Questions and Answers

Japan

PRINCIPAL LAWS

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1. Firstly, what are the principal laws which are aimed at the protection of competition in your country?

Ans:

Act Concerning Prohibition of Private Monopoly and Maintenance of Fair Trade (AMA).
Act Against Unjustifiable Premiums and Misleading Representations (Premiums and Representations Act).
Act Against Delay in Payment of Subcontract Proceeds, etc. to subcontractors.

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PRINCIPAL AGENCIES

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2. Now, we are interested in the principal agencies involved in the enforcement and administration of your competition laws. What are the respective roles of the principal agencies involved in enforcement of the law?

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2A. Head of State

Ans: Reservation

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2B. Government/relevant ministers

Ans:

The Fair Trade Commission (JFTC) shall be administratively attached to the Prime Minister, but JFTC perform its duties independently.

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2C. Courts

Ans:

Tokyo High Court has exclusive Jurisdiction over the following:

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2D. Competition agencies

Please specify their names and role.

Ans:

Name of the principal agencies involved in the enforcement or administration

Roles of the agency

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2E. Do the competition agencies have any other administrative, decision making or negotiating roles?

Ans: No.

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THE SUBSTANTIVE PROHIBITIONS IN YOUR COMPETITION LAWS

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General prohibitions

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3. Most competition statutes have general prohibitions against anti-competitive behaviour(eg "Combinations in restraint of trade", "agreements to substantially lessen competition"). Are there any general prohibitions in your competition law? And what are they?

Ans: Yes.

Prohibition of private monopolization (reference to Section 3 and 2 (5)). Unreasonable restraint of trade (reference to Section 3 and 2(6)).

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Horizontal Agreements

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4. Horizontal agreements are agreements between firms directly in competition with one another.

Price fixing [agreements between competitors to raise or fix prices]

4A. Does your law have special provisions relating to price fixing?

Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans:

It is prohibited that any entrepreneur, with other entrepreneurs, mutually restrict or conduct their business activities, thereby restraining, contrary to the public interest, substantially competition in any particular field of trade. (Section 3 of the AMA).

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4B. Bid rigging [agreements on which firm will make the low bid for contracts, and what that bid will be] Does your law have special provisions relating to bid rigging? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans: The same as 4A.

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4C. Market sharing [agreements to allocate specific customers or sales territories to particular firms and not to compete over the territory or customers of other firms] Does your law have special provisions relating to market sharing? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans: The same as 4A.

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4D. Output limitation [agreements not to supply more than a specified quantity of goods or services] Does your law have special provisions relating to output limitation? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans: The same as 4A.

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4E. Collective boycotts [agreements between competitors not to deal with firms that supply other firms in their market] Does your law have special provisions relating to collective boycotts? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans:

It is prohibited that any entrepreneur, with other entrepreneurs, mutually restrict or conduct their business activities, thereby restraining, contrary to the public interest, substantially competition in any particular field of trade. (Section 3 of the AMA) (Even if the practice does not cause substantial restraint of competition in a market, it is in principle illegal as unfair trade practices of Section 19 of the AMA.)

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4F. Trade association activities [agreements between members of a trade association] Does your law have special provisions relating to trade association activities? Please specify the law and the provision of that law.

Ans: Yes. Section 8 of the AMA.

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What is the nature of the provision?

Ans: Reference to Section 8 of the AMA.

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4G. Other horizontal agreements

Does your law have special provisions relating to other horizontal agreements which we have not mentioned above? Please specify the law and the provision of that law.

Ans: No.

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Monopolization and Dominant Firm Behaviour

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5. Monopolization and dominant firm provisions are aimed at individual firms with market power. Such firms may be able to use their market power to restrict the competitive process or to charge excessive prices.

5A. General provisions

Does your law have general provisions prohibiting monopolization or dominant firm behaviour? Please specify the law and the provision of that law.

Ans: Yes. Reference to Section 2(5) and Section 3 o f the AMA).

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What type of behaviour is this provision aimed at and what is the nature of the provision?

Ans: Reference to Section 3 and 2(5) of the AMA.

