General Policy Framework

The FTC continues to address Antimonopoly Act violations strictly and vigorously with a view to promoting fair and free competition in the Japanese market.

The FTC broadly provides databases of decisions and judgements related to Antimonopoly Act violations through the internet, as well as develops an information system that  support a court injunction against violators. (http://snk.jftc.go.jp/)

Continued efforts shall be made to strengthen the enforcement of the Antimonopoly Act including such measures as to reinforce the FTC in terms of investigative and other resources.

Strict and vigorous measures, including criminal accusations, shall be taken against price cartels, bid-riggings and other types of violations of the Antimonopoly Act.

An injunction relief system against the AMA violations (relating to the unfair trade practices) will enable victims to file a lawsuit to seek a suspension on such practices.  The victims will make full use of the newly established injunction relief system and damage system so that they can be compensated for losses and furthermore, deter such illegal practices eventually.

Address violations with international dimensions in a strict, prompt and vigorous manner.

In case where anti-competitive practices are employed based on or facilitated by the competition restricting administrative guidance, the FTC and other government ministries and agencies concerned will continue to undertake a review of such guidance promptly.

Actively advocate competition policy by conducting surveys and making necessary proposals on business fields where entry is restricted by regulations such as demand-supply control regulations.

Continue to conduct surveys by the FTC on the entry barriers instituted by local governments.  Where necessary, the FTC has been submitting its proposals and undertaking appropriate adjustments with the administrative agencies concerned.

The FTC began in June 1997 to provide information on competition law and policy in English on website. (http://www.jftc.go.jp/e-page/f_home.htm)

The FTC is determined to continue to take strict and active measures against practices that violate the AMA, as it is becoming increasingly important to maintain and promote fair and free competition with the progress in the deregulation.

The FTC will continue to provide relevant information to courts on request, so that the civil relief system for those who suffer from the AMA violations will effectively function.

 The FTC is also determined to improve the quality of our opinions sought from a court when a damages suit under Section 25 is filed.

The FTC has convened a study group which consists of experts from various fields in order to consider and review the Antimonopoly Act, especially  regulations of overall concentration.  It is scheduled to finalize a report by the end of this autumn.

The FTC & MPHPT will develop and publish ¡§Guidelines for promotion of competition in the Telecommunications Business Field¡¨ to prevent possible violation of the Antimonopoly Act and the Telecommunications Business  Law, and to create the environment in which carriers can operate as autonomously as possible.

Reviews of Competition Policies and/or Laws

No further action taken

Action taken previously

The FTC will continue to review competition policies and/or laws appropriately.

The FTC will take appropriate measures to enforce the injunction system smoothly.

Competition Institutions (Including Enforcement Agencies)

The FTC¡¦s jurisdiction, prescribed in the section 27-2 of AMA, was revised to specify the role of international cooperation regarding FTC¡¦s operation on Jan.6th 2001.

At the policy speech to the 151st session of the Diet, Prime Minister Junichiro Koizumi pointed out that the Government of Japan(GOJ) would strengthen the structure of the FTC, which should serve as the guardian of the market, thereby establishing competition policies appropriate for the 21st century.

Japan has reinforced the power of the FTC in terms of organizational structure and personnel from the point of ensuring strict enforcement of competition law and policy.

The FTC has following power.

(Administrative Power)

The following steps are carried out under the administrative power:

・Receipt and certification of various notifications and reports from firms based on the Antimonopoly Act.

・General surveys of business activities, economic conditions and monopolistic situations.

・Acceptance of prior consultation from firms and trade associations.

・Preparation of guidelines that explicitly discuss the implementation of laws.

・Coordination of problems on economic laws or orders and administrative guidance with other organs from the viewpoint of the AMA.

・Discussions and exchange of opinions with international organizations and competition authorities in foreign countries.

(Quasi-legislative Power)

The FTC has the power to designate unfair trade practices and unjustifiable premiums and misleading representations.  Also, it may enact internal regulations and regulations concerning the settlement procedures, reporting and certification.

