Mo Automobile Co., Ltd. (Law Firm Barun, Attorneys Han-mo et al., Counsel for defendant-appellant)

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

November 13, 2008

1. The Defendant’s corrective order, notification order, and penalty surcharge payment order as indicated in the attached Form 1 List, which was issued against the Plaintiff by the plenary session Resolution No. 2008-01 on January 3, 2008, shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

3. The notification order issued by the Defendant against the Plaintiff by the plenary session Resolution No. 2008-001 on January 3, 2008 shall suspend its effect until this ruling becomes final and conclusive.

The same shall apply to the order.

1. Details of the disposition;

A. Status of the plaintiff, etc.

The plaintiff is a large enterprise owner who operates a passenger car and other passenger car manufacturing business and has entrusted a small and medium enterprise owner with the manufacture of automobile parts, and the plaintiff is a principal contractor under Article 2 (2) 1 of the Fair Transactions in Subcontracting Act (amended by Act No. 8539 of July 19, 2007).

Companies entrusted by the Plaintiff with the manufacture of motor vehicle parts are 55 small and medium enterprises (this refers to subcontractors under Article 2(3) of the Subcontract Act) and 22 large enterprises, such as the entry in the attached Table 3 and the attached Table 4.

B. Status of purchasing organization and functions of the Plaintiff

The plaintiff shall have a general headquarters under the jurisdiction of the chairperson and the vice-chairperson to take charge of purchasing affairs, and the general headquarters for purchasing shall consist of 5 business sections, such as the 1 business division for purchasing and the 2 business division as of May 31, 2007, and 14 business sections and 51 business teams. Among these, the dedicated organization of the plaintiff consists of 2 real team (the 1st unit for parts development, the 1st unit development (the bus, truck, etc. in the 2nd unit development), the 1st unit for materials management, the 1st unit for raw materials management, the raw materials management team, and the factory purchasing team). Other parts management teams, such as the purchase planning team and the purchase planning team, and the integrated parts development room, the former parts development room, and the new parts development room, shall be an organization that performs common affairs of the plaintiff and the former automobile company. Accordingly, basic purchase affairs, such as cost reduction, etc., are conducted in accordance with common standards and procedures.

C. The plaintiff's act

(1) An act of reducing the subcontract price 1)

On December 2002 and January 2003, the Plaintiff reduced the unit price for the supply of 430 parts by 2.0% from 20 subcontractors, including Nonparty 3 Co., Ltd. (attached Table 3 Nos. 1 to 20).

From the end of March 2003 to the end of April of the same year, the Plaintiff reduced the unit price for the supply of 359 parts by 3.4% to 3.5% from the end of April of the same year by 2003.

From the end of April 2003 to the beginning of May of the same year, the Plaintiff reduced the unit price of supply by 20 subcontractors, including Nonparty 3 Co., Ltd. (attached Table 3 Nos. 1 to 20) by 1.4% (as a result, the unit price was reduced by 3.2% to 3.4% for these companies).

(2) Payment of interest in arrears

The plaintiff paid the 118th,681,000 interest for arrears in excess of 11th,956 days from the statutory payment date (60 days from the date of acquisition of the object) for the 3th, 18 subcontractors such as non-party 5 corporation, etc. (see attached Table 5) and completed the payment on May 3, 2006.

D. The defendant's disposition

(1) Regarding the act of reducing the subcontract price

The defendant deemed that the above second reduction 4) act constitutes "an act of determining the subcontract price by reducing the unit price at a uniform rate without any justifiable reason," and issued a corrective order, notification order, and penalty surcharge payment order as stated in attached Table 1 No. 1, 3, and 4.

The defendant decided 3,387,394,00 won (subcontract 42,342,434,000 x 2 x 0.04 x 0.04) of penalty surcharges calculated in accordance with the criteria for imposition of penalty surcharges under the Enforcement Decree of the Subcontract Act, or 1,693,697,00 won of the penalty surcharges calculated in consideration of the fact that there is no accumulated points for each type of measure in the past three years.

(2) As to the overdue interest payment

The defendant issued a corrective order and notification order as stated in attached Form 1, 1, 3, on the ground that the act of paying the interest in arrears violates Article 13(7) of the Subcontract Act.

[Ground of recognition] Facts without dispute, Gap evidence 1, 24 evidence, Eul evidence 3 (including provisional number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) As to the reduction of subcontract price

As a result, there was a “justifiable cause” that occurred in the process of reflecting the high-maintenance effect due to the increase in quantity of the second character, and as a result, there was a difference between the subcontractor and each subcontractor, it did not seem to be a “three-dimensional”.

(2) As to the overdue interest payment

Since the scale of purchase of KRD parts is relatively small in comparison with the completed parts, and the computerization level of the KRD business system is insufficient, it takes more time than the general case, and it does not intentionally delay the payment, but has mutual understanding, and thus falls under the proviso of Article 13(1) of the Subcontract Act.

Since the plaintiff had already been voluntarily corrected before the disposition of this case, it is not possible to issue a corrective order.

(3) As to the notification order

It is against the principle of clarity and the principle of excessive prohibition to notify all subcontractors of violations of the law from time to time.

(b) Related statutes;

Attached Table 2 shall be as listed in the attached Table 2.

C. Determination

(1) As to the reduction of subcontract price

As seen earlier, the Defendant: “The first and second reduction acts are not problematic but only the second reduction acts are deemed as a violation; however, according to the simple logic that “the unit price of 789 parts produced and supplied by 26 subcontractors was uniformly reduced at a level of 3.4% according to the mere logic that “the unit price of 3.5% has to be reduced by 3.5%” (see, e.g., the Decision 14th), the Defendant, in fact, deemed the first and second reduction acts as a single act and deemed as a violation of the Subcontract Act. However, the Defendant’s determination is difficult to accept for the following reasons.