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5B. Excessive prices

Are there any provisions prohibiting dominant firms from charging excessive prices?

Ans: No.

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5C. Presumptions of dominant position

Are there any provisions defining a dominant position, or creating a presumption that firms with a particular market share or size are in a dominant position?

Ans: No.

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5D. Predatory pricing [selling at below cost for the purpose of driving out competitors] Are there any specific provisions relating to predatory pricing?

Ans: No.

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5E. Refusals to deal

Are there any specific provisions relating to "refusals to deal" by dominant firms?

Ans: No.

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5F. Discriminatory behaviour [selling to some customers, particularly associated companies, on different terms to others] Are there any specific provisions relating to discriminatory behaviour by dominant firms?

Ans: No.

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5G. Exclusive dealing [requiring a retailer or distributor not to sell products competing with the supplier's products] Are there any specific provisions relating to exclusive dealing by dominant firms?

Ans: No.

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5H. Tie-ins [requiring purchasers of one product to purchase other products from the same supplier] Are there any specific provisions relating to tie-ins by dominant firms?

Ans: No.

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5I. Third line forcing [requiring purchasers of one product to purchase other products from named suppliers] Are there any specific provisions relating to third line forcing by dominant firms?

Ans: No.

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5J. Territorial restrictions [specifying that the retailer or distributor may not resell outside of a defined territory] Are there any specific provisions relating to territorial restrictions by dominant firms?

Ans: No.

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5K. Customer restrictions [specifying that the retailer or distributor may only deal with specified customers] Are there any specific provisions relating to customer restrictions by dominant firms?

Ans: No.

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5L. Other specific provisions

Are there any other specific provisions relating to monopolization or dominant firm behaviour in your law.

Ans: No.

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Vertical Restraints

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6. Vertical restraints are restrictions imposed by supplying firms upon distributors or retailers on matters such as the price at which the good may be sold, what other products the distributor must or must not sell, or the territory in which the good may be sold.

6A. Resale price maintenance [specification of minimum price at which the product may be resold to customers] Does your law have special provisions relating to resale price maintenance? Please specify the law and the provision of that law.

Ans: Yes.

Section 19 of the AMA . Unfair trade practice (JFTC notification No. 15, 1982) (hereinafter referred to as ˇ§ the General Designationˇ¨) Article 12 of the General Designation (Resale Price Restriction).

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And what is the nature of the provision of that law?

Ans: The practice is prohibited in all cases.

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6B. Maximum resale price maintenance [specification of a maximum price at which the product may be resold to customers] Does your law have special provisions relating to maximum resale price maintenance?

Ans: No.

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6C. Exclusive dealing

Does your law have special provisions relating to exclusive dealing? Please specify the law and the provision of that law.

Ans: Yes. Section 19 of the AMA, Article 11 of the General Designation (Dealing on Exclusive terms).

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And what is the nature of the provision?

Ans: JFTC determines case by case whether the practice tends to impede fair competition.

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6D. Tie-ins

Does your law have special provisions relating to tie-ins? Please specify the law and the provision of that law.

Ans: Yes. Section 19 of the AMA, Article 10 of the General Designation (Tie-in Sale, etc.)

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And what is the nature of the provisions?

Ans: The same as 6C.

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6E. Third line forcing

Does your law have special provisions relating to third-line forcing? Please specify the law and the provision of that law.

Ans: Yes. Section 19 of the AMA, Article 10 of the General Designation (Tie-in Sales, etc.)

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And what is the nature of the provisions?

Ans: The same as 6C.

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6F. Territorial restrictions

Does your law have special provisions relating to territorial restrictions? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans:

If the practice tends to impede fair competition, it violates Section 19 of the AMA. (Article 13 of the General Designation (dealing on Restrictive terms)).

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6G. Customer restrictions

Does your law have special provisions relating to customer restrictions? Please specify the law and the provision of that law.

Ans: No.

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If covered by a general prohibition how does that prohibition treat the practice?

Ans: The same as 6F.

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6H. Other non-price vertical restraints

Does your law have special provisions relating to other non-price vertical restraints which we have not mentioned above? Please specify the law and the provision of that law.