(Quasi-judicial Power)

The FTC takes a hearing procedure before issuing a decision.  A hearing procedure similar to an open court trial is conducted by the FTC in order to ensure the fairness of the procedure.

The GOJ will continue to strengthen the structure of the FTC.

Measures to Deal with Horizontal Restraints

No further action taken

Horizontal Arrangements are prohibited as ¡§unreasonable restraint of trade¡¨ under the Section 3 of the Antimonopoly Act.  Section 2 (6) of the Antimonopoly Act defines the term ¡§unreasonable restraint of trade¡¨ as business activities, by which (1) any entrepreneur, by contract, agreement or any other concerted actions, irrespective of its names, with other entrepreneurs, (2) mutually restrict or conduct their business activities in such a manner as to fix, maintain, or increase prices, or to limit production, technology, products, facilities or customers or suppliers, (3) thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.

When the FTC finds that there exists any violation of the Antimonopoly Act, it can render a cease and desist order against the respondent to eliminate such conducts (Section 7).

It usually, at first, recommends that the party concerned take certain measures to eliminate the violation, such as to notify consumers of it by means of newspaper when necessary, not to repeat the same violations in the future, to report the measures taken complying with order to the FTC.

In the case where the FTC is unable to prove violation but there is some doubt or concern about violation, the FTC takes an informal measure such as warning or caution.

In the case where a price-related cartel is conducted, a surcharge is levied on the cartel members and constituent members of a trade association that conducted the cartel.

 The Antimonopoly Act empowers the FTC to file a criminal accusation with the Public Prosecutor General (Section 73).  For instance, those who engaged in unreasonable restraint of trade or private monopolization may be punished by imprisonment of up to 3 years, or fine of up to 5 million yen.  In addition to that, the firm and the trade association may be fined up to 100 million yen because of the double punishment provision (Section 95).

Nofurther action planned

Measures to Deal with Vertical Restraints

Although the FTC considers that the resale price maintenance (RPM) system for copyrighted works (books, magazines, newspaper, records, music tapes and music CDs) should be abolished from the viewpoint of competition policy, it reached the conclusion that it is appropriate to maintain the RPM system for the time being, since many people are against the abolition, arguing that it might adversely affect cultural or public aspect of copyrighted works, and national consensus has not been formed with regard to the abolition.

The Antimonopoly Act prohibits conduct, which tends to impede fair competition as ¡§unfair trade practices.¡¨  The Antimonopoly Act regulates unfair trade practices by applying Section 19 when firms use unfair trade practices as follows.

Refusal to Deal (Item 1,2) 

The refusal to deal is the act of not dealing with certain firms or not allowing such dealing unjustly.  Such conduct is carried out either concertedly (group boycotts)(Item 1) or individually (Item 2).

Discriminatory Pricing, Discriminatory Treatment (Item 3,4,5)

  It is unlawful for firms to set unjustly different prices for the same goods or services (Item 3) and to set unjustly different transaction terms (Item4) depending on the region of sales and trading partners.  Unjustly Discriminatory Treatment of firms in trade associations is unlawful if such conduct makes it difficult for the firms in question to carry out business activities (Item 5).

Tie-in Sales (Item 10)

 It is unlawful if a firm unjustly force its trading partners to purchase goods or services by tying them to the supply of other goods or services, as a result of which there is a possibility of, for example, unjustly imposing disadvantage to the latter, or foreclosing competitors from the market.

Dealing on Exclusive Terms (Item 11)

 If exclusive dealing, which makes trading partners handle only one¡¦s own goods or services and prohibits dealing with other competitors, has the possibility of unjustly depriving competitors of opportunities of trade and hindering new entry, such conduct would be unlawful.

