Open Access Research Article
COMPETITION LAW IN JAPAN: UNIQUE FEATURES
Published Paper
Article Details
COMPETITION LAW IN JAPAN: UNIQUE
FEATURES
AUTHORED BY - SAI KRISHNA CHEEKATI
INTRODUCTION
Competition law in Japan, known as the Antimonopoly
Act 1947, is a crucial legal framework that governs and promotes fair
competition within the country's market. Subsequently amended to investigate
evolving economic dynamics, this legislation aims to prevent anti-competitive agreements
and abuse of dominance that benefits consumers, businesses, and the overall
economy. The Antimonopoly Act of 1947 prohibits activities that may be against
the competition, such as anti-competition agreements, abuse of dominant market
position, and mergers and acquisitions that may lessen the competition. These
provisions aim to prevent unfair business practices, protect consumers and increase
innovations and efficiency. Under this law, the Japan Fair Trade Commission is
a regulatory body that has to enforce competition rules and investigate
violations.
LEGAL REGIME
In Japan, Anti-Monopoly Act ("AMA") is
encompassed with several provisions like - a) governs cartel enforcement b) prevents
'excessive concentration of power'[1]
and c) prohibits engagement in 'unreasonable restraint of trade'[2],
'private monopolisation'[3]and
'unfair trade practices’[4].
Excessive concentration of power has been defined in
AMA as a situation in which a company, including its sister companies and other
domestic companies whose business activities it tries to control through share
capital, (a) has an exceptionally large company's overall scale all over
various corporate areas, (b) has a dominant business position and has an
influence on other companies through transactions with their funds, (c) holds powerful positions in several connected
commercial disciplines, and each of these elements has a significant effect on
national economic growth and impedes free and equal competition. The AMA
defines unreasonable trade restraint as "business activities by which any
enterprise, by contract agreement or any other means, regardless of its name,
in concert with other companies jointly constrain or conduct their business
operations in such a manner as to fix, maintain, or raise wages or to limit
production, tech products, facilities, or counterparties, thereby causing a
substantial restraint of competition, contrary to the public interest[5]."
The AMA defines private monopolization as business activities by which any
enterprise, individually or in combination with other enterprises, conspires
against them, or in any other way eliminates or regulates the business operations
of other companies, resulting in a significant reduction in competition in a
given market sector that is against the public interest[6].
Unfair trade practices have been defined in AMA as the
act of[7]:
1) Approaching a competitor with an anti-competitive
mindset-
a) withholding
the supply from a particular enterprise or imposing restrictions on the amount
of goods and services provided to particular enterprises.
b) causing making another enterprise to
decline the supply to specific enterprises or to impose restriction on the
quantum of goods and services which has to be provided to particular
enterprises.
2) Constantly and unreasonably charging different
rates in different locations or to different parties, which makes it impossible
for another company to do its varied business operations.
3) without rationale, consistently offering products
or services at a discount from what it costs to produce them, which interferes
with other businesses' operations.
4) Providing commodities to a third party after
purchasing the necessary items from oneself while enforcing, without rational
grounds, one of the following restrictive terms:
a) inflicting restrictions on the
party's ability to choose the selling price for the products, such as requiring
the party to sustain the selling value of the products set by the providing
company.
b) inflicting the party to restrain
the relevant enterprise's freedom to decide on the selling price of the
products by ordering a company that receives the products from the party to
keep the selling price for the products that one has established.
5) Conducting any of the acts listed in any of the
following while unfairly taking advantage of the counterparty's stronger
negotiating position in light of customary business practices. This might
include several different activities, such as requiring the counterparty to
contribute funds, services, or other economic advantages, refusing to accept
products from the counterparty, postponing or lowering payment, or adopting
trade conditions that put the counterparty into a disadvantageous position.
ENFORCEMENT
The Japan fair trade commission is responsible for
enforcing the AMA. The AMA provides for administrative sanctions, including abstaining
the directions and imposing fines or Surcharges extensive guidelines have been
provided for in AMA. The JFTC has no discretion to impose fines. In contrast,
the CCI has wide discretion when it comes to imposing on enterprises and
individuals the CCI employees aggravating as well as mitigating factors. While
deciding the quantum of penalties first instances reviewing against JFTC orders
shall be submitted to Tokyo’s court of district. High Court has the
jurisdiction to hear appeals from the Tokyo District Court. Final appeals shall
be filed before the apex court of Japan. The AMA also provides provisions for criminal
prosecution in certain cases including[8]
private monopolization, irrational restraint of trade, anti-competition
activities in the field of trade, limiting the number of participants in a
market or restricting activities of market participants by a trade association,
banking and insurance businesses from holding more than 5% and 10% voting
rights respectively in other companies[9]. A
criminal proceeding can be initiated only if JFTC files an accusation with the
prosecutive general[10].