Ans: No.

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Price Discrimination

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7. Price discrimination is a practice whereby a firm charges different customers or classes of customers different prices for the same good for reasons unrelated to costs. Does your law have any specific provisions relating to price discrimination? Please specify the law and the provision of that law.

Ans: Yes. Section 19 of the AMA, Article 3 of the General Designation (Discriminatory Pricing).

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What type of behaviour is this provision aimed at and what is the nature of the provision?

Ans: JFTC determines case by case whether the practice tends to impede fair competition.

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Mergers and acquisitions

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8. Mergers are the joining together of two or more firms into an existing firm or to create a new firm. Similar effect can often be achieved by the acquisition of business units or business assets from another firm or the creation of a joint venture. Competition laws often treat all three activities under the same provision.

8A. Does your law include a prohibition for anti-competitive mergers and acquisitions? Please specify the law and the provision of that law.

Ans: Yes. Section 10, 14, 15 and 16 of the AMA.

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And what is the prohibition?

Ans: Reference to Section 10, 14, 15 and 16 of the AMA.

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8B. Does your law contain any provisions presuming certain mergers to be anti- competitive(for example if they exceed a given market share)?

Ans: No.

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8C. Does your law require firms involved in mergers or acquisitions to notify competition agencies? Please specify the law and the provision of that law. And when is the notification required?

Ans: Yes. Section 10, 14, 15 and 16 of the AMA.

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And when is the notification required?

Ans: Notification required before the merger takes place.

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8D. And what are the time limits for notification?

Ans:

8E. If the law requires firms to notify the competition agency or agencies, what criteria are used to identify which mergers must be notified?

Ans: All mergers must be notified to JFTC.

8F. If the law does not require firms to notify the competition agency of mergers, does it allow for voluntary notification? Please specify the law and the provision of that law.

Ans: No.

8G. For the competition agency to stop or prevent anti-competitive mergers and acquisitions, which applies?

Ans: The main competition agency can take administrative actions.

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Deceptive or misleading advertising or representations

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9. Does your competition law contain any provisions prohibiting advertising which is deceptive or misleading, or other misleading representations? Please specify the law and the provision of that law.

Ans: Yes. Premiums and Representations Act

And What is the provision?

Ans:

JFTC prohibits any representation by which the quality, standard or any other matter relating to substance of a commodity or service and any representation by which price or any other terms of transaction of a commodity or service which will misunderstood by consumers in general. (Section 4(I) and (ii) of Premiums and Representations Act). And then, JFTC prohibits misleading representations concerning country origin of goods (Section 4(iii) of Premiums and representations Act).

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Unfair use of bargaining position(Unconscionable conduct)

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10. Does your competition law contain any provisions prohibiting firms from making unfair use of their bargaining position? Please specify the law and the provision of that law.

Ans: Yes.

Section 19 of the AMA, Article 14 of the General Designation (Abuse of Dominant Bargaining Position)

How do you define "unfair use of their bargaining position"?

Ans: This practice is one type of abuse of dominant bargaining position.

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What firms does the provision apply to ?

Ans: firms which have dominant bargaining position over the other party.

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And Which customer does the provision apply to?

Ans: Reservation

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Coercive behaviour

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11. Does your competition law contain any provisions aimed at preventing firms from taking action to intimidate competitors or the customers of competitors? Please specify the law and the provision of that law.

Ans: Yes.

Section 19 of the AMA, Article 15 of the General Designation ( Interference with a Competitorˇ¦s Transaction), Article 16 of the General Designation ( Interference with Internal Operation of a competing company).

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Other substantive prohibitions

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12. Does your competition law have provisions for the protection of competition other than those outlined above? Please specify the law and the provision of that law.

Ans: Yes. Section 6, 9, 9-2 11, 13 and the other General Designation of Section 19.

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And what are the provisions?

Ans: Reference to each section

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EXEMPTIONS FROM THE PROVISIONS OF YOUR COMPETITION LAW

Actions authorized under other types of law

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13. If there is a potential conflict between your competition law and other laws, how do you determine which law takes precedence? Please specify the law and the provision of that law.