Resale Price Restriction (Item 12)  Since the restriction of the resale price restricts price, the basic means of competition, and restraints competition among sellers, it is unlawful in principle.  However, the resale price restriction on copyrighted works (books and magazines, newspapers, records, music tapes and music CDs) is permitted as an exception (Section 23).

Dealing on Restrictive Terms (Item 13) 

 Carrying out trade on terms that restrict the business activities of trading partners may be unlawful, depending on the trading position of the party in the market and the type of business activities restricted. Conducts deemed unlawful in the past include customer restrictions and sales area restrictions(territory system), in addition to price restrictions.

*¢°Establishment of an injunction relief systemAny  consumers or businesses who has suffered or is likely to suffer serious damages by the AMA violations (relating to unfair trade practices) can file a lawsuit to demand the suspension on such practices (Section 24 of the revised act)

*2  When a lawsuit demanding an injunction is filed, a court in charge may inform the FTC of the suit and can seek opinions from the FTC on how the AMA should be applied to the incident concerned and so on.  The FTC is also empowered, with the permission of the court, to express its opinions to the court on how the AMA should be applied to the incident concerned and so on (Section 83-3 of the revised act).

*3  A lawsuit demanding an injunction can be filed not only before district courts that have jurisdiction over the areas where the illegal practices occur in accordance with the principles of the Code of Civil Procedure, but also before a district court where a high court which governs the said district court is located and the Tokyo District Court.  Moreover, such a lawsuit filed before a certain court can be transferred upon the judge¡¦s authority, to one of the other courts mentioned above (Section 84-2, 87-2 of the revised act).

*4  In order to prevent the system on such lawsuits from being abused, the court in charge can order the plaintiffs to provide a certain amount of security when the defendants offer a preliminary showing that the suit has been filed for illegal purposes (Section 83-2 of the revised act).

No further action planned

Measures to Deal with Abuse of Dominant

Position

Amendment of the Subcontract Act concerning provision of the content of the order and preservation of the record of the subcontract transaction by using information technology came into force on April 1,2001.

The Antimonopoly Act prohibits Abuse of Dominant Bargaining Position (Item 14).  It is unlawful for large firms in a dominant bargaining position to use their position to make unreasonable requests to trading partners.

The Subcontract Act prohibits abuse of dominant bargaining position in subcontract transactions  to ensure fair subcontract transactions and protect the interest of subcontractors.

An injunction relief system against  AMA violations was introduced.  Please see *1 through *4 in ¡§Measures to Deal with Vertical Restraints¡¨.

No further action planned

Measures to Deal with Mergers and Acquisitions

No further action taken

Chapter 4 of the Antimonopoly Act stipulates various restrictions on mergers, acquisitions and divisions for the purpose of preventing the formation of an anticompetitive market structure.

・Restriction of Mergers and Divisions

 Mergers and Divisions are prohibited if they may cause a substantial restraint of competition in any particular field of trade. 

  Companies, whose total assets or domestic sales exceed what AMA provides, which is desirous of becoming a party to a merger, a join establishment division(meaning establishment division that one company effect jointly with another company) ,or an acquisition division are subject to the prior notification requirements.

・Restriction of Acquisition of Business

 Since the acquisition of business among companies has the same effect as mergers, it is treated in the same manner as mergers in the AMA.

Companies ,whose total assets exceed what AMA provides, which is desirous of acquiring the whole or substantial part of the business of another company in Japan, is subject to the prior notification requirements.

・Restriction of Stockholdings

 No company shall acquire or hold stock of companies in Japan where the effect of such acquisition or holding of stock may be substantially to restrain competition in any particular field of trade. 

Every domestic and foreign company in Japan whose total assets exceed two billion yen is subject to submit a report on the stock they hold within thirty days as from the date, which AMA provides.

・Restriction of Interlocking Directorates

 Interlocking directorates are prohibited if they may substantially restrain competition in any particular field of trade.

