Standard for determining whether a transactional position is unfairly used, as prescribed in Article 23(1)4 and (2) of the Monopoly Regulation and Fair Trade Act, and Article 36(1) [Attachment Table 1]6 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act, and the scope of “goods or services which the transaction partner does not intend to purchase” and “voluntary purchase”

Article 23(1)4 and (2) of the Monopoly Regulation and Fair Trade Act and Article 36(1)6 of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (amended by Presidential Decree No. 22160, May 14, 2010; hereinafter “Enforcement Decree of the Fair Trade Act”) based on the foregoing Article 23(1)4 and Article 23(2) of the Monopoly Regulation and Fair Trade Act shall be determined based on the following: “whether a person unfairly uses a transactional position” includes not only the situation of the market and transaction in which the party is faced, the overall business capacity gap between the parties, the characteristics of the goods or services subject to the transaction, the intent, purpose, effect, impact, and specific attitude of the act in question, the degree of the enterpriser’s superior position in the market, and the contents and degree of disadvantage the other party to the transaction, but also the “involuntary purchase of goods or services” under Article 36(1) [Attachment 1]6(a) of the Enforcement Decree of the Fair Trade Act includes an “involuntary purchase of goods or services supplied by the other party.”

Article 23(1)4 and (2) of the Monopoly Regulation and Fair Trade Act; Article 36(1) [Attachment Table 1] 6 [Attachment Table 1] of the former Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Amended by Presidential Decree No. 22160, May 14, 2010)

[Plaintiff-Appellant] Plaintiff 200Du9359 delivered on January 25, 2002 (Gong2002Sang, 593)

Trod Holdings Co., Ltd. (Law Firm LLC, Attorneys Yoon Hong-san et al., Counsel for the plaintiff-appellant)

Fair Trade Commission (Law Firm Kang-ho, Attorneys Mediation and 2 others, Counsel for defendant-appellant)

Seoul High Court Decision 2011Nu42491 decided December 12, 2012

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

The grounds of appeal are examined.

1. After finding the facts as stated in its holding, the lower court determined that the Plaintiff’s act of demanding the purchase of membership of the club (hereinafter “this case’s golf club membership”) in Korea Home shopping and Hyundai Home shopping, which is a home shopping business operator (hereinafter “stock company’s name”) in the broadcast transmission transaction, and the Plaintiff’s act of demanding the purchase of membership of the club (hereinafter “this case’s golf club membership”) under the construction of the Plaintiff’s forest tourism development, constitutes a trade status under Article 23(1)4 and (2) of the Monopoly Regulation and Fair Trade Act (hereinafter “Fair Trade Act”) and Article 36(1) [Attachment 1] of the former Enforcement Decree of the Fair Trade Act (amended by Presidential Decree No. 22160, May 14, 2010; hereinafter “Enforcement Decree of the Fair Trade Act”).

Furthermore, on the following grounds, the lower court determined that the Plaintiff’s above act did not constitute a compulsory purchase under Article 23(1)4 and (2) of the Fair Trade Act and Article 36(1) and [Attachment Table 1] 6(a) of the Enforcement Decree of the Fair Trade Act on the ground that the Plaintiff’s act did not constitute a compulsory purchase under Article 23(1)4 and (2) of the Fair Trade Act and Article 36(1) of the Enforcement Decree of the Fair Trade Act

① In the event that the Plaintiff requested a person in charge of marketing of the instant golf course membership to purchase the instant golf course membership from the entire five home shopping business operators, including the said three home shopping business operators, and agriculture, fishery, and home shopping business operators including the said three home shopping business operators, it cannot be deemed that the Plaintiff explicitly expressed or proposed any disadvantage in terms of the allocation of the broadcasting channel or the determination of the fee for transmission of the broadcasting channel.

