The Seoul High Court viewed that, in light of the meaning of the term in daily use, “the term trade is based on the intension of a person who tries to engage in an act for the purpose of producing a legal effect”. Under the MRFTA, an act of “providing disadvantages”, a specific type of abusing a superior position, is defined as an act of establishing or changing the transaction conditions to the disadvantage of the trading partner, or giving disadvantages in the process of executing the transaction. Therefore, the person’s intention is involved in “establishing or changing the transaction conditions”, while such intention is not necessarily required in “giving disadvantages in the execution process”.
In concept, the execution process does not require the involvement of intention. However, in this case, this factor of intention cannot be fully excluded because the insurers have to explain the details about insurance payment in the phase of finalizing the payouts and negotiate on the coverage of damage compensation.
C) Teleological interpretation: regulatory purpose
The purpose of regulation on abuse of an advantageous position is to prevent an enterprise which is in a favorable position or in a position affecting the trade activities of its counterparts from abusing its position to give them disadvantages in a transaction. Based on the premise that a company’s superior position means a possibility of providing disadvantages to its transaction partner, the term “trade” is interpreted in a different way.
Under some theories, the concept of “fair trade” can be understood as having the same meaning as competition, considering the purpose of the law set forth in Article 1 of the MRFTA. From this perspective, unfair trade practices may impede fair competition, which means free competition and fairness of means of competition. There are other theories under which trade has a broader meaning than competition. According to these theories, the ban on unfair trade practices is a comprehensive system to protect not only the fairness of competition itself, but also the interests of competitors and consumers. Based on these theories, besides unfair means or methods of competition, unreasonable or unfair terms of transaction and even conducts of impeding trading partner’s reasonable choice in negotiating or providing information for a transaction fall into the category of unfair trade practices. Thus, the term “trade” has a broader meaning of a commercial or economic activity, not a transaction commonly used to mean an act of buying and selling. Instead of referring to individual forms or conditions of transaction, trade can be interpreted as all the means for business activities, or trading order. In this context, the unreasonableness of unfair trade practice includes restriction of competition through a particular means, unfairness in transaction conditions, and abusive conducts of misleading consumers.
Considering the overall purpose of the relevant provisions, it looks reasonable for the Supreme Court to interpret the term “trade” as a general means for business activities or trading order beyond a narrow meaning of contractual relationship established based on the intention of the parties concerned.
3. Trading Relationship based on Liability Insurance and Direct Claim for Insurance Payouts
1) Summary of positions
Despite the general understanding of trade aforementioned, it is necessary to find out whether such concept of trade can be applied to the present case. The plaintiffs argued that “the relationship between the insurance companies and the owners of damaged cars is a legal relationship established by law, not a trading relationship, because the insurers provide insurance payouts upon exercise of a direct claim as they assume the insured’s liability for damage”. On the premise that the direct claim exercised by the victims is not a modified right of insurance claim against the insured but a claim for damages associated with an unlawful car accident, the Seoul High Court ruled that the relationship between the insured and the victims was based on the illegal act, and thus there was no direct trading relationship between the two. The High Court also determined that, for this reason, it was difficult to view there was a trading