As regards mergers and acquisitions, measures such as introduction or raise of a minimum threshold were taken in notification system for mergers and acquisitions of business and in the reporting system for stockholdings of other companies.  These changes were made from the viewpoint of achieving more efficiently the aims of regulation on concentration operations, of reducing the burden of enterprises, and of bringing harmonization with international regulatory practices. (The Bill was passed in the Diet by May 1998, and was put into effect in January 1999).

No further action planned

Other Issues Addressed by Competition Policy

No further action taken

The FTC and Japan International Cooperation Agency (JICA) had been implementing training program for personnel of competition authorities or of relevant agencies in developing countries, including those in a number of APEC member economies.  This training program had been taking place annually for a five-year period from 1994 to 1998 (Japanese fiscal year), and was decided to continue until 2003.

The FTC had been implementing personnel training program in the field of competition policy as a part of ¡§Partners for Progress (PFP)¡¨ training programs.  The PFP program was scheduled to be implemented annually for a five-year period from 1996-2000 (Japanese fiscal year).  (The fifth one was held in Bangkok, Thailand in March , 2001)

The FTC has sent experts on competition policy to developing economies including some APEC economies for technical assistance.

Continue to implement personnel training projects relating to competition policy.

Continue to send experts on competition policy for technical assistance in developing economies.

Co-operation Arrangements with other Member Economies

No further action taken

The Government of Japan and the Government of the US signed a bilateral agreement concerning cooperation on anticompetitive activities on October 7, 1999.  The agreement has entered into force upon the signature.

No further action planned

Activities with other APEC Economies and in other International Fora

No further action taken

The FTC has been holding periodical bilateral meetings for exchange of views with other APEC economies¡¦ competition authorities (i.e., US, Canada, Korea, Australia and New Zealand).

The FTC hosted the first Conference on competition policies among Asian and Oceanic countries in 1979 with the aim of exchanging information and views on competition policy among economies in the region.  The Conference has been held six times. 

Since 1964 when Japan became a member of the OECD, the FTC has participated in the Committee on Competition Law and Policy (CLP).

 In the UNCTAD, the FTC has participated in the conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices and the meeting of the Intergovernmental Group of Experts on Competition Law and Policy.

Continue to implement bilateral exchange of views with foreign competition authorities.

Collective Actions

No further action taken

Contribute to promoting cooperation between APEC and the Conference on Competition Policies among Asian and Oceanic Countries.

Contribute to fostering cooperation between APEC and international organizations such as OECD and UNCTAD in the field of competition policy.

No further action planned

General Policy Position

Japan has conducted active competition policy, focusing on strict enforcement of the Antimonopoly Act (Act Concerning Prohibition of Private Monopoly and Maintenance of Fair Trade), since it was enacted in 1947 with a view to promoting free and fair competition.

The Antimonopoly Act has three major objectives, namely (a) prohibition of unreasonable restraint of trade, (b) prohibition of private monopolization, and (c) prohibition of unfair trade practices.  The Fair Trade Commission is in charge of applying the Antimonopoly Act.

Reforms of Japan¡¦s economic structure are now being sought through fuller application of market principles, promoting launch into new business, and technological innovation.  The Japanese government, in a series of cabinet decisions, has accordingly made deregulation and to rendering the Japanese market more competitive and internationally open by further promoting fair and free competition. 

To enhance the transparency of law enforcement and to prevent possible violations, a variety of guidelines are issued and made public internationally.  The FTC also publishes and distributes FTC/Japan Views, an English-language publication that reports on the enforcement of the AMA, etc.

Japan introduced a system on a court injunction against entrepreneurs violating the AMA (those regarding unfair trade practices).

The JFTC¡¦s Study Group on Government Regulations and Competition Policy has been reviewing the appropriate condition for fair competition on the public sector (e.g. electricity sector, gas sector, etc.) in the most of which deregulation is promoted.  The FTC has publicized ¡§ The competition policy issues in the electricity sector,¡¨ ¡§ The competition policy issues in the gas sector,¡¨ ¡§ The competition policy issues in the domestic air passenger transportation services sector,¡¨ and The competition policy issues in the Telecommunications sector¡¨, ¡§Competition policy for the introduction of competition into postal services¡¨ and ¡§Deregulation and competition policy in public utilities sector¡¨.

