 35 (1) 4 of the Enforcement Decree belongs to the discretion of the administrative agency. Thus, unless it is acknowledged that the standards objectively and objectively are unreasonable and abuse of discretion, the administrative agency's intent should be respected as far as possible (see Supreme Court Decisions 97Nu13061, Feb. 13, 1998; 2004Du8910, Apr. 28, 2005; 2004Du8910, etc.). Such discretionary rule is generally effective only within the administrative organization, and does not have external binding power, and thus, it is not immediately unlawful merely because it violates such administrative disposition, and thus, it goes against the principle of equality and protection of the administrative agency (see, e.g., Supreme Court Decision 20088Du9789, etc.

B. Article 16(2) of the Public Notice of Reduction or Exemption provides that, under the premise that other collaborative acts are one act, to determine whether to reduce or exempt the collaborative act by comparing the scale thereof. In this case, where multiple and different collaborative acts are also different, there are no specific provisions as to how to determine the reduction rate. Thus, where an additional application is made based on Article 35(1)4 of the Enforcement Decree when several different collaborative acts are involved, (1) whether the scope of the collaborative act to be reduced or exempted is limited to the number of other collaborative acts voluntarily reported; (2) Whether the relevant collaborative acts are the object of reduction or exemption; (3) how to determine whether to separately reduce or exempt the relevant collaborative acts by comparing the scale of different collaborative acts with those of the selected collaborative acts; (3) how to separately determine whether to separately reduce or exempt the relevant collaborative acts by applying the respective methods which are the most favorable to all other collaborative acts; and (4) how to separately determine whether to separately reduce or exempt the relevant two or more different methods after comparing each other’s reduction or exemption methods by applying the relevant one of or exemption methods.

In addition to these circumstances, determination of whether to grant a penalty surcharge and its percentage are subject to the discretion of the defendant, and the defendant has discretion to decide on how to deal with internal business affairs related thereto. In addition, in the absence of specific provisions as to both the collaborative act and other collaborative acts, the standard applied by the defendant while imposing a penalty surcharge does not go against the legislative intent of the penalty surcharge system and the additional reduction and exemption system, and it does not go against any unreasonable or arbitrary nature, and further, the imposition of a penalty surcharge based on which such standard is applied is erroneous or contrary to the principle of proportionality and equality, it is difficult to deem that the imposition of the penalty surcharge is unlawful.

C. Examining the reasoning of the judgment below in light of the aforementioned legal principles and records, the Defendant established a standard that the reduction rate should be determined by comparing the amount of sales related to the seven bidding collusions with the amount of sales related to the two different collaborative acts, and the amount of sales related to the two different collaborative acts is not contrary to the legislative intent of establishing a penalty surcharge system and additional reduction and exemption system, and it does not go against the legislative intent of establishing a penalty surcharge system and additional reduction and exemption system. In addition, in a case where multiple collaborative acts and other collaborative acts are involved before the instant disposition were conducted, the Defendant imposed a penalty surcharge by applying the criteria different from the criteria applied in the instant disposition in the instant case, or any other administrative practice is established, and thus, the instant disposition does not violate the principle of equality or the principle of protecting trust.

Nevertheless, the lower court determined that the part of the disposition of this case, which imposed a penalty more than the penalty surcharge calculated in accordance with the criteria of equality, violates the principle of equality, and thereby deviates from and abused discretionary power. This is erroneous in the misapprehension of the legal doctrine on deviation and abuse of discretionary power, thereby making a judgment. The Defendant’s assertion pointing this out is with merit, and the Plaintiff’s assertion on a different premise is not acceptable.

3. Therefore, the part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Plaintiff’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)