CONTENTS
- 1. Collusion | Overview of the Case
- 2. Collusion | The Court's Determination
- - Discretion in the Public Notice: Designation of Competition Products Is an Area of Broad Policy Judgment
- - Justification for Maintaining the Exception: The Defendant Must Present Concrete Grounds
- - A Record Alone Is Insufficient: Comparison with Other Regions Is Necessary
- - Contradictions in the Supporting Materials: Committee Review and Deliberation Alone Cannot Justify the Exercise of Discretion
- 3. Collusion | Standards for the Administrative Agency's Exercise of Discretion and the Burden of Proof
- - A Practical Checklist for Enterprises and Organizations
- - Areas of Legal Assistance in Related Disputes
1. Collusion | Overview of the Case
In this case, which arose in connection with collusion, the issue was whether an administrative public notice that established a separate exception for only a specific region, during the process of continuing to designate ready-mixed concrete as a product subject to competition among small and medium enterprises, was lawful.
The plaintiffs were organizations whose members were small and medium enterprises engaged in the manufacture and sale of ready-mixed concrete in the Daejeon Metropolitan City, Sejong Special Self-Governing City, and South Chungcheong Province regions.
The defendant, the Minister of SMEs and Startups, had designated, in three-year cycles, the products subject to competition among small and medium enterprises and the items subject to direct purchase of construction materials under the Act on the Support of Sales Channels, and ready-mixed concrete had continuously been included among those items since 2007.
The issue lay in the “special remarks” portion regarding the ready-mixed concrete item.
Originally, an exception could be established only for the Seoul metropolitan area, within a range of 20% of the annual projected volume, but from the public notice issued at the end of 2021, the South Chungcheong region was also included as subject to the same exception.
This reflected the fact that the Fair Trade Commission had previously issued corrective orders and imposed penalty surcharges on the ready-mixed concrete cooperatives in the South Chungcheong region on the ground of bid rigging in public-procurement ready-mixed concrete.
The plaintiffs subsequently filed a revocation lawsuit against that earlier public notice but lost, and the judgment became final.
However, after the designation period ended, the defendant issued a new public notice again in December 2024, while maintaining, as before, the content recognizing an exception for the South Chungcheong region within 20% of the annual projected volume.
This time, the plaintiffs filed another revocation lawsuit, arguing that “the earlier public notice was a kind of punitive measure for past collusion, but during that designation period there had been no separate collusion, and the South Chungcheong exception should therefore now be deleted.”
2. Collusion | The Court's Determination
In this case, the Seoul Administrative Court did not deny the administrative agency's discretion itself, but it made clear that, even for a discretionary act, the facts and reasons forming the basis of the judgment, as well as the grounds for the balancing of public and private interests, must be presented concretely.
Discretion in the Public Notice: Designation of Competition Products Is an Area of Broad Policy Judgment
The court first held that whether ready-mixed concrete should be designated as a competition product, and whether a region-specific exception should be recognized, fall within a professional and policy-oriented area of judgment that must comprehensively consider various factors, such as the structure of the relevant product market, technical characteristics, the need to protect small and medium enterprises, and the competitive landscape.
The Act on the Support of Sales Channels and its Enforcement Decree merely provide for procedures such as a recommendation by the Korea Federation of SMEs, consultation with the relevant administrative agencies, and deliberation by the operating committee, while leaving the specific standards for designation and exclusion to be formed largely through the public notice, so the court found that broad discretion is recognized for the defendant.
In other words, the court took the position that it could not, from the outset, directly determine anew the question of “why an exception was established only for the South Chungcheong region,” and that it must first review whether there was any deviation from or abuse of the administrative agency's exercise of discretion.
Justification for Maintaining the Exception: The Defendant Must Present Concrete Grounds
The court held, however, that even in judicial review of a discretionary act, the administrative agency must at least first present what grounds it considered, how it interpreted the relevant statutes, and how it weighed the public interest against private interests.
In this case, the defendant initially submitted only a formal answer, and even after the court ordered it to submit a substantive brief, it did not respond properly.
The court found that, even in the brief belatedly submitted thereafter, the defendant offered only abstract explanations, such as the general purpose of the system for products subject to competition among small and medium enterprises, the need to foster mid-sized enterprises, and the characteristics of the ready-mixed concrete industry, while failing to present the concrete reasons on the core question of “why the 20% exception should continue to be maintained for the South Chungcheong region in 2025 through 2027 as well.”
In light of these circumstances, the court found that the materials submitted by the defendant did not even prove the lawfulness of this public notice to a degree sufficient to be acceptable.
A Record Alone Is Insufficient: Comparison with Other Regions Is Necessary
The defendant relied on the opposing opinions of the Fair Trade Commission and the Ministry of Land, Infrastructure and Transport, as well as on the point that, given the characteristics of the ready-mixed concrete industry, unfair practices such as collusion may recur.
In fact, the Fair Trade Commission's materials included the fact that, from 2022 through 2024, sanctions were imposed for unfair collaborative acts relating to ready-mixed concrete in various regions nationwide.
