Prospects for the JFTC's Priorities in 2019 | White & Case LLP International Law Firm, Global Law Practice
Prospects for the JFTC's Priorities in 2019

Prospects for the JFTC's Priorities in 2019

The Japan Fair Trade Commission's (the "JFTC") major priorities in 2019 are, among others, amendments to the Antimonopoly Act (the "AMA"), research in areas of the digital economy and the labor market, and, of course, antitrust enforcement.

 

Amendments to the AMA

The JFTC has recently been reviewing the AMA, in particular its surcharge system, from the viewpoint of adjusting the AMA in line with advancements in global economy. The JFTC is most likely, if the relevant work proceeds smoothly, to submit proposed amendments to the Diet for its deliberation by early March.

The proposed amendments will include adapting the leniency program to take account of the surcharge system. Under the leniency program in its current form, leniency applicants are entitled to a 30%, 50% or 100% reduction in their surcharges based on the order in which they attained leniency and regardless of their level of cooperation with the JFTC. The amendments will introduce a range in the surcharge reduction rates, with the rate varying depending on the extent of voluntary cooperation offered to the JFTC by the companies subject to investigation. Accordingly, for example, unlike under the current system, the reduction rate applied to the third leniency applicant (currently fixed at 30%) may in some cases exceed the one applied to the second applicant (currently fixed at 50%).

It is expected that more companies will need to consult with defense attorneys given these proposed changes to the leniency system. The JFTC is now considering introducing a scheme, implemented through JFTC rules and guidelines, under which its investigators are not allowed to access to those documents recording communications exchanged confidentially between a company and its attorneys under certain conditions. Since this new scheme, analogous to attorney-client privilege, will be introduced for the first time in Japan, it will be necessary for a certain introductory period to take place so that affected parties can learn about the new rules and procedures.

 

Conducting of market research regarding digital platform businesses

On December 18, 2018, the Ministry of Economy, Trade and Industry (the "METI"), JFTC and the Ministry of Internal Affairs & Communications (the "MIAC") jointly issued "Fundamental Principles for Rule-making in Response to the Rise of the Platform Business Model." This document proposed, among others things, that large-scale, comprehensive and in-depth research was a necessary starting point for realizing transparency and fairness with respect to digital platform businesses. Following this proposal, the JFTC was scheduled to launch such research in the latter half of January. The research was to be conducted not only through a questionnaire survey and follow-up hearings, but also by deploying a digital information channel on the JFTC's website to gather information from consumers, to ensure extensive and in-depth research. The JFTC opened such a channel on January 23, 2019. It is likely to take some time to complete the research but because of the critical importance of and great interest in the research, the JFTC plans to issue interim reports at various stages of the research, rather than issuing one final report upon its completion.

 

Implementation of the Commitment Procedure

The commitment procedure, which frees the JFTC to enter into settlements with investigated parties and was introduced in 2018, took effect on December 30, 2018 when the TPP11 Treaty went into effect. Even before that effective date, the JFTC made several decisions in 2017 and 2018 in cases regarding alleged unfair trade practices and private monopolization, in which it closed its investigations prior to establishing the illegality of the relevant conduct when the parties under investigation took adequate steps to meet the JFTC's concerns. Those decisions were made at the discretion of the JFTC. Now that the commitment procedure has become effective under the AMA, the JFTC is supposed to resort to it, if appropriate, in investigations of unilateral conduct, in particular in the area of the digital economy, and to ensure transparency of its implementation in accordance with those provisions stipulated in the AMA and the relevant guidelines.

 

Application of the AMA in the labor market

In addition to the area of the digital economy, the JFTC has also already started to consider the possible application of the AMA to the skilled human resource sector. To this end, the Completion Policy Research Center, the JFTC's think tank, issued a report from "the Study Group on Human Resource and Competition Policy" last February. In addition, in December 2018, the JFTC invited comments from both athletes and other relevant parties regarding transfer restrictions, such as no-poaching agreements in both professional and amateur sports. The JFTC will accept submissions until February 15, 2019. Those developments clearly show that the application of the AMA to the human resources context is among the JFTC's priorities for its future activities.

 

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