Japan Fair Trade Commission

Japan Introduces ”Commitment Procedure” for Alleged Antitrust Violations

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On December 30, 2018, an amendment to the Japan Antimonopoly Act (the Act) to introduce “Commitment Procedure” became effective. The Commitment Procedure is a new procedure to resolve alleged violations of the Act voluntarily by an agreement between the Japan Fair Trade Commission (JFTC) and a company under investigation. It is similar to an antitrust consent decree under U.S. law.

The Commitment Procedure was introduced in accordance with the Trans-Pacific Partnership Agreement, first signed by 12 countries but then by 11 countries after withdrawal of the United States.

The Commitment Procedure is expected to provide opportunities to JFTC and companies under investigation to remediate alleged violations of the Act at an early stage, as an alternative to issuing cease-and-desist orders and/or imposing surcharge payments. With respect to its scope, according to the Policies Concerning Commitment Procedures, the following conducts will not be subject to the Commitment Procedure, and certain conducts such as Private Monopolization and Unfair Trade Practices (e.g. abuse of superior bargaining position) could be subject to it:

  • When an alleged violation is a so-called hardcore cartel matter such as bid rigging or price fixing;
  • When an investigated company has committed the same violation multiple times within 10 years; or
  • When an alleged violation is malicious and substantial and could result in criminal accusation.

A typical flow of the Commitment Procedure is: (i) JFTC issues notice of an alleged violation of the Act to a company under investigation, (ii) the company under investigation voluntarily composes and submits to JFTC within 60 days a plan to remediate the violation and (iii) JFTC decides whether or not to approve the plan. As a result of JFTC’s approval of and the investigated company’s compliance with the plan, JFTC will not issue a cease-and-desist order and/or surcharge payment order.

In practice, it will be important for an investigated company to closely communicate with JFTC and promptly conduct an internal investigation to seek possible options including taking advantage of the Commitment Procedure and avoiding a possible cease-and-desist order and/or surcharge payment.

China’s and Japan’s Antitrust Enforcement Agencies Warm Up To Each Other

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Chinese and Japanese crossed flags increased communication, cooperation and coordination among Chinese and Japanese antitrust enforcement agencies

Although China and Japan have very different histories regarding their antitrust laws, antitrust enforcement officials from the two countries have recently taken steps to open a formal dialogue. This is a welcome development for Chinese and Japanese companies, as well as for foreign companies that do business in China and Japan, and it continues the trend of increased communication, cooperation and coordination among national enforcement agencies. There remains an open question, however, as to how convergence among Asian antitrust enforcement agencies will affect possible convergence with agencies in the United States, the European Union and the rest of the world.

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Buckle up for Japan’s new plea bargaining!

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Over the past decade, the Japan Fair Trade Commission (JFTC) has increased its criminal enforcement of Japan’s antitrust law, the “Act on Prohibition of Private Monopoly and Maintenance of Fair Trade,” commonly known as the Anti-Monopoly Act.  This trend is likely to continue because last month Japan’s Diet amended the Code of Criminal Procedure to introduce a plea bargaining system that creates an incentive to report antitrust violations committed by others.  The new plea bargaining system, which applies to crimes such as antitrust, fraud, bribery and tax evasion, will be implemented in Japan within 2 years.

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