The FTC has issued Guidelines as follows.

Guidelines on holding companies in December 1997

Guidelines on authorization regarding stockholding rate by a 

    financial company in December 1997

Guidelines on the abuse of Dominant Bargaining Positions in Consigned Service Transactions in March 1998

Guidelines on M&As in December 1998

Guidelines on patent and know-how licensing agreement in July 1999.

Guidelines on Fair  Electricity Transactions in December 1999

Guidelines on Fair Gas Transactions in March 2000

The FTC began in June 1997 to provide information on competition law and policy  in English on website.(http://www.jftc.go.jp/e-page/f_home.htm)

Reviews of Competition Policies and/or Laws

The Anti-Monopoly Act was amended in June 1996 to strengthen the organization of the Fair Trade Commission.  As a result of this amendment aimed at a fundamental strengthening of the staff, office and organization, the former Executive Office was replaced by the General Secretariat, which consists of the Secretariat, the Economic Affairs Bureau and the Investigation Bureau.  Also, under the Economic Affairs Bureau, the Trade Practices Department was established; and under the Investigation Bureau, the Special Investigation Department was established.  Further, in order to appoint people from a wider sphere, the retirement age of the Chairman and the Commissioners was raised from 65 to 70 years.¡@¡@¡@

Amendments to the notifications and guidelines regarding the regulations on premiums and prizes have been in force since April 1, 1996.  The main points of the amendments are as follows:

(1) The upper limit of premiums offered by lotteries or prize competitions was raised from 50,000yen to 100,000yen, and in the case of lotteries jointly held by stores in an area, the amount was raised from 200,000yen to 300,000yen.

 (2) The upper limit of 50,000yen on premiums offered to purchasers and shoppers, excluding those offered by lotteries or prize competitions, was abolished.

 (3) The notification concerning premium offers to firms was abolished.

(4) Premium offered by department stores were subjected to the same regulations as premium offers by general retailers, by deleting the specific rule on unfair trade practices by department stores.

 (5) The maximum amount for open lotteries was raised from 1 million yen to 10 million yen.

 (6) In order to reduce and clarify the scope of application of premiumregulations, the related guidelines were revised.

Regarding exemptions on resale price maintenance (RPM), successive Cabinet decisions have announced a policy of reviewing such exemptions. 

Japan has been reviewing the Antimonopoly Act exemption system for resale price maintenance in certain commodities.  In April 1997, the JFTC abolished all notifications that had designated several commodities as exempted.  In March 1998, it was confirmed that the exemption system in the area of copyrighted works was limited in scope to books, magazines, newspapers, records, music tapes and music CDs.

Japan reviewed cartels and other systems exempted from the application of the Antimonopoly Act under individual laws.  As a result, 35 exemption systems under 20 laws were abolished or limited in scope by establishing the Omnibus Act in June 1997.  And 6 exemption systems under 6 laws were abolished or amended by individual laws concerned from 1996 to 1998. 

The notification system for international contracts was abolished in consideration of economic globalization and the reduction of the burden on business community (June 1997)

As regards regulation on holding companies, establishing or transforming into a holding company had been totally prohibited.  In December 1997, however, the Antimonopoly Act was amended, and establishing or transforming into a holding company is banned when such a practice constitutes an excessive concentration of economic power. 

As regards mergers and acquisitions, measures such as introduction or raise of a minimum threshold were taken in notification system for mergers and acquisitions of business and in the reporting system for stockholdings of other companies.  These changes were made from the viewpoint of achieving more efficiently the aims of regulation on concentration operations, of reducing the burden of enterprises, and of bringing harmonization with international regulatory practices. (The Bill was passed in the Diet by May 1998, and was put into effect in January 1999.)

