The Constitutional Court ruled that it does not violate the Constitution to retroactively apply, through a supplementary provision, the Fairness in Agency transaction Act (Agency Act), the legal basis on which Hanssem was fined a penalty surcharge of 1.1 billion won by the Korea Fair Trade Commission.
On the 29th, the court delivered a decision, by a vote of 8 (constitutional) to 1 (unconstitutional), that supplementary provision No. 2 of the Agency Act does not violate the Constitution.
The Agency Act was enacted on Dec. 22, 2015, and took effect on Dec. 23, 2016. At the time of enactment, supplementary article 2 provided, "This Act applies from the first contract concluded or renewed between a supplier and an agency after this Act takes effect."
This supplementary provision was amended on Oct. 31, 2017. The amended supplementary article 2 provided, "However, Articles 5 and 11 apply from the first contract concluded or renewed after this Act takes effect." The National Assembly amended the supplementary provision to resolve the problem that, because agency contract terms vary from one year to 10 years, the Agency Act would not apply to some agencies for several years after the Act took effect.
From Jan. 2015 to Oct. 2017, Hanssem was caught by the Korea Fair Trade Commission (FTC) for holding promotional events related to kitchen and bathroom showrooms without prior consultation with agencies and unilaterally imposing the expense on agency owners.
In Oct. 2019, the Korea Fair Trade Commission (FTC) issued a corrective order to Hanssem and imposed a penalty surcharge of 1,156,000,000 won. The FTC applied the Monopoly Regulation and Fair Trade Act to conduct from Jan. 2015 to Dec. 22, 2016, and applied the Agency Act to conduct from Dec. 23, 2016, to Oct. 2017.
Hanssem filed a lawsuit with the Seoul High Court to cancel the penalty surcharge disposition. While hearing the case, the Seoul High Court, ex officio, referred a request for a constitutional review. The court viewed that the initial supplementary provision and the amended supplementary provision of the Agency Act concerning the violative conduct have different scopes of application and that there is room to see a violation of the constitutional prohibition on retroactive legislation affecting property rights.
The eight justices who found it constitutional said, "Retroactive legislation is, in principle, prohibited under the rule-of-law state, but (in this case) there are compelling public-interest grounds to allow retroactive legislation." They added, "After the Agency Act was enacted, the amended supplementary provision was prepared because there was a need to promptly remedy agencies left in a blind spot of protection for up to several years."
Justice Kim Bok-hyeong, who dissented, said, "As a result of retroactive legislation, when a penalty surcharge is imposed under the Agency Act rather than the Monopoly Regulation and Fair Trade Act, it cannot be ruled out that it may be more unfavorable to suppliers," adding, "Without compelling public-interest reasons, the loss inflicted on the parties' property rights is considerable."
Hanssem is the first case in which a penalty surcharge was imposed under the Agency Act implemented in 2016.