The 185th extraordinary session of the Diet in 2013 passed the Act to partly amend the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade. The amended Act was promulgated on December 13, 2013 and would be enforced within a year and 6 months after the date of promulgation. A bill for the amendment was originally submitted to the ordinary session of the Diet in 2010, but the Diet took time to pass it and got into the extraordinary session of 2013.
The major contents of the amendment are (1) abolishment of the trial system, (2) improvement in the legal proceedings regarding a cease-and-desist order, etc. and (3) improvement in the hearing procedure, etc. by the Fair Trade Commission (“FTC”) and improvement in the inspection and copying procedure of evidence before the disposition. (2) is the amendment relating to the lawsuit proceedings that will be the proceedings for making a complaint instead of requesting a trial to be abolished. (3) is the amendment to improve the procedure at the FTC before the disposition with the abolishment of the trial system which is a proceeding after the disposition, such as a cease-and-desist order. Therefore, (2) and (3) may be interpreted as amendments required as a result of the abolishment of the trial system of (1).
- Abolishment of trial system
The current Act allows a person dissatisfied with an FTC cease-and-desist order or payment order for a surcharge to make a complaint to the FTC by requesting a trial.
However, the trial system had been criticized that the FTC in a complaint trial acts both as a prosecutor, a party to the trial, and as a court judging the trial. Therefore, the trial system is abolished.
- Improvement in lawsuit proceedings regarding cease-and-desist orders, etc.
A lawsuit before a court is a procedure for making a complaint instead of requesting a trial of the FTC. The amended Act provides for the following:
The Tokyo District Court has exclusive jurisdiction because cases of violation of the Act relate to complicated economic cases requiring special knowledge (Article 85).
- Collegiate court of judges
For the purpose of ensuring careful proceedings, a collegiate court needs at least three judges and can have five judges to examine and judge the a case for in the first instance at the Tokyo District Court (Article 86). The collegiate court decides case by case if five judges should examine and judge a case.
In an appeal of a lawsuit at the Tokyo High Court, it is possible to have five judges examine and judge the case (Article 87).
- Abolishment of special provisions on trials
- Improvement in hearing procedure, etc. by the FTC
Under the current Act, the FTC’s final judgment on a case is given in a trial as a trial decision. As the amended Act abolishes trial proceedings, the FTC’s final judgment on a case will be given as a cease-and-desist order, etc. Considering this, the amended Act improves the hearing procedure and establishes the inspection and copying of evidence (see 5 below) for the purpose of improving the current pre-disposition procedures related to a cease-and-desist order, etc. Specifically, the FTC gave explanations regarding the rationale in examinations by the Diet, etc. that it would carefully take actions, secure transparency, further follow due process, take appropriate procedure and properly dispose of a case after hearing the arguments of a respondent.
In addition, the provisions of the amended Act on the hearing procedure and inspection and copying of evidence apply mutatis mutandis to a payment order for a surcharge and an order for reviving competition in monopolistic situations (Article 62, paragraph 2, Article 64, paragraph 4).
- Superintendent, etc. of procedures
As pre-disposition procedures under the current Act, when the FTC intends to issue a cease-and-desist order, it shall notify in writing the would-be addressee of the order of the contents of the expected order, facts found by the FTC and the application of laws and regulations thereto, and give the would-be addressee of the order an opportunity to express its opinions and submit evidence in advance (Article 49, paragraph 3 and 5). The pre-disposition procedures under the current Act are taken by and between the two parties, namely the examiner and the business operator.
Under the amended Act, a superintendent of the procedure for hearing opinions is introduced separately from the examiner and presides over the procedure for hearing the opinions of the respondent (Article 49 and 53). It also provides that an FTC staff member who performed duties of the examiner of a case or engaged in any work related to the investigation of a case shall not be a superintendent of procedures in the same case (Article 53, paragraph 2).
The respondent may appoint an attorney for the procedure for hearing opinions (Article 51).
- Date for hearing opinions
The FTC shall in principle set a date for hearing opinions and directly hear the oral opinions of the respondent.
On the first day of a hearing, the examiner in charge of a case will explain to the respondent the contents of the expected cease-and-desist order, facts found by the FTC, major evidence among the evidence used to prove the case and the application of laws and regulations thereto (Article 54, paragraph 1).