First, the evidence supporting the defendant's argument that the background and purpose of the first and second reduction are the same as each other was never transferred, while many of the evidence presented that the above background and purpose are different. In other words, the plaintiff is required to set the development cost of a new product more than the arm's length price since it is intensively required at the beginning of the new departure ("development cost") and if delivery is conducted to a certain extent, it should be returned to the arm's length price ("development cost"). The plaintiff and the subcontractor agreed that the development cost of the new product should be returned to the two-year unit price if a certain quantity increases when concluding the subcontract at the beginning of 202. As such, it is the first reduction that the development cost was made in the process of changing the development unit price into the two-year unit price. On the other hand, the plaintiff's assertion that it is necessary to reduce the supply and demand of the new product more than the originally planned unit price, and that it is difficult for the plaintiff to have more than 10-year 20-year 200 production and 10-year 20.

Second, the Defendant asserts that the Plaintiff had uniformly reduced the supply price without considering the characteristics or differences of the supplier’s business situation, type, size of the object, quality and size of the object, but there is no evidence to acknowledge this. Of the subcontractors, it is only 26 companies if the Defendant had uniformly reduced the supply price among the 55 small and medium enterprises, and the Defendant’s assertion that the supply price was reduced at the level of 3.4% if the Defendant excluded the first reduction from the object of determination as the Defendant’s assertion, the companies whose supply price was reduced at the level of 3.4% are only six companies. In addition, among the 22 large enterprises with a similar relationship with the Plaintiff, the supply price at the level of 3.4% at the same time as the first and second reduction was nine companies, and there is no difference between the supply price and the company whose supply price was reduced at the same level as the same time among the small and medium enterprises. Rather, these circumstances can be considered to support the Plaintiff’s assertion that the supply business operator’s price was different.

Therefore, the Defendant’s judgment that the second reduction constitutes “an act of determining the subcontract price by reducing the unit price at a uniform rate without any justifiable reason” is unreasonable.

(2) As to the overdue interest payment

A corrective order under Article 25(1) of the Subcontract Act does not include confirming the existence of an act of violating Article 13 or taking measures to prevent the recurrence thereof, but also means to correct the unlawful result existing due to the act of violating Article 13. This is compared with allowing the Fair Trade Commission to impose a penalty surcharge on the act of violating Article 13 in addition to the corrective order under Article 25-3(1)3. In addition to the provision that criminal punishment shall be imposed on the person who violates Article 13 in Article 30(1)3 and Article 30(2)2 through Article 13 in addition to the provision that criminal punishment shall be imposed on the person who fails to comply with the corrective order on the ground that Article 13 has been violated, the Fair Trade Commission does not simply confirm the occurrence and delay of payment of the subcontract price, and further, it is not possible to impose a corrective order under Article 25(1)3 of the Subcontract Act, regardless of whether the result of the act of violating Article 25(1)3 has occurred or not, even if the result of the correction order is 10.

As seen earlier in the instant case, the Plaintiff has already paid all the accrued interest prior to the instant disposition, and thus, it is no longer possible to issue a corrective order in accordance with the above legal principles.

(3) As to the notification order

As seen above, as long as each corrective order with respect to the reduction of subcontract consideration and the payment of overdue interest is unlawful, not only a notification order premised on such order, but also a penalty surcharge payment order cannot be deemed unlawful.

3. Conclusion

Therefore, since the disposition of this case is unlawful, the plaintiff's claim is accepted, and it is recognized that there is an urgent need to prevent irrecoverable damage caused to the plaintiff due to the order of notification among the disposition of this case, and there is no other evidence to recognize that the suspension of execution may have a significant impact on the public welfare due to the suspension of execution, so the effect of this case shall

[Attachment]

Judges Lee Sung-sung (Presiding Judge)

Note 1) Under below, ① the act of reducing 2.0% by December 2002 and around January 2003, 2003, ② the act of reducing 3.4% to 3.5% by the end of March 2003, or around April 2003, and the act of reducing 1.4% by 1.4% by the end of April 2003 to the beginning of May 2003.

Note 2) In the case of “Nonindicted Co., Ltd. 5” in [Attachment 3 List 21], the written resolution states that no price has been reduced at the time of the first reduction and 3.4% has been reduced at the time of the second reduction, but it states that the total of 4.1% (including 2.1% at the time of the first reduction and 2.0% at the time of the second reduction, and 2.0% at the time of the second reduction) has been reduced (On the other hand, the evidence No. 3 states that the total of 4.1% at the time of the second reduction, 2.0% at the time of the second reduction, and 2.0% at the time of the second reduction, and it seems difficult to deem that it is necessarily coincide with the final reduction price, but it is not clear that the two entries are different from each other, and the content of the written resolution should be written in accordance with the contents of the first written resolution.

3) Compock Dock Dock : A component for export to assemble complete vehicles in an overseas plant by exporting vehicles in the past produced or currently being produced in full as a component of complete decomposition;

Note 4) The Defendant, on the ground that “The first reduction act is presumed to be an unlawful uniform reduction, but the Plaintiff’s assertion that it stated in the contract that it was stipulated in the bidding condition that it was partially acceptable, was not submitted, and thus, the Plaintiff’s assertion as to that part was not determined (see the Decision 17 pages).”