Representing KDB Life Insurance, Hanwha Life Insurance, and Heungkuk Life Insurance, Yulchon's Antitrust Group and Litigation Group lawyers prevailed in separate appeals to the Korean Supreme Court against the Korea Fair Trade Commission ("KFTC"), which had imposed sanctions on the three life insurance companies, including administrative fines for alleged price-fixing collusion. These Supreme Court decisions are noteworthy because they clarify (i) the Korean antitrust principle that information exchange, in and of itself, does not amount to collusion (i.e., an illegal cartel agreement) and (ii) the heavy burden of proof that the KFTC must satisfy to show a "meeting of minds" (i.e., an agreement), which is one of the essential elements of collusion under Korean antitrust law.
In December 2011, the KFTC imposed various corrective measures and a KRW 53.8 billion in total administrative fines on 16 Korean life insurance companies including the three represented by Yulchon and vindicated by the Supreme Court. The KFTC found that (1) from 1998 to 2000, the life insurance companies "directly agreed" to fix the discount rate for fixed-rate individual life insurance products and the reference rate for variable-rate individual life insurance products; (2) from 2001 to 2006, they "exchanged non-public information" on future discount rates and reference rates and then used such information to decide their own respective rates, thereby indirectly but nonetheless jointly fixing the rates; and (3) these two periods constituted a single continuing conspiracy.
On appeal to the Seoul High Court, Yulchon argued that while the three companies exchanged the insurance rates at issue, they did not agree to fix the rates. Accepting Yulchon's argument, the Seoul High Court noted the markedly changed nature and type of conduct in the second period as a clear break from whatever might have happened in the earlier period and in turn dismissed the first period as falling outside the statute of limitations. Regarding the alleged indirect price-fixing via information exchanges in the second period, the Seoul High Court held that the law requires not just an exchange of price information but an "agreement" to fix, maintain, or change prices. The Seoul High Court also noted that the life insurance companies used not just the exchanged information to determine their own rates but also comprehensively used numerous other critically relevant factors – such as the prime rate, going rates in the marketplace, their own return on assets ratio, level of customer recognition of each brand, their own competitive position, and the like. The Seoul High Court also noted that there was no genuine dispute as to the absence of uniformity or matching patterns in the competitors' actual discount rates. Finally, the Seoul High Court held that it was inherently inconsistent and irreconcilable for the KFTC to acknowledge that the insurance companies "individually decided their own rates" after exchanging certain sensitive information with others but also to allege that they had "jointly decided" the rates. Therefore, the Seoul High Court, in separate opinions, vacated the KFTC's sanctions on the three companies in their entirety, including the administrative fines.
On further appeal, the Korean Supreme Court affirmed the Seoul High Court's decisions, finding that the exchange of future rates at issue, without more, did not amount to collusion because there was no other evidence of an actual agreement, explicit or implicit, to jointly fix the rates.
Within the Litigation Group, senior advisor Nung Hwan Kim (a former Korean Supreme Court Justice) and partners Hai Sung Park and Sang Hyean Gwack (former Seoul High Court judges) spearheaded the matters. Within the Antitrust Group, partners Hae Sik Park, Kum Ju Son, Kyoung Yeon Kim, Sung Moo Jung, and associates Hyung Chul Moon, Yu Mi Choi, Sung Youn Hong, Chung Min Lee, and Gi Beom Park successfully handled the appeals.