“A Record of Collusion Alone Cannot Justify Maintaining a Region-Specific Exception” | A Court Judgment Setting the Standard for the Exercise of Discretion

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.

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.

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.

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.

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.

• Reviewing the past sanction history: examine how collusion-related dispositions may be connected to the current business area
• Confirming whether there is differential regional treatment: analyze whether there is an unreasonable difference compared with other regions in the same business type
• Securing policy materials: identify in advance the materials and logic on which the administrative agency relies as grounds for maintaining the exception
• Verifying the procedure: confirm the lawfulness of the expert committee review, the deliberation committee's deliberation, and the consultation with relevant agencies
• Checking for contradictions in the materials: review whether there are conflicting parts among the review reports, deliberation materials, and the draft public notice
• Responding to the balancing of public and private interests: secure materials on industry harm and market impact to respond to the administrative agency's assertions of public interest
• Preparing a follow-up litigation strategy: organize the structure of proof and the points for asserting deviation from or abuse of discretion in a revocation lawsuit

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.

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.