Criminal investigation in Japan is governed by Japan’s criminal procedure. court
of the district in Japan has jurisdiction over such kinds of criminal cases
under AMA.
MERGER CONTROL
Chapter-4 of the AMA focuses on the
merger control regime in Japan and sets out the transactions covered and the
jurisdictional threshold. The regime can be broadly put into two categories-
a) A generalization of economic power concentration.
Article 9 of AMA prohibits a company whether
it is existing or newly established from causing an immoderate engrossment of
economic power in Japan by acquiring or clenching shares in other companies in
Japan[11].
Article 11 prohibits banking and insurance businesses from holding more than 5%
and 10% voting rights respectively in other companies. Article 10 prohibits a
company from acquiring or clenching shares of any other companies using immoral
trade practices to clench shares. Article 15 prohibits certain kinds of mergers,
if the merger significantly impedes competition in an industry or if immoral
trade practices were performed[12].
b) specific concentration of economic
power.
The AMA prohibits a company from acquiring or gaining
shares of any other companies[13], carrying
out a mutual amalgamation type companies split or a permeation types split[14], engaging
in joint share transfer, acquiring another company in whole or in part through
unfair trade practices, or if the act substantially restrains competition[15].
Article 13 also prohibits a company from using unfair trade practices to coerce
another company to admit an officer or employee of the former company into the
latter. Before 30 days have passed after the day the JFTC accepted the
notification, transactions cannot be completed. The JFTC must provide its
approval to a transaction within 30 days of the date it received the
notification. If the JFTC determines that a more thorough study is required,
the review time will be stretched to 120 days starting with the date on which
the notice was accepted or 90 days first from the date on which the required
reports were accepted, whichever comes first.
INTERNATIONAL CO-OPERATION
Japan has entered into economic
partnership agreements with different countries like India[16],
Australia and Singapore have provisions related to competition law and policy.
Japan has also entered into cooperation agreements and MoUs with antitrust
agencies of different countries like China, Brazil, and Australia[17].
CONCLUSION
The Anti-Monopoly Act 1947, has various provisions to promote
fair competition and protect consumers of the country. It governs cartelization,
prevents the concentration of power in a few hands, and prohibits unreasonable
restraint of trade, anti-competition agreements, and abuse of supremacy. The
Japan Fair Trade Commission enforces the AMA, imposing sanctions and fines. The
merger control regime under the AMA covers general and specific concentration
of economic power, with restrictions on acquisitions, shareholdings, and
mergers that may lessen the competition and may create excessive concentration
among a few companies. The JFTC reviews transactions within specified
timeframes, ensuring whether it is compliant with the AMA's provisions.
[1] Anti-Monopoly Act 1947, Art-9
[2] Anti-Monopoly Act 1947, Art-2
[3] ibid
[4] ibid
[5] Anti-Monopoly Act 1947, Art-2(6)
[6] Anti-Monopoly Act 1947, Art-2(5)
[7] Anti-Monopoly Act 1947, Art-2(7)
[8] Anti-Monopoly Act 1947, Art-89
[9] Anti-Monopoly Act 1947, Art-11
[10] Anti-Monopoly Act 1947, Art-96
[11] Anti-Monopoly Act 1947, Art-9
[12] Anti-Monopoly Act 1947, Art-15
[13] Anti-Monopoly Act 1947, Art-10
[14] Anti-Monopoly Act 1947, Art-15-2
[15] Anti-Monopoly Act 1947, Art-16
[16] Ministry Of Foreign Affairs Of
Japan < https://www.mofa.go.jp/region/asia-paci/india/epa201102/index.html> accessed on June 5, 2023
[17]Australian Government Department Of
Foreign Affairs And Trade
< https://www.dfat.gov.au/trade/agreements/in-force/jaepa/japan-australia-economic-partnership-agreement> accessed on June 5, 2023
Article Information
COMPETITION LAW IN JAPAN: UNIQUE FEATURES
Authors: SAI KRISHNA CHEEKATI
- Journal IJLRA
- ISSN 2582-6433
- Published 2023/07/17
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
All research articles published in International Journal for Legal Research and Analysis are open access and available to read, download and share, subject to proper citation of the original work.
Disclaimer: The opinions expressed in this publication are those of the authors and do not necessarily reflect the views of International Journal for Legal Research and Analysis.