The respondent may appear before the FTC on the date for hearing, express its opinions and submit evidence, and may give questions to the examiner upon the approval of the superintendent of the procedure (Article 54, paragraph 2). The respondent may also submit a statement and submit evidence instead of appearing before the FTC on the date for hearing (Article 55).
The superintendent of procedures may, if it is found necessary to do so on the day of the hearing, give questions to the respondent, urge it to express its opinions and submit evidence, and ask the examiner for explanations (Article 54, paragraph 3).
- Record and report of superintendent of procedures
The superintendent of procedures shall prepare a record of expression of the opinions, etc. of the respondent and a report summarizing the points of the arguments in the case and submit them to the FTC (Article 58). The record shall not contain any judgment of the superintendent. On the other hand, the report shall summarize the points of the arguments in the case based on the opinions expressed by the respondent, explanations given by the examiner on the day of the hearing, and questions and answers between the respondent and the examiner, so that the FTC would refer to the report to judge the case.
The FTC shall fully consider the record and the report submitted by the superintendent before giving a decision related to a cease-and-desist order, etc. (Article 60).
- Period of procedure for hearing opinions
The amended Act does not include any provision on a period of procedure for hearing opinions. However, the answer given by the FTC during the deliberations on the bill by the Diet indicates that the FTC estimates that such period will be shorter than that of the pre-disposition trial system in the past.
- Inspection and copying of evidence
The current Act does not include any provision on the inspection and copying of evidence before the disposition.
On the other hand, under the procedure for hearing opinions of the amended Act, a provision on the inspection and copying of evidence proving the facts found by the FTC during the procedure for hearing opinions was made. It is explained that the provision is set from the viewpoint for further improving the pre-disposition procedure.
Specifically, Article 52 of the amended Act provides that the respondent may request an inspection and copying of evidence proving the facts found by the FTC during a period from the receipt of a notice of hearing opinions to the completion of hearing such opinions. The FTC shall not refuse such inspection or copying unless the interests of a third party may be harmed or there is some other due reason. However, the target of copying shall be limited to evidence submitted by a party to the case or its employee or a record of a statement given by its employee.
It is explained that an example of “interests of a third party may be harmed or there is any other due reason” in which the FTC may refuse inspection or copying of evidence is a case involving matters related to the privacy of an employee of a company which is a party to the case.
It is also explained that the reason why copying of evidence is limited to the evidence submitted by a party itself is because, in a case of violation of the Act, evidence will likely include secrets, etc. of a business operator and the scope of evidence to be copied shall be carefully considered.
- Tentative measures
Whether the procedures of the current Act are applied or those of the amended Act are applied depends on whether pre-disposition procedures regarding a cease-and-desist order, etc. under the current Act have already started or not as of the enforcement date of the amended Act, namely whether a prior notice under the provision of Article 49, paragraph 5 of the current Act has been given or not (Article 2 of the Supplementary Provisions).
Trials by the FTC as a post-disposition examination are abolished and a complaint against an FTC decision is given in the form of a lawsuit before a court. With regard to such lawsuit, it appears that measures for responding to the requirement of special knowledge in a case of violation of the Act have been taken, such as giving exclusive jurisdiction over those cases to the Tokyo District Court and enabling more judges to take charge of such cases than other ordinary cases. However, there seem to be no other provisions in the amended Act for taking further special measures.
A focus of the amended Act is supposed to be on the improvement of the pre-disposition procedures as well. It is inferred that the FTC wishes to lay weight on the pre-disposition procedures and carefully consider and properly decide a case because trials as a post-disposition examination are abolished. On the other hand, from a respondent’s viewpoint, in order to effectively defend itself before the disposition by the FTC and avoid disposition, due process and improvement of disclosure of information in the pre-disposition procedures are expected.
However, it depends on the future operation of the Act to see how the newly expected superintendent of procedures for hearing opinions would actually preside over a hearing and influence not only the procedure but also the substance, or how much business operators could expect from the amended Act. As explained above, the amended Act only requires to “fully consider” a report on the hearing procedure submitted by the superintendent, and does not provide that the FTC is bound by the report. It is inferred that the superintendent will be selected mainly from FTC officers having experience as trial examiners or a career similar to that of a trial examiner.
Although evidence may be inspected and copied, it is limited to the “evidence proving the facts found by the FTC” and only evidence submitted by a party itself may be copied. Thus, the effect thereof appears limited.