[1] Contents and legislative intent of the fixed price book sales system under the Publishing Industry Promotion Act

[2] Whether a “mail order brokerage business operator” who bears the obligation to observe the fixed price book sales system pursuant to Article 22(4) and (5) of the Publishing Industry Promotion Act includes a business operator related to the distribution of publications under the same Act as a business operator engaged in the distribution of publications under the same Act, who may be deemed as a mail order distributor and may determine the final sales price of publications separately from a seller and may obtain economic benefits therefrom (affirmative)

[1] According to Article 22 of the Publishing Industry Promotion Act (hereinafter “Publication Act”), when a publishing company issues a publication for the purpose of sale, it shall determine the price to be sold to consumers (hereinafter “fixed price”) and indicate it on the publication as prescribed by the Presidential Decree (Paragraph 1), and the seller of the publication shall sell it at a fixed price (Paragraph 4). The seller of the publication may sell it at a free association of price reduction of not more than 15% and economic interests to promote reading and protect consumers, and even in this case, the price discount shall not exceed 10% (Paragraph 5). Here, “economic interest” in this context refers to the goods offered to consumers in addition to the transaction of the publication, mileage (referring to points, etc. corresponding to a certain ratio of sales price), human rights, merchandise coupons, and other things recognized as being impossible for consumers to acquire without payment for ordinary prices (Paragraph 7). According to Article 28(1)5-2, 25(2), or 300,000 won or less of the publication.

As such, the Publication Act introduces the fixed price book by prescribing the principle that a publication shall be sold at the fixed price, while exceptionally allowing the provision of price reduction and economic benefits within the limit of 15% of the fixed price, thereby relaxing restrictions on the freedom of competition in the distribution phase arising from the application of the fixed price book sales system and guaranteeing the freedom of business of the seller of the publication. Accordingly, according to the current fixed price book sales system, the final purchase price of a publication that is to be borne by the consumer of the publication should exceed 85% of the fixed price indicated in the publication.

The legislative purport of the fixed price book sales system is to prevent confusion in the distribution order of publications due to excessive price competition, and to provide consumers with publications with diverse and rich contents to consumers by protecting and fostering authors, publishing companies, and book stores in a stable manner.

[2] Examining the contents and legislative intent of the provisions related to the fixed price book sales system in the entire structure of the regulations on the distribution order of publications under the Publishing Industry Promotion Act (hereinafter “Publication Act”), it is reasonable to interpret that not only a seller in a narrow sense of concluding a sales contract on publications with consumers, but also a seller in a publication who is obligated to comply with the fixed price book sales system under Article 22(4) and (5) of the Publication Act includes a seller in a narrow sense of concluding a sales contract on publications with consumers, such as “Act on the Consumer Protection in Electronic Commerce, Etc.” as a business operator related to the distribution of publications under the Publication Act, and a “mail order brokerage business operator” that determines the final sales price of publications separately from a seller, and

[1] Articles 22 and 28(1)5-2 of the Publishing Industry Promotion Act / [2] Articles 22, 23(1) and (2), and 28(1)5-2 of the Publishing Industry Promotion Act; Article 2 subparag. 4 and 20-3 of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.; Article 3 of the Enforcement Rule of the Act on the Consumer Protection in the Electronic Commerce Transactions, Etc.

Prosecutor

Ebry Korea Co., Ltd. (Law Firm Cheong & Yang, Attorneys Lee Jong-soo et al., Counsel for the plaintiff-appellant)

Seoul Central District Court Order 2018Ra105 dated March 26, 2019

The order of the court below is reversed, and the case is remanded to the Seoul Central District Court.

The grounds of reappeal are examined.

1. Case history

A. The offender provided an electronic commerce system that enables a transaction between a seller and a buyer (or a consumer) and operates the ○○ website (Internet address omitted; hereinafter “instant site”) which is an online market space as an operator of the so-called “open Market” that receives sales commission from a seller. Specifically, a seller shall register and sell goods on the instant site, and the buyer orders the goods to be purchased and pays the price to the seller, and the seller shall pay the price after deducting the sales commission, etc. from the seller.

나. 위반자는 2017. 3. 6. 이 사건 사이트에서 ‘주간 핫딜 프로모션’(이하 ‘제1이벤트’라고 한다)과 ‘대학교재 ＆ 수험서 무제한 혜택’(이하 ‘제2이벤트’라고 한다) 이벤트를 진행하였다. 제1이벤트가 적용되는 도서의 판매자는 도서정가에서 10% 할인된 금액을 판매가로 정하였고, 제2이벤트가 적용되는 도서의 판매자는 할인 없이 도서정가를 판매가로 정하였다. 구매자가 두 이벤트의 적용 대상 도서를 구입하면서 위반자의 간편결제서비스인 △△△△△(영문 명칭 생략)에 등록한 제휴 신용카드로 결제할 경우, 위반자는 구매자에게 15%(제1이벤트에 해당한다)와 10%(제2이벤트에 해당한다)의 ‘신용카드 할인쿠폰’을 발급하고, 할인판매가의 15%(제1, 2이벤트에 모두 해당한다)에 상당한 ‘○○캐시’(구매자가 이 사건 사이트에서 적립·사용할 수 있는 적립금이다)를 제공하였다.