② The CJ Home shopping or the CJ Home shopping or the CJ Home shopping, the remainder of which was requested by the Plaintiff to purchase membership of the instant golf course, did not purchase membership of the instant golf course, and accordingly, did not receive any disadvantage from the Plaintiff in terms of the allocation of broadcasting channels or the determination of transmission fees.

③ In the process of converting advance deposits to purchase membership of the instant golf course into the membership fee of the instant golf course, it cannot be deemed that the Plaintiff forced or demanded such advance deposits, or interfered with or prevented the return of the advance deposits.

④ In light of the above three home shopping business operators’ capital, assets, or net income, etc., the said three home shopping business operators are likely to purchase golf club memberships in this case and obtain more profits from the distribution of broadcasting channels and the determination of transmission fees. In light of the fact that the said three home shopping business operators are likely to purchase golf club memberships in this case, it cannot be concluded that the said three home shopping business operators’ purchase of golf club memberships in this case goes against ordinary trading practices.

2. However, the part of the judgment of the court below that the plaintiff cannot be deemed to have forced the above three home shopping business operators to purchase the golf course membership of this case by unfairly taking advantage of their trade position is hard to accept for the following reasons.

(1) Based on Article 23(1)4 and 23(2) of the Fair Trade Act and Article 36(1)6 of the Enforcement Decree of the Fair Trade Act based on the above Article 23(1)4 and 36(2) of the Fair Trade Act, the issue of whether a “the other party to a transaction unfairly uses a trade position” includes not only the goods or services supplied by the actor, but also the goods or services supplied by an enterpriser designated by the actor, the gap in the overall business capacity between the parties, the characteristics of the goods or services subject to the transaction, the intent, purpose, effect, impact, and specific aspects of the pertinent act, the degree of the enterpriser’s superior position in the market, and the contents and degree of disadvantage suffered by the other party, etc., it shall be determined by considering whether the pertinent transaction practice goes beyond normal transaction practices and it is likely to impede fair trade. In the compulsory purchase under Article 36(1)6(a) of the Enforcement Decree of the Fair Trade Act, “goods or services that the other party to the transaction has no intention to purchase” includes an objective situation where the other party does not purchase.

(2) According to the records, the following facts are recognized.

① The Plaintiff is a 14 affiliated company of a conglomerate solar industry, and is a multiple CATV broadcasting business entity running a CATV broadcasting business in 21 broadcasting zones nationwide, along with another 14 affiliated companies. The Plaintiff is a single business entity with approximately 26% of the sales share among the entire CATV broadcasting business entities, as well as the only business entity within 15 broadcasting zones.

② Among program providers that provide programs to the same CATV broadcasting business entity as the Plaintiff, there are five companies that provide branch home shopping, home shopping, modern home shopping, CJ home shopping, and agro-fishery home shopping. Unlike general program providers, the above five home shopping business entities are the structure that generates profits by paying transmission fees to a CATV broadcasting business entity, etc. and providing information on their products through the broadcasting channels of a CATV broadcasting business entity, etc. and selling orders after receiving orders. In other words, the above five home shopping business entities are the structure that use broadcasting channels such as a CATV broadcasting business entity by paying transmission fees to a CATV broadcasting business entity, etc.

③ However, the Plaintiff is a holding company that adjusts and controls the business activities of the said 14 affiliated companies, and the Plaintiff grants the said 5 home shopping business operators overall broadcasting channels through negotiations with the said 5 home shopping business operators with respect to the above 21 broadcasting channels.

④ In the home shopping industry, broadcasting channels are divided into usual S, quasiS, A, and B. The home shopping business entity’s top priority is to improve the broadcasting channels in Class A and maintain S. In the case of modern home shopping, the home shopping business sector accounts for 69.1% of sales in 2008 and 87.7% of operating profits. In most cases, as the home shopping business sector accounts for 69.1% of sales in 2008, most of the home shopping business sector accounts for a large portion of sales in the relevant home shopping business sector, and the increase or decrease of sales amount depending on changes in the broadcasting channel environment, such as an increase or decrease in sales amount by at least 40% when the broadcasting channels are changed from Grade A to Grade A. Accordingly, the five home shopping business entity is in competition with other home shopping business entities in order to distribute the broadcasting channels more than other home shopping business entities.

