III. Main Issues
1. The Respondents’ Assertions and Court’s Ruling
1) An Inquiry Whether a Collaborative Act on Price Was Committed
The three plaintiffs argued that they had not jointly determined the retail price of school uniforms, nor ordered, encouraged and monitored an improper price cartel. They also argued that they had not taken any action against sales agencies for violating the agreement made at the central consultation committee, and that the discussions to freeze or reduce the price made through
consultation committees were designed to build a sound market environment
and to enhance the customer benefits. Therefore, it was difficult to view that there had been a price cartel specified in Article 19 Paragraph (1) Item 1 of the MRFTA. In addition to these arguments, SK Networks asserted that its conduct was not illegal as it fell in the category of rationalization of trade
terms and conditions specified under Article 19 Paragraph (2) Item 5 of the MRFTA and Article 27 Item 1 of its Enforcement Decree. It further argued that its practice could be seen as maximum price maintenance for justifiable reasons set forth in Article 29 Paragraph (1) of the MRFTA. In addition, SK
Networks and Saehan argued that the “price” in Article 19 Paragraph (1) Item 1 of the MRFTA refers to the price of goods or services directly sold by the enterprisers participating in a collaborative act, or the “factory price” of the
goods if the enterprisers are manufacturers. They stressed that the three companies had not engaged in a collaborative act on the “factory price”. In response to these arguments, the court ruled that the three plaintiffs held meetings of their sales team leaders, or meetings attended by executives of these three companies, and the central consultation committee and representatives of regional consultation committees. It concluded that they made sales agencies determine the selling price through their respective regional consultation committees or agreed to determine or maintain the price
at a certain level or within a certain range. Furthermore, the court held that it was acknowledged that the plaintiffs agreed to impose penalties against violations and monitored compliance, and they provided the pricing standards for their wholesalers and sales agencies by specifically notifying the retail
price. Therefore, their act of jointly fixing, maintaining or changing the price of school uniforms constituted an act of unduly restraining free and fair competition not only among their distributors, but also among the three manufacturers themselves. As to the argument that the plaintiffs’ conduct was tantamount to rationalization of trade terms and conditions or maximum price maintenancefor justifiable reasons, the court rejected such argument on the ground that the
conduct failed to satisfy the requirements prescribed by law and made distributors sell the products at a notified price. Therefore, it was difficult to understand their practice as an act of maximum price maintenance to prevent transactions at a price exceeding a certain level. In addition, the court defined that the “price” as the subject of the collaborative act referred to fixing, maintaining, or changing the price at a
certain level, including providing pricing standards such as the rate of price increase or reduction, base price, standard price, maximum price and minimum price, and setting the limits of price elements including discount rate and margin.