C. Accordingly, the head of Gangnam-gu determined that the issuance of credit card discount coupons and the provision of ○○ Capital by the offender constitutes “the provision of price discount and economic benefits exceeding 15% of the fixed price of book” as prohibited by Article 22(5) of the Publishing Industry Promotion Act (hereinafter “Publication Act”). Around June 2017, the head of Gangnam-gu imposed an administrative fine of KRW 6 million on the offender of the violation of the Publication Act, each of three million won per event (hereinafter “instant disposition”), in accordance with Article 28(1) of the Publication Act (hereinafter “instant disposition”).

D. When an offender raises an objection to the instant disposition, the first instance court decided that the offender be punished by an administrative fine of three million won (1.5 million won, respectively) in summary form without undergoing an examination under Article 31(1) of the Act on the Regulation of Violations of Public Order. When the offender files an objection, the first instance court decided that the offender shall not be punished by an administrative fine of three million won (1.5 million won, respectively) after undergoing an examination procedure, and that the person who sells the publications under Article 22(4) and (5) of the Publication Act (hereinafter “publication”) shall be construed as the person who has the authority to sell, sell, transfer, etc. the publications to others, such as the owner of the publications, and that the offender is merely a sales intermediary who did not have the authority to take the above disposition, and thus, the offender shall not be punished by an administrative fine, considering that the offender cannot be held liable for the violation of Article 22(5) of the Publication Act.

E. Although the prosecutor filed an immediate appeal, the court below dismissed the prosecutor’s appeal, in addition to the decision that the fine for negligence cannot be imposed on the violator based on Article 12(2) of the Act on the Regulation of Violations of Public Order, which provides that the person who participated in the violation of public order established by the person who sells the publication, unless the person in question committed the violation of public order.

2. Grounds for reappeal and issues of this case

A. The prosecutor asserts that (1) the mail order broker (open Market) who takes part in the sales activities as well as the person who directly sold the goods to the buyer shall be deemed as the seller of the publication. (2) Since the violator claims for the costs incurred from the issuance of discount coupons and the provision of reserves to the seller as advertising expenses, it shall be deemed as a violation of public order pursuing his own profits by providing the benefit of violating the fixed price book system under the Publication Act.

B. The key issue of the instant case is whether the violator, who is engaged in the mail order brokerage of publications at the instant website, as an operator of the Open Market, constitutes a publication seller as defined in Article 22(4) and (5) of the Publication Act.

3. Relevant legal principles

A. Contents and legislative intent of the relevant provisions on the fixed price book system

1) According to Article 22 of the Publication Act, when a publishing company issues a publication for the purpose of sale, it shall determine the price to be sold to consumers (hereinafter “fixed price”) and indicate it on the publication (Paragraph 1), as prescribed by Presidential Decree, and the seller of the publication shall sell it at a fixed price (Paragraph 4). The seller of the publication may sell the publication at a free association of price reduction and economic interest within 15% for the promotion of reading and consumer protection, and even in such a case, the price discount shall not exceed 10% (Paragraph 5). Here, “economic interest” refers to goods offered to consumers in addition to the transaction of the publication, mileage (referring to points, etc. corresponding to a certain percentage of the selling price), human rights, merchandise coupons, and other things recognized as being impossible to be acquired by consumers without paying a normal price (Paragraph 7). According to Article 28(1)5-2, Article 22(4) or (5) of the Publication Act, a person who sells the publication shall be punished by a fine for negligence not exceeding 3 million won.

2) As such, the Publication Act introduces a fixed price book by prescribing the principle that a publication should be sold at a fixed price, while exceptionally allowing a publication to provide price reduction and economic benefits within the limit of 15% of the fixed price, thereby relaxing restrictions on the freedom of competition in the distribution phase arising from the application of the fixed price book sales system and guaranteeing the freedom of business of a publication seller. Accordingly, according to the current fixed price book sales system, the final purchase price of a publication that is to be borne by the consumer of a publication should exceed 85% of the fixed price indicated in the publication.

3) The legislative purport of the fixed price book sales system is to prevent confusions in the distribution order of publications due to excessive price competition, to stably protect and foster authors, publishing companies, and book stores, and to provide consumers’ readers with publications with diverse and rich contents.