Ans:

JFTC and administrative agencies if necessary coordinates potential conflicts between the AMA and other laws in advance.

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Import Cartels or Agreements Between Importers

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14. Does your competition law exempt or partially exempt agreements aimed at controlling the flow of imports into your country? Please specify the law and provision of that law.

Ans: No.

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Export Cartels or Agreements Between Exports

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15. Does your competition law exempt or partially exempt agreements between exporters from your country? Please specify the law and the provision of that law.

Ans: Yes. Section 33 of Export and Import Trading Act.

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What type of behavior is this provision aimed at and what is the nature of the provision?

Ans: Reference to Section 5(1) and 11(2) of Export and Import Trading Act.

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Specific products or industries

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16. Are there any specific products or industries (e.g. agriculture, international shipping) which are exempted or partially exempted from your competition law? Please list the sectors exempt or partially exempt and the nature of the exemption.

Ans: Yes. Referred to Appendix: ˇ§ The Exemption Systems from the AMAˇ¨.

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Small business

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17. Are there any exemptions or partial exemptions from your competition law for small and medium size businesses? Please specify the law and the provision of that law.

Ans: Yes. Reference to Appendix: ˇ§ The Exemption Systems from the AMAˇ¨.

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What is the nature of the exemptions?

Ans: Referred to Appendix: ˇ§ The Exemption Systems from the AMAˇ¨.

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And how is small business defined?

Ans: Some laws other than the AMA have definitions of small business.

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Rationalization cartels or agreements

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18. Rationalization cartels are agreements between firms, and authorized by the government, to close down inefficient plants, reduce capacity and reorganize production in order to increase overall industry efficiency and performance. Does your competition law contain any exemptions or partial exemptions for rationalization cartels? Please specify the law and the provision of that law.

Ans: Yes. Section 24-4 of the AMA.

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Depression cartels or agreements

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19. Depression cartels are agreements between firms and authorized by the government to reduce production to meet a temporary downturn in the market. Does your competition law contain any exemptions or partial exemptions for depression cartels? Please specify the law and the provision of that law.

Ans: Yes. Section 24-3 of the AMA.

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Government agencies

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20. Are Government agencies exempted or partially exempted from your competition law? Please specify the law and the provision of that law.

Ans: No.

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Practices authorized by administering bodies

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21. Is there any provision for competition agencies or the relevant ministers exempt specific activities from the competition law? Please specify the law and the provision of that law.

Ans: Yes. Reference to Appendix.

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Intellectual property

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22. Does your competition law contain any exemptions for actions relating to the protection of intellectual property rights? Please specify the law and the provision of that law.

Ans: Yes. Section 23 of the AMA.

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And what is the nature of this exemption?

Ans: Reference to Section 23 of the AMA.

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Labour markets

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23. Does your competition law exempt or partially exempt labour market activities? Please specify the law and the provision of that law.

Ans: No.

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Other exemptions

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24. Are there any other exemptions from your competition law other than those outlined above? Please specify the law and the provision of that law.

Ans: No.

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INTERNATIONAL APPLICATIONS

Acts by citizens or organizations outside the country

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25. To what extent are the overseas activities of your citizens or organizations covered by your competition law?

Ans: Reservation.

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Acts by foreign citizens or organizations

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26. To what extent are the actions of foreign citizens or organizations covered by your competition laws for actions that take place inside your borders?

Ans: They are covered by the AMA.

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27. To what extent are the actions of foreign citizens or organizations covered by your competition laws for actions that take place outside your borders but affect markets within your borders?

Ans: Reservation.

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28. To what extent are the actions of foreign citizens or organizations covered by your competition laws for actions that take place outside your borders but affect exporters from your country?

Ans: Reservation.

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ENFORCEMENT, REMEDIES AND PENALTIES

Mode of operation

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29. Different countries have different ways of controlling anti-competitive behaviour. Which of the following best describes your approach?

Ans: We tend to prohibit specified anti-competitive activities.