As of December 1998, FTC amended the notification designating the types of representations to which the Premiums and Representations Act applied, for the purpose of making it clear that advertisements via Internet were subject to the Act.

Necessary measures have been taken to enforce the Convention on Combating Bribery of Foreign Public Officials in International Business Transaction (the amendment of the Unfair Competition Prevention Law took effect on February 15, 1999).

A bill was passed in the Diet in June, and was put into effect in July 1999 with the objective of repealing exemption systems (i.e., depression cartels and rationalization cartels), abolishing the Act concerning Antimonopoly Act Exemptions, and amending other laws.

A bill including amendment of the AMA to stipulate the regulations for corporate divestitures, which are similar to the regulations for mergers and acquisitions, etc. was enacted.  (It was promulgated on May 31 2000).

In accordance with the deregulation of the electricity and gas sectors, a bill concerning the amendment of the AMA, including deletion of the provision of Section 21 (the exemption for businesses constituting monopolies by the inherent nature of the businesses), was submitted on 21 March 2000 and put into effect on 19 June 2000.

A bill concerning the amendment of the AMA, which would permit private parties to seek and obtain injunction orders from courts against parties engaged in activities in violation of the unfair trade practices provisions of the AMA and would improve the current damage compensation system against the AMA violations, was submitted to the Diet on March 21, 2000 (it was promulgated on May 19 2000, and has been put into effect on 1 April 2001).

Competition Institutions (Including Enforcement Agencies)

The Fair Trade Commission (FTC) has following power.

(Administrative Power)

The following steps are carried out under the administrative power:

Receipt and certification of various notifications and reports from firms based on the Antimonopoly Act.

General surveys of business activities, economic conditions and monopolistic situations.

Acceptance of prior consultation from firms and trade associations.

Preparation of guidelines that explicitly discuss the implementation of laws.

Coordination of problems on economic laws or orders and administrative guidance with other organs from the viewpoint of the AMA.

Discussions and exchange of opinions with international organizations and competition authorities in foreign countries.

(Quasi-legislative Power)

The FTC has the power to designate unfair trade practices and unjustifiable premiums and misleading representations.  Also, it may enact internal regulations and regulations concerning the settlement procedures, reporting and certification.

(Quasi-judicial Power)

The FTC takes a hearing procedure before issuing a decision.  A hearing procedure similar to an open court trial is conducted by the FTC in order to ensure the fairness of the procedure.     

After Jan. 6th 2001, Section 27-2 of AMA  was revised to provide FTC¡¦s jurisdiction of international cooperation regarding FTC¡¦s operations within its jurisdiction.

Measures to Deal with Horizontal Restraints

Horizontal Arrangements are prohibited as ¡§unreasonable restraint of trade¡¨ under the Section 3 of the Antimonopoly Act.  Section 2 (6) of the Antimonopoly Act defines the term ¡§unreasonable restraint of trade¡¨ as business activities, by which (1) any entrepreneur, by contract, agreement or any other concerted actions, irrespective of its names, with other entrepreneurs, (2) mutually restrict or conduct their business activities in such a manner as to fix, maintain, or increase prices, or to limit production, technology, products, facilities or customers or suppliers, (3) thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.

When the FTC finds that there exists any violation of the Antimonopoly Act, it can render a cease and desist order against the respondent to eliminate such conducts (Section 7).

It usually, at first, recommends that the party concerned take certain measures to eliminate the violation, such as to notify consumers of it by means of newspaper when necessary, not to repeat the same violations in the future, to report the measures taken complying with order to the FTC.

In the case where the FTC is unable to prove violation but there is some doubt or concern about violation, the FTC takes an informal measure such as warning or caution.

In the case where a price-related cartel is conducted, a surcharge is levied on the cartel members and constituent members of a trade association that conducted the cartel.