⑤ Meanwhile, Dong forest tourism development is a company in which Nonparty 1 and his relatives hold 100% shares of 100% as the president of the business group's solar industry. While the construction of the instant golf course was promoted, even if there was an admission approval under the Installation and Utilization of Sports Facilities Act (hereinafter "No. 15, 2009") and the Enforcement Decree thereof (No. 27, 2008, May 27, 2008, to June 9, 2008, 8 affiliated companies, including the Plaintiff, including the Taedong Industry and the Plaintiff, received total of KRW 79.2 billion as a prior deposit for the purchase of the instant golf course membership.

④ From August 1, 2007 to November 2008, the Plaintiff also requested the purchase of the golf course membership of the instant five home shopping business operators. Of these, three home shopping business operators, home shopping, our home shopping, and modern home shopping, among which they invested 2.2 billion won each as prior deposit money for the purchase of the golf course membership of the instant case from September 12, 2008 to March 5, 2009 upon the said request of the Plaintiff.

7. The major contents of the agreement entered into between the three home shopping business operators at the time are as follows. This is similar to those of the agreement entered into with the development of the forest and its affiliated companies, including Taee Mining Business, which are similar to those of the agreement entered into with the development of the forest

The three home shopping business operators shall participate in the solicited projects by providing KRW 1.1 billion per unit of the forest tourism development at the same time as the conclusion of the agreement.

(b) The (c) the development of the regional forest tourism shall pay to three home shopping business operators the investment amount and its profits at the rate of 5.22% per annum when the sale of the target project commences.

Along with the public recruitment of members of the golf course in this case pursuant to the provisions of the Sports Facilities Act and the Enforcement Decree thereof, if the number of members recruited falls short of the number of members recruited, a priority shall be given to three home shopping business operators to apply for membership of the golf course.

Three home shopping business operators may apply for golf courses membership in lieu of return of investment profits.

Where a membership contract is concluded at the equiries, the above investment amount shall be substituted for the admission fee of the golf course, and three home shopping business operators shall not claim separate profits.

④ Since then, the said three home shopping business operators received membership fees of the instant golf course from December 19, 2009 to December 28, 2009, by converting the total amount of the advance deposit into the membership fees, as stipulated in the said investment agreement, and instead, by converting the said advance deposit into the membership fees, as well as profits accrued therefrom, from the members who purchased membership of the instant golf course from December 19, 2009 to the first membership period of the instant golf course, as stipulated in the said investment agreement.

9) However, the time when the said three home shopping business operators invested the instant advance deposit was prior to the approval of membership recruitment because the construction process of the instant golf course does not reach 30%, and the most of the membership price of the instant golf course fell rapidly due to the lack of economic situation at the time. Moreover, the time when the said advance deposit was converted into the membership fee of the instant golf course was not recovered even if the said advance deposit was converted into the membership fee of the instant golf course.

(10) On the other hand, at the time of the investment of the aforementioned advance deposit, the Plaintiff stated that “the Plaintiff requested to make an investment in the instant golf course membership to the previous home shopping company, the Plaintiff’s refusal of the Plaintiff’s request in terms of securing channel stability, and the Plaintiff’s refusal of the Plaintiff’s request should be accepted on the ground that it does not preclude the possibility of negative impact on the broadcast transmission contract in 2009. In addition, at the time of the investigation by the Fair Trade Commission, Nonparty 2, who was the person in charge of the broadcasting channel marketing of the branch shopping, reported to the management that it is necessary to purchase the instant golf course membership to maintain channels, and Nonparty 2, who was the person in charge of the broadcasting channel marketing of the branch shopping, reported to the management at the time of the investigation by the Fair Trade Commission, “the Plaintiff was at the disadvantage of all other home shopping companies only in our country, and was at the same time asked to other home shopping companies on the part of the Plaintiff.”

