1. Introduction
This decision (“Decision”) is from a case in which I represented the Korea Fair Trade Commission (“KFTC”), and provides an express basis of determination on whether a disposition may be made on a first cartel conduct without Amnesty Plus prior to the KFTC’s decision on a second cartel conduct on which the plaintiff (“Plaintiff”) filed a priority voluntary report.
2. Summary of Facts
In a service contract bid held by the Busan-Ulsan Regional Office of the Korea Electric Power Corporation for the transportation of supplies, including telegraph poles and transformers, Plaintiff colluded with other bidders and fake bidders on bid prices, and was cited for a violation of Article 19, Paragraph 1, Subparagraph 8 of the Fair Trade Act, resulting in the KFTC ordering corrective action and imposing a penalty surcharge (the “Disposition”). Plaintiff subsequently filed an appeal with the Seoul High Court to overturn the Disposition.
3. Plaintiff’s Arguments and the Court’s Decision
A. Plaintiff’s Arguments
Plaintiff argued that since it had filed voluntary reports on a number of other instances of illegal cartel conduct, and since some of those voluntary reports satisfied the criteria for priority voluntary reporting, it was eligible for further leniency (called “Amnesty Plus”) under Article 22-2, Paragraphs 1 and 3 of the Fair Trade Act, and Article 35, Paragraph 1, Subparagraph 4 of the Enforcement Decree of the same Act. At the time when Plaintiff initiated the present suit, investigations were still under way for a number of instances of cartel conduct and investigation reports were either submitted and awaiting review or undergoing the final deliberation process. Even though no determination had been finally made as to whether Plaintiff constituted a priority voluntary reporter at the time when the other instances of cartel conduct were voluntarily reported, the defendant (“Defendant”) could sufficiently apply the Amnesty Plus program to the cartel conduct at issue in this case (“Conduct”) by either concurrently conducting the deliberation or deferring deliberation or decision on the Conduct. Nevertheless, Defendant failed to further reduce the penalty surcharge by undergoing a process of comparing the proceeds of the Conduct with other instances of cartel conduct, violating the principles of self-restraint and equality.
B. Court’s Decision
The court ruled as follows, rejecting Plaintiff’s argument on further leniency.
i) Article 35, Paragraph 1, Subparagraphs 1 and 2 of the Fair Trade Act provide criteria for priority voluntary reporters and priority investigation cooperators (hereinafter “Voluntary Reporters” without distinguishing between reporters and cooperators). One such criterion is that the person shall have “conscientiously cooperated until the completion of an investigation, deliberation, and resolution… including testifying all the facts related to the illegal cartel conduct and submitting related materials.” Article 5, Paragraph 1 of the “Operating Regulation on Leniency Programs, Including Remedies for Voluntary Reporters of Illegal Cartel Conduct ” (“Leniency Regulation”) provides that “until the completion of an investigation” means “until the completion of the Commission’s deliberation”. ii) Considering the text and system of the relevant regulations, to qualify for further leniency on a penalty surcharge, the criteria for a priority Voluntary Reporter must be met, and as such, the voluntary report on the other instances of cartel conduct must also satisfy the temporal criterion that conscientious cooperation be given until the completion of the Commission’s deliberation. iii) Even though it was difficult to determine whether the criteria for priority reporting or cooperation in investigation were met due to the fact that the Commission’s deliberation on the other instances of cartel conduct had not been completed, it cannot be held that the failure to grant further leniency based on the assumption of priority Voluntary Reporter status during the computation of the penalty surcharge amount for the Conduct was wrongful. Neither may it be said that in the present case, concurrent deliberation had to be conducted on the Conduct and the other instances of cartel conduct subject to the leniency application, nor that the Disposition had to be deferred until deliberation or disposition on such other instances of cartel conduct.
4. Significance of Decision
Article 22-2 of the Fair Trade Act provides leniency for Voluntary Reporters, and Article 35, Paragraph 1, Subparagraph 4 of the same Act provides that the perpetrator of an instance of cartel conduct is eligible for further leniency in terms of corrective measures and penalty surcharges if they file a priority voluntary report on other instances of cartel conduct that they have perpetrated. In other words, under the further leniency (Amnesty Plus) policy, if a person who is subject to a disposition for corrective action or penalty surcharge due to a failure to file a priority voluntary report on a specific instance of cartel conduct (“Conduct A”) files a priority voluntary report on another instance of cartel conduct in which they were involved (“Conduct B”), leniency, in the form of a reduction of corrective action or penalty surcharge, is granted not only for Conduct B, but also for Conduct A, hence granting “further” leniency or “Amnesty Plus”. The intent of this policy is to encourage reporting on other instances of cartel conduct by extending leniency on an initially prosecuted conduct in return, ultimately aiming at the elimination of all cartel conduct.
If there already is a decision of the KFTA on whether Conduct B is eligible for priority voluntary report status at the time a disposition is being decided on Conduct A, there are no issues because further leniency can be simply granted for Conduct A. However, no precedent had yet existed on whether, if the KFTC’s investigation is still under way for Conduct B, or deliberation is still in process on an investigation report, a disposition may be decided on Conduct A without granting further leniency, or whether such a disposition must wait until the deliberation has been completed on Conduct B in order to accordingly grant further leniency on Conduct A.
This issue is of particular importance when there are multiple instances of Conduct A and B, instead of just one. In cases where there are multiple instances of Conduct A or B, the extent of further leniency is determined by comparing the total size of Conduct A and that of Conduct B (see Article 13, Paragraph 2 of the Operating Regulations). As such, when there are multiple instances of Conduct B at the time when the KFTC is deliberating on a disposition, as in the present case, the issue is whether a disposition must be deferred until a decision is reached on all instances of Conduct B, so that the extent of the further leniency may be determined. If a decision has to be reached on all instances of Conduct B, the KFTC’s processing of cases may be delayed indefinitely, sometimes resulting in the expiration of the statute of limitations and preventing a decision on any disposition. The possibility also cannot be excluded that a business operator under investigation would deliberately file multiple voluntary reports in order to delay the handling of a case.
In the KFTC’s practice thus far, in cases where a decision has been reached on Conduct A before a decision has been reached on Conduct B, and priority voluntary report status is later established for Conduct B, leniency has been granted ex-officio after-the-fact on corrective measures and penalty surcharges on Conduct A. Plaintiff in this case, however, asserted that a decision must not have been made on Conduct A in advance of one on Conduct B, and rather, either deliberations on both A and B had to be concurrently conducted or deliberation or decision on Conduct A had to be deferred.
In response, the court held that the voluntary report on Conduct B had to meet the criteria for priority voluntary report status at the time of the computation of the penalty surcharge amount on Conduct A (meaning at the time of the disposition), and that there was no obligation to concurrently conduct deliberation on Conduct B or delay the disposition on Conduct A until after deliberation or disposition on Conduct B, and therefore, making a disposition on Conduct A without granting further leniency was not unlawful.