 The Antimonopoly Act empowers the FTC to file a criminal accusation with the Public Prosecutor General (Section 73).  For instance, those who engaged in unreasonable restraint of trade or private monopolization may be punished by imprisonment of up to 3 years, or fine of up to 5 million yen.  In addition to that, the firm and the trade association may be fined up to 100 million yen because of the double punishment provision (Section 95).

Action taken previously.

Measures to Deal with Vertical Restraints

The Antimonopoly Act prohibits conduct, which tends to impede fair competition as unfair trade practices.¡¨  The Antimonopoly Act regulates unfair trade practices by applying Section 19 when firms use unfair trade practices as follows.

Refusal to Deal (Item 1,2) 

The refusal to deal is the act of not dealing with certain firms or not allowing such dealing unjustly.  Such conduct is carried out either concertedly (group boycotts)(Item 1) or individually (Item 2).

Discriminatory Pricing, Discriminatory Treatment (Item 3,4,5)  It is unlawful for firms to set unjustly different prices for the same goods or services (Item 3) and to set unjustly different transaction terms (Item4) depending on the region of sales and trading partners.  Unjustly Discriminatory Treatment of firms in trade associations is unlawful if such conduct makes it difficult for the firms in question to carry out business activities (Item 5).

Tie-in Sales (Item 10)

 It is unlawful if a firm unjustly force its trading partners to purchase goods or services by tying them to the supply of other goods or services, as a result of which there is a possibility of, for example, unjustly imposing disadvantage to the latter, or foreclosing competitors from the market.

Dealing on Exclusive Terms (Item 11) 

If exclusive dealing, which makes trading partners handle only one¡¦s own goods or services and prohibits dealing with other competitors, has the possibility of unjustly depriving competitors of opportunities of trade and hindering new entry, such conduct would be unlawful.

Resale Price Restriction (Item 12)

 Since the restriction of the resale price restricts price, the basic means of competition, and restraints competition among sellers, it is unlawful in principle.  However, the resale price restriction on copyrighted works is permitted as an exception (Section 24-2).

Dealing on Restrictive Terms (Item 13)

 Carrying out trade on terms that restrict the business activities of trading partners may be unlawful, depending on the trading position of the party in the market and the type of business activities restricted.  Conducts deemed unlawful in the past include customer restrictions and sales area restrictions (territory system), in addition to price restrictions.

Japan has been reviewing the Antimonopoly Act exemption system for resale price maintenance in certain commodities.  In April 1997, the FTC abolished all notifications that had designated several commodities as exempted.  In March 1998, it was confirmed that the exemption system in the¡@area of copyrighted works was limited in scope to books, magazines, newspapers, records, music tapes and music CDs.

Although the FTC considers that the resale price maintenance (RPM) system for copyrighted works (books, magazines, newspaper, records, music tapes and music CDs) should be abolished from the viewpoint of competition policy, it reached the conclusion that it is appropriate to maintain the RPM system for the time being, since many people are against the abolition, arguing that it might adversely affect cultural or public aspect of copyrighted works, and national consensus has not been formed with regard to the abolition.

Measures to Deal with Abuse of Dominant Position

The Antimonopoly Act prohibits Abuse of Dominant Bargaining Position (Item 14).  It is unlawful for large firms in a dominant bargaining position to use their position to make unreasonable requests to trading partners.

The Subcontract Act prohibits abuse of dominant bargaining position in subcontract transactions(in order)to ensure fair subcontract transactions and protect the interest of subcontractors.

The FTC released AMA guidelines Concerning the Abuse of Dominant Bargaining Positions in consigned Service Transactions in March 1998.  The guidelines were worked out to regulate abuses of dominant bargaining positions in consigned service transactions, to contribute to preventing AMA violations, and to promote sound business practices in this sector. Amendment of the Subcontract Act concerning provision of the content of the order and preservation of the record of the subcontract transaction by using information technology was to come into force on April 1,2001.