In addition, the case of Hyundai Home Shopping, which was prepared at the time of converting the said advance deposit into the membership fee of the instant golf course, stating that “At the time of the refusal to maintain the instant golf course membership, it would be changed to 100% if it is determined by the method of light, and it would be re-scheduled to adjust the rate of increase in the fee for broadcast transmission (12.5%) in which the negotiation was completed in 2010 (2010), so the Plaintiff and the Plaintiff should maintain the golf course membership and observe our channel through the maintenance of friendly relations.” Meanwhile, Nonparty 3, who was the person in charge of the broadcasting channel marketing of Hyundai Home Shopping, requested to review the purchase of the instant golf course membership and, at the time of the investigation, considered that “the Plaintiff requested that the Plaintiff “the Plaintiff made the said request to purchase the instant golf course membership,” and considered to the effect that “the Plaintiff did not request the Plaintiff to present the instant golf course to the company,” and thus, the Plaintiff did not consider the contents of the instant case.”

In addition, the case where our home shopping was prepared at the time of the investment of the above advance deposit, "the plaintiff demanded the increase of the fee for broadcast transmission along with the request for the purchase of the golf club membership of this case. The first proposal is to keep the current channel, and the second proposal is to purchase the golf club membership of this case in connection with the public order of the branch shopping channel. In addition, at the time of the investigation by the Fair Trade Commission, the non-party 4, who was a person in charge of the marketing of the broadcasting channel of our home shopping, stated that "the plaintiff's personnel in charge of the plaintiff in charge of the plaintiff's side, have the right to purchase the golf club membership of this case." The plaintiff's report to the head of the headquarters, "it would be desirable for the plaintiff to purchase the golf club membership of this case." At the time of the channel negotiation in 2009, the plaintiff demanded the above investment of the golf club membership of this case and prepared it in the above process, and the plaintiff did not make any investment."

According to the case of the above three home shopping business operators and their statements, it is reasonable to view that the above three home shopping business operators might suffer relative disadvantages compared to other home shopping business operators in the allocation of channels or the determination of transmission fees. Thus, it is reasonable to deem that they purchased golf course membership of this case.

(3) Examining these circumstances in light of the legal principles as seen earlier, in light of the situation of the broadcasting channel market in which the Plaintiff and the said three home shopping business operators are in possession of, and the characteristic of the broadcasting channel subject to the transaction, etc., the Plaintiff and the said three home shopping business operators are not easy to select any other CATV broadcasting business operators than the Plaintiff, and in particular, there was no possibility of selecting any other CATV broadcasting business operators within 15 broadcasting zones. Thus, the Plaintiff should be deemed to have relatively superior position to the transaction of the said three home shopping business operators.

Furthermore, in light of the following circumstances, the Plaintiff’s act of having the said three home shopping business operators purchase the instant golf course membership in the light of the purpose and details of the Plaintiff’s request for the purchase of the instant golf course membership, the objective economic situation at the time, and the status and relation of the Plaintiff and the said three home shopping business operators, etc., the Plaintiff’s act of having the said three home shopping business operators purchase the instant golf course membership constitutes an act of compelling the other party to purchase it by unfairly taking advantage of its transactional position as deviating from normal transaction practices. Accordingly, the Plaintiff’s act constitutes an act of compelling the purchase under Article 23(1)4 and (2) of the Fair Trade Act and Article 36(1) and [Attachment 1] 6(a) of the Enforcement Decree of the Fair Trade Act.

① The reason why the Plaintiff requested the said three home shopping business operators to purchase the membership of the instant golf course is that, in light of the timing, object and method of collecting investors’ prior deposit money for the purchase of membership of the instant golf course and the economic situation at the time, the purpose of the Plaintiff’s request is to provide funds for the development of the dong Tourism, which is an affiliated company of the Plaintiff.