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30. In this section we wish to examine the sanctions which are available to the competition agencies and/or courts to deal with contraventions of the law.

30A. What is the maximum fine chargeable for the various offenses against your competition law?

Ans:

Entrepreneur: 100 million yen

Individual persons: 5 million yen ( Reference to 30E about surcharge).

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30B. Are any other criminal penalties, including imprisonment, available for offenses against the competition law? Please specify the law and the provision of that law.

Ans: Yes. Chapter 10 of the AMA.

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And what are those penalties?

Ans: penal servitude

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30C. Does the competition agency have the power to order restitution or payment of damages to affected parties? Please specify the law and the provision of that law.

Ans: No.

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30D. Does the legislation provide for orders to be made by government or other bodies to prevent repeat contraventions? Please specify the law and the provision of that law.

Ans: Yes. Section 7, 8-2 and 20 of the AMA.

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What form of orders can be made, any by what body?

Ans:

JFTC may issue a forbearance order concerning future activities as one of the elimination measures against the AMA violations. The violations against the above-mentioned order are subject to the criminal sanction.

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30E. What other penalties or sanctions are available?

Ans:

JFTC issues surcharges on the firms which conducted unreasonable restraint of the trade and resulted in affecting in effect the price of such goods or services such as price-fixing. Surcharges is not criminal penalties, but administrative sanction.

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Private parties

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31A. Do private parties have the right to take action against prohibited activities in the absence of action by the enforcement agency?

Ans: Yes.

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31B. What damages and remedies are available to private parties?

Ans: Reference to Section 25 of the AMA.

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31C. Can private parties seek orders to prevent contravention? Please specify the law and the provision of that law.

Ans: No.

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What form of orders can they seek?

Ans: (Reference) They may report the said fact to JFTC and ask for appropriate measures to be taken.

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Foreign complainants

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32. Are there any restrictions or special limitations where the complainant is not domestically based? Please specify the law and the provision of that law.

Ans: No.

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33. Are there any restrictions or special limitations where the complainant is a foreign government?

Ans: No.

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Other aspects

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34. Are there any other aspects of your competition law or enforcement policy which you would like to comment on?

Ans: No.

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Appendix:

The Exemption of the Antimonopoly Act

1 Exemptions under the AMA itself (3 systems)
(1) Section 21 (Acts under intellectual property rights)
(2) Section 22 (Acts of cooperatives)
(3) Section 23 (Resale price maintenance contracts)

2 Exemptions under various individual laws (14 laws, 18 systems)

ˇ]as of 2003ˇ^

Relevant Ministries/Agencies Name of legislation Name of system
Financial Services Agency Insurance Business Law Insurance cartels
Law concerning Non-Life Insurance Rating Organizations Exemptions concerning the compulsory automobile insurance and earthquake insurance

Ministry of Justice

 Corporation Reorganization Law Acquisition of shares of companies under reorganization

Ministry of Finance

 Law Concerning Liquor Business Associations and Measures for Securing Revenue from Liquor Tax Rationalization cartels

Ministry of Education, Culture, Sports, Science and Technology

Copyright Law Cartels on fees for commercial usage of music records

Ministry of Health, Labour, Welfare

 Law Concerning Coordination and Improvement of Hygienically Regulated Business Cartels to prevent excessive competition
Ministry of Agriculture, Forestry and Fisheries of Japan Agricultural Cooperative Association Law Federation of agricultural co-operatives
Agricultural Association corporation
Ministry of Economy, Trade and Industry Export-import Trading Law Cartels on export
Law on the Cooperative Association of Small and Medium Enterprises. Federation of small business associations
Law on Cooperatives of Medium and Small-Sized Enterprises Joint economic undertakings
Ministry of Land, Infrastructure and Transport Maritime Transportation Law Maritime transportation cartelsˇ]internationalˇ^
Maritime transportation cartelsˇ]coastal serviceˇ^
Road Transportation Law Transportation cartels
Civil Aeronautics Law Aviation cartels (international)
Aviation cartels (domestic)
Coastal Shipping Association Law Maritime transportation cartelsˇ]coastal serviceˇ^
Joint shipping businesses