The issue, in the court's view, was that collusion had been detected several times in regions other than the Seoul metropolitan area and the South Chungcheong region as well, yet the defendant did not recognize an exception for those other regions.
The court further found that the collusion at issue in the South Chungcheong region around 2024 was a matter relating to the private-demand market, and that its direct connection to the designation of competition products for public-procurement volume addressed by this public notice was weak.
In the end, the court found that the mere fact that “there was a single instance of collusion-related sanctions in the South Chungcheong region” does not explain why only the South Chungcheong region should still be given a separate exception, or why effective competitive bidding should be regarded as difficult.
Contradictions in the Supporting Materials: Committee Review and Deliberation Alone Cannot Justify the Exercise of Discretion
A particularly notable part of this judgment is the contradiction in the internal review materials submitted by the defendant.
The review opinion of the ready-mixed concrete expert committee examined by the court contained, on the one hand, the conclusion that “for the South Chungcheong region, the grounds for exclusion from designation have been resolved, and deletion is appropriate,” while elsewhere it also contained the conflicting statement that “in light of the collusion cases over the past three years, maintaining the exception for the South Chungcheong region is reasonable, and keeping the existing designation as it is appropriate.”
The ready-mixed concrete competition system deliberation committee nonetheless proceeded with its deliberation while this contradiction remained uncorrected, and as a result that content was reflected in the public notice as it was.
The court pointed out that the defendant, without providing any explanation or reconciliation regarding this contradiction, merely repeated the assertion that “committee review and deliberation had been carried out.”
The Seoul Administrative Court ultimately found that, while broad discretion is recognized for the administrative agency as to whether to designate a competition product and whether to recognize an exception, in this public notice the defendant failed to sufficiently present the substantive reasons and supporting materials as to why only the South Chungcheong region should maintain the exception, and accordingly rendered a judgment revoking that portion.
3. Collusion | Standards for the Administrative Agency's Exercise of Discretion and the Burden of Proof
In order to prevent collusion or to secure a fair competitive order, separate administrative restrictions or exceptions may be established for a specific industry or region.
However, for such a measure to continue to be maintained, a reasonable ground and substantial necessity for maintaining the restriction at the present point in time must be presented.
In particular, the following factors should be reviewed together.
In other words, going forward, if an administrative agency wishes to maintain an exception for a specific region or business type on the ground of collusion, it must provide a multidimensional explanation of the region, the market, the procurement structure, and the recent sanction records.
Category | Key Practical Points of Determination | Materials to Prepare |
Administrative Agency | · Necessity of maintaining the region-specific exception · Grounds for differential treatment compared with other regions · Balancing of public and private interests | · Review reports · Deliberation materials · Comparative statistics · Sanction records · Policy effect analysis |
Industry Organizations | · Differences between the past collusion and the current market situation · Whether improvement measures exist | · Voluntary compliance materials · Bidding structure improvement materials · Recent transaction status |
Individual Enterprises | · Whether it is directly related to concerns about undermining the competitive order · The degree of disadvantage caused by maintaining the exception | · Sales materials · Public procurement participation materials · Delivery records · Market impact analysis |
Deliberation Committee | · Consistency of the review materials · Reasonableness of the process of reaching the conclusion · Whether conflicting opinions were reconciled | · Minutes · Deliberation proposals · Opinion reconciliation tables · Revision history |
A Practical Checklist for Enterprises and Organizations
Because administrative dispositions or public notices relating to collusion can have a direct business impact on enterprises or industry organizations, it is advisable to review the following items proactively.
Areas of Legal Assistance in Related Disputes
At Daeryun, attorneys handling fair trade matters who have experience working at the Fair Trade Commission, attorneys handling administrative matters, and related legal professionals collaborate to provide broad assistance, ranging from responding to Fair Trade Commission sanctions relating to collusion to the procurement-market restrictions, competition-product designations, public-notice revocation lawsuits, and the development of joint industry response strategies that follow.
Area of Assistance | Main Content |
Analysis of the grounds for the disposition | Review of the substantive grounds and legal structure of collusion-related public notices and dispositions |
Strategy for discretion control | Analysis of whether there is deviation from or abuse of discretion, and whether the principles of proportionality and equality have been violated |
Evidence strategy | Securing and organizing comparative materials on other regions, recent sanction records, and market impact materials |
Review of procedural illegality | Review of the lawfulness of committee review and deliberation, consultation with relevant agencies, and the administrative pre-announcement procedure |
Design of the industry response | Establishing a joint response structure among cooperatives, associations, and enterprises, and designing a strategy for submitting opinions |
Conduct of administrative litigation | Conduct of public-notice revocation lawsuits, stays of execution, and follow-up administrative responses as a whole |
In matters where a record of collusion expands into public procurement, business-type regulation, or administrative disadvantages, it is important to respond from the early stages by reviewing the facts and the policy grounds together.
If you need assistance, you are welcome to explore preventive measures and response directions through 🔗a legal consultation on fair trade matters.