② However, in the instant case where the Plaintiff, a CATV broadcasting business entity, requested the purchase of membership of the instant golf course by the said three home shopping business entities, in which there is no objective evidence to acknowledge any other circumstances, the Plaintiff’s act of requesting the purchase of membership of the instant golf course is irrelevant to the agreement on the transmission of the broadcasting channel. As such, the Plaintiff’s act is distinguishable from the normal transaction practices in the broadcasting channel trading market in light of the nature of the broadcasting channel trading market or its business contents.

③ Furthermore, the Plaintiff, who was in charge of marketing of broadcasting channels within the said three home shopping business operators, was informed of the said request to the said three home shopping business operators and other home shopping business operators in competition, thereby making the said three home shopping business operators in fact unable to refuse the Plaintiff’s request.

Of course, as pointed out by the court below, although the above three home shopping business operators did not explicitly express or express any disadvantage when the plaintiff demanded the purchase of this case's golf club membership, the above three home shopping business operators could not consider any disadvantage when they refuse the plaintiff's request in a superior position in the transaction. This is obvious in light of the fact that the above three home shopping business operators might suffer relative disadvantage compared to other home shopping business operators in the allocation of channels or the determination of transmission fees, etc. as seen earlier, it is evident that the above three home shopping business operators were entitled to purchase the golf club membership in this case.

Thus, the above three home shopping business operators are deemed to fall under the circumstances in which it is objectively impossible to purchase the golf club membership of this case in light of the surrounding circumstances at the time.

④ In addition, in light of the general economic situation and the situation of the golf club membership trading market at the time when the said three home shopping business operators invested in advance deposits to purchase golf club membership of this case and converted the said advance deposits into membership fees, the said three home shopping business operators did not have any economic value to invest in the golf club membership of this case. Thus, there was no objective and reasonable managerial reason to purchase the golf club membership of this case if the said three home shopping business operators did not request the Plaintiff. Therefore, the purchase of the golf club membership of this case by the said three home shopping business operators is only because the Plaintiff, who had superior status in the broadcasting channel trading market, requested the purchase of the golf club membership of this case.

⑤ Meanwhile, in light of the above three home shopping business operators’ capital, assets, or net income, there was a possibility that the said three home shopping business operators purchased the instant golf course membership in the management judgment that they want to gain more profits from the distribution of broadcasting channels and the determination of transmission fees. However, this is not different from that of the said three home shopping business operators to purchase the instant golf course membership in management judgment in order to prevent disadvantages at a disadvantage in the allocation of broadcasting channels and the determination of transmission fees. Thus, the said three home shopping business operators’ purchase of the instant golf course membership does not constitute ordinary trade practices.

(6) In addition, unlike the above three home shopping business operators, there are two other home shopping business operators who did not accept the Plaintiff’s request for purchase of membership of the instant golf course, and even if the said two home shopping business operators were to have relatively no disadvantage in the assignment of channels and the determination of fees from the Plaintiff, it is not directly related to the existence of compulsory purchase, compulsory purchase, and the existence of other competitors who did not make compulsory purchase, and the above fact that there is no direct relation. The above two home shopping business operators are not subject to compulsory purchase. The above two home shopping business operators may refuse the Plaintiff’s request for other business reasons even if they were actually forced to purchase membership of the instant golf course, and as such, there are other reasons that did not disadvantage the Plaintiff in the assignment of channels and the determination of fees.

(4) Nevertheless, the lower court determined otherwise, on the grounds that the Plaintiff could not be deemed to have forced the said three home shopping business operators to purchase membership of the instant golf course by unfairly taking advantage of its trade position. In so doing, the lower court erred by misapprehending the legal doctrine on the illegality of the act of forcing purchase as an abuse of trade position, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ko Young-han (Presiding Justice)