Japan to introduce new leniency regime

The Diet has passed an amendment bill to the Antimonopoly Act which aims to deter anti-competitive practices by introducing a new leniency program, revising administrative fines and strengthening criminal penalties for obstruction.

The amendment bill, passed on 19 June 2019, aims to deter antitrust activities by:

• introducing a new leniency regime based on the level of a company's cooperation with the competition authority;

• revising the calculation of administrative fines; and

• strengthening criminal penalties for obstructing the JFTC.

Attorney-client privilege, while not part of these amendments, will be introduced under the JFTC regulations and guidelines. Such protections have not previously been recognised under Japanese law and is an important policy development in Japan.

The amendments will come into effect by the end of 2020.

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Draft amendments to merger review guidelines and policies announced

The JFTC's draft amendments to its merger review guidelines and policies propose greater voluntary consultation by merger parties and introduce additional factors for merger assessment in the digital market.

Under the draft policies, the JFTC will recommend that parties voluntarily consult with the JFTC when the total value of the proposed business combination exceeds 40 billion yen (USD 368 million) and there is a requisite local nexus.

The JFTC does not intend to amend the Antimonopoly Act to add transaction value thresholds as a new statutory threshold. In addition, the JFTC plans to include in the guidelines specific factors for merger review in the digital market, such as:

• multi-sided markets;

• network effects;

• switching costs; and

• R&D and innovation aspects.

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JFTC looks to strengthen antitrust regulations in digital markets

The JFTC is proposing new rules and encouraging further inter-governmental agency collaboration to address increasing antitrust concerns associated with the rise of online platform businesses in Japan.

Under a Japanese government initiative, the JFTC is establishing new rules to deal with the rise of online platform businesses from a competition law perspective in collaboration with other government agencies. These include amendments to the merger review guidelines and policies to include specific factors for digital markets.

Certain actions taken by digital platforms against consumers may soon be deemed as an abuse of superior bargaining position. The JFTC has also announced draft guidance concerning abuses of a superior bargaining position in transactions between digital platform operators and consumers that provide personal information.

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