Measures to Deal with Mergers and Acquisitions

Chapter 4 of the Antimonopoly Act stipulates various restrictions on mergers and acquisition for the purpose of preventing the formation of an anticompetitive market structure.

Restriction of Mergers

 Mergers are prohibited if they may cause a substantial restraint of competition in any particular field of trade. 

  Every company in Japan, which is desirous of becoming a party to a merger, is subject to the prior notification requirements.

Restriction of Acquisition of Business

 Since the acquisition of business among companies has the same effect as mergers, it is treated in the same manner as mergers in the AMA.

 Every company in Japan, which is desirous of acquiring the whole or substantial part of the business of another company in Japan, is subject to the prior notification requirements.

Restriction of Stockholdings

 No company shall acquire or hold stock of companies in Japan where the effect of such acquisition or holding of stock may be substantially to restrain competition in any particular field of trade.

 Every domestic and foreign company in Japan whose total assets exceed two billion yen is subject to submit a report regarding all stock they hold within three months from the end of each business year.

Restriction of Interlocking Directorates

  Interlocking directorates are prohibited if they may substantially restrain competition in any particular field of trade. 

Every officer or employee of a company who holds concurrently the position of an officer in another company or companies in Japan incompetitive with it in Japan, shall, in case the total assets of either one company exceed two billion yen, file, a report thereof with the FTC within thirty days as from the date of assuming the position of such an officer

As regards regulation on holding companies, establishing or transforming into a holding company had been totally prohibited.  In December 1997, however, the Antimonopoly Act was amended, and establishing or transforming into a holding company is banned when such a practice constitutes an excessive concentration of economic power.

As regards mergers and acquisitions, measures such as introduction or raise of a minimum threshold were taken in notification system for mergers and acquisitions of business and in the reporting system for stockholdings of other companies.  These changes were made from the viewpoint of achieving more efficiently the aims of regulation on concentration operations, of reducing the burden of enterprises, and of bringing harmonization with international regulatory practices. (The Bill was passed in the Diet by May 1998, and was put into effect in January 1999).

A bill including amendment of the AMA to stipulate the regulations for corporate divestitures, which are similar to the regulations for mergers and acquisitions, etc. was enacted.  (It was promulgated on May 31 2000,and was put into effect in April 2001).

Other Issues Addressed by Competition Policy

The FTC and Japan International Cooperation Agency (JICA) had conducted training program for personnel at competition authorities in developing economies (including the following five members of APEC: Indonesia, Malaysia, People¡¦s Republic of China, Republic of Korea and Thailand).  The training programs were scheduled to take place annually for a five-year period, from FY1994 to FY1998 and was decided to continue until 2003.

The FTC has sent experts on competition policy to developing economies including some APEC economies for technical assistance.

The FTC had been implementing personnel training program in the field of competition policy as a part of ¡§Partners for Progress (PFP)¡¨ training programs.  The PFP program was scheduled to be implemented annually for a five-year period from 1996-2000 (Japanese fiscal year).  (The fifth one was held in Bangkok, Thailand in March 2001)

Co-operation Arrangements with other Member Economies

Japan has no arrangements or agreements for assistance or co-operation with other Member Economies regarding competition policy.

The Government of Japan and the Government of the US singed a bilateral agreement concerning cooperation on anticompetitive activities on October 7, 1999.  The agreement has entered into force upon the signature.

Activities with other APEC Economies and in other International Fora

The FTC has held bilateral meetings for exchange of views with foreign competition authorities regularly (including those of the following three members of APEC: the United States, Canada and Republic of Korea).

The conference on Competition Policies among Asian and Oceanic Countries (attended by members of the Asia-Oceanic region, including the 10 APEC members) has been held since 1979.

Since 1964 when Japan became a member of the OECD, the FTC has participated in the Committee on Competition Law and Policy (CLP). 

In the UNCTAD, the FTC has participated in the conference to Review All Aspects of the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices and the meeting of the Intergovernmental Group of Experts on Competition Law and Policy.

Action taken previously