(b) Whether a mail order brokerage business operator is included in the seller of publications under Article 22(4) and (5) of the Publication Act;

Examining the contents and legislative intent of the aforementioned provisions related to the fixed price book sales system in the entire structure of the provisions on the distribution order of publications under the Publication Act, it is reasonable to interpret that the seller of publications obligated to observe the fixed price book sales system pursuant to Article 22(4) and (5) of the Publication Act includes not only the seller of a narrow meaning that concludes a sales contract for publications with consumers, but also the seller of publications related to the distribution of publications under the Publication Act, such as the Act on the Consumer Protection in Electronic Commerce, Etc. (hereinafter “Electronic Commerce Act”), as a business operator related to the distribution of publications under the Publication Act, and the “mail order brokerage business operator” that determines the final selling price of publications separately from the seller and gains economic benefits therefrom. The detailed reasons are as follows.

1) Administrative laws and regulations, which serve as the basis for an indivative administrative disposition, must be strictly interpreted and applied, and shall not be excessively expanded or analogically interpreted in the direction unfavorable to the other party to the administrative disposition. However, insofar as they do not deviate from the ordinary meaning of the language and text, teleological interpretation taking into account the legislative intent, purpose, etc. is allowed (see Supreme Court Decision 2018Du48601, Nov. 29, 2018, etc.).

2) The Publication Act regulates “establishment of a sound distribution order of publications” which is the legislative purpose of the Act in Chapter VI. Chapter VI provides that “The author of a publication, a person related to the publishing and distribution of a publication who falls under any of the following subparagraphs shall not engage in any of the following acts in order to maintain the distribution order of publications” (Article 23(1)), and Article 23(1) of the Publication Act provides that “The Minister of Culture, Sports and Tourism or a Mayor/Do Governor may take measures falling under any of the following subparagraphs against publishing companies, printing companies, and business operators related to the distribution of published publications, and other persons prescribed by Presidential Decree, if deemed necessary to establish the sound distribution order of publications,” and such broad meaning constitutes a criminal for the establishment of a publication distribution order under the Publication Act, and the person who is the person who is the person who is the person who is the person who is the person who is the person who is the subject of the duty of the publication order under the Publication Act, shall also be understood in the part of the publication order under the Publication Act’s narrow form of publication order.”

3) An operator of an open market is a mail order broker who mediates a mail order between the parties to a transaction by allowing the use of a cyber mall, providing advertising means for a mail order in his/her name, or displaying his/her name on the advertisement means to carry out a part of the mail order such as providing information on the mail order or receiving orders (see Article 2 subparag. 4 of the Electronic Commerce Act, Article 3 of the Enforcement Rule of the same Act). Therefore, in cases where a publication is sold and distributed in an open market, the operator of an open market is

4) Generally, a broker is only a brokerage act which assists in the conclusion of a contract between others. However, in the event that a mail order broker receives an order or receives the price of goods, etc. and mail order distributor fails to perform a certain obligation provided for in the Electronic Commerce Act, the mail order broker shall perform the said obligation on behalf of the mail order distributor and shall be deemed a mail order distributor in relation to such responsibility (Article 20-3 of the Electronic Commerce Act).

5) The core of the fixed price book sales system is that the final selling price of a publication should be more than 85% of the fixed price of the publication. Generally, the final selling price is determined by an agreement between the seller and the buyer, but in the open market, the operator may determine the final selling price at the stage of settlement, separate from the seller of the publication, and thereby, the buyer (consumer) may purchase the publication by paying the price less than 85% of the fixed price. In addition, the arbitrary determination of the final selling price of the publication by an open market operator in violation of the fixed price book sales system exceeds the freedom of competition permitted by the Publication Act, and if such determination is allowed on the grounds that it is a mail order broker, it would result in the breaking of the fixed price book sales system.

6) An open market operator obtains economic benefits that increase the sales volume of publications by lowering the final sales price of publications to less than 85% of their fixed price, and accordingly increases in sales commission, etc. paid by sellers. In addition, consumers’ purchase of data through the simple payment system can be obtained through the simple payment system, and a variety of advertising products can be sold to publications sellers in the open market. As such, costs incurred in issuing credit card discount coupons and providing reserves will be transferred to sellers.

4. Determination as to the instant case

Nevertheless, the lower court interpreted that the “publication of publications” under Article 22(4) and (5) of the Publication Act means only the disposal authority of publications within a narrow meaning, and determined that the offender, who is a mail order broker, cannot be held liable for the violation of the fixed price book sales system. In so doing, the lower court erred by misapprehending the legal doctrine on the recipient of fixed price book sales system under the Publication Act, thereby adversely affecting the conclusion of the judgment. The Prosecutor’s ground for re-appeal

5. Conclusion

Therefore, the order 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 Noh Jeong-hee (Presiding Justice)