The Australian Competition and Consumer Commission (ACCC) and the Japan Fair Trade Commission (JFTC) recently signed a Cooperation Arrangement.
The Cooperation Arrangement will enable the two agencies to assist each other with investigations and exchange information more freely.
In this eBulletin, we look at what the Cooperation Arrangement means for Japanese and Australian companies that do business in these two countries, and the increasing coordination of investigations and enforcement activities of competition regulators throughout the world.
By entering into the Cooperation Arrangement, Australia and Japan are seeking to establish a framework for 'constructive cooperation' between the ACCC and JFTC.
The Cooperation Arrangement includes provision for:
- Notification: Each authority will endeavour to notify the other of enforcement activities that are likely to affect the important interests of the other authority;
- Information exchange: Each authority will give due consideration to sharing information obtained during the course of an investigation. The authorities will endeavour to provide each other with information in their possession that is relevant to, or may warrant, enforcement activities; and
- Coordination of enforcement activities: Each authority will endeavour to render assistance to each other's enforcement activities and consider the coordination of their enforcement activities. This may include obtaining information or evidence from companies or individuals.
The cooperation between the two authorities extends to 'enforcement activities', meaning any investigation or proceeding conducted by one of the authorities in relation to the application of the competition law of that country. However, enforcement activities do not include:
- the review of business conduct or routine filings (eg merger clearances or other notifications); and
- research, studies or surveys with the objective of examining the general economic situation or general conditions in specific sectors.
The confidentiality of information exchanged from one authority to the other should be maintained and will only be used for the purpose of effective enforcement of the law. The information can only be disclosed to other parties in limited circumstances, for instance where the disclosing authority consents in writing.
The arrangement follows the Economic Partnership Agreement entered into by Australia and Japan on 8 July 2014, which was signed to strengthen trade activities between the two nations.
The Cooperation Arrangement is the ACCC's latest effort to increase the global reach of its investigatory activities and assist other nations in combatting anti-competitive conduct.
Coordination between international competition authorities is expected to become more and more common, given increasing globalisation of industry, which tends to blur jurisdictional lines.
Focus on Japanese companies
The Cooperation Arrangement follows a series of high-profile prosecutions of Japanese companies by the ACCC.
Last December, the ACCC's case against Yazaki Corporation and Australian Arrow Pty Ltd was heard by the Federal Court. The ACCC alleged that Yazaki and Australian Arrow engaged in cartel conduct, market sharing and price fixing in relation to the supply of wire harnesses to Toyota Motor Corporation and related entities in Australia. The Federal Court's decision has been reserved. The ACCC's prosecution followed similar investigations by regulators, including those in Japan, the US, Canada and Europe.
In October 2013, Koyo Australia Pty Ltd, a wholly-owned subsidiary of Japanese company JTEKT Corporation, was fined AUD2 million for engaging in cartel conduct. Koyo was found to have conspired with two fellow Japanese engineering groups, NSK Australia and Nachi Australia, to increase the price of ball and roller bearings. The 'pricing plan' was agreed over dinner by senior Japanese executives living in Australia.
Importantly, similar conduct was concurrently investigated by the JFTC and other authorities. JFTC imposed fines totalling JPY34 billion on various companies in relation to bid-rigging of automotive bearings and criminally prosecuted several individuals.
In April 2013, Japanese cable supplier Viscas Corporation was ordered to pay a penalty of AUD1.35 million for bid rigging and price fixing conduct. The Court found it had reached an anti-competitive arrangement with other Japanese and European suppliers of land cables.
Implications for business
With increased cooperation between the ACCC and JFTC, companies and individuals who do business in both Australia and Japan should be vigilant in ensuring that they are not in breach of any competition laws in either country.
Australia's regulation of anti-competitive conduct is frequently considered to be more stringent and more actively enforced than many other countries. As such, Japanese and other foreign companies that undertake activities in Australia need to ensure they are aware of their obligations under Australian legislation and that they have internal compliance measures in place.
The extended reach of the ACCC's investigatory powers by virtue of the Cooperation Arrangement and other bilateral agreements means that a foreign company which undertakes impugned activities offshore will not necessarily be immune from ACCC prosecution.
While the precise scope of the ACCC's jurisdiction with respect to foreign activities is currently somewhat uncertain, Australia's ability to coordinate investigations with other countries will make it more likely that anti-competitive conduct will be prosecuted by at least one nation's regulator.