On June 6 2017 the Japan Fair Trade Commission (JFTC) Competition Policy Research Centre published a report on competition issues surrounding big data. Almost one year later, views on this topic are increasingly common and data issues are attracting more attention in Japan and abroad.

The JFTC's report was the first study outlining Japanese antitrust regulators' views on the digital economy amid similar publications by European and US regulators and the Organisation for Economic Co-operation and Development. It highlighted JFTC's areas of concern relating to digital markets, including data collection methods, unjust refusals to data access and the potential impact on merger reviews with respect to transactions involving data accumulation.

The report did not reflect the JFTC's official views, and whether the commission will provide any follow-up action in the form of new guidelines or amendments to existing laws remains unclear. However, its stance that digital economy falls well within the scope of Japanese competition law and that certain methods employed to obtain data or unjust refusals to access data may be considered anti-competitive is noteworthy.

While the report did not presume that an oligopoly of digitalised businesses constituted a problem, it recognised that rapid advances in machine learning and data accumulation could boost the power of existing dominant players exponentially and limit opportunities for new market entrants.

Types of antitrust issue

The report acknowledged that striking a balance between regulating anti-competitive behaviour and accommodating innovation incentives is key. While the JFTC maintains that data accumulation and use is pro-competitive because it stimulates and promotes technological innovation, it nevertheless cites the following as areas of anti-competitive concern:

  • data collection by illegitimate means;
  • unjust withholding of data;
  • joint collection and use of data; and
  • mergers involving data accumulation.

For instance, antitrust issues could arise where a dominant market player:

  • forms a business alliance and unilaterally demands that the other party provide it with data; or
  • refuses access to previously accessible data that is essential to competitors' business.

Participants of joint research projects should ensure that data being collected for analysis is not shared in a way that allows competitors' pricing and production volumes to be inferred.

While the report admits that most "problematic behaviour" in data collection or data withholding can be interpreted within the scope and framework of ordinary competition law, it also suggests that mergers involving data accumulation may require a new form of appraisal.

While the report summarises that it will be necessary to examine whether the proposed mergers reduce competition in markets for artificial intelligence techniques or data-related goods and services, it further added that if merging companies planned to trade data or if their competitors were engaged in trading data, it may also be necessary to examine how the data market will be affected as a result of a proposed transaction.

Impact on merger reviews

Competition authorities around the world – especially in Europe – are paying more attention to the rapid development of computer algorithms and artificial intelligence. The impact of data-driven economy on merger reviews is widely debated, particularly with regard to turnover thresholds, innovation and remedies in merger reviews.

Merger control thresholds The turnover thresholds required in merger control notifications differ in each jurisdiction. However, regulators know that their traditional turnover thresholds may not adequately capture digital M&A transactions because the turnover generated by such companies (often start-ups) is not necessarily high.

Digital businesses frequently offer free services to quickly increase their customer base and market share. Competition authorities globally are keen to capture these transactions within their own merger control reviews as these digital economy businesses may have a significant impact on consumers in their countries.

For example, in order to address the shortcomings of the threshold requirement, the German competition authority recently introduced a new merger control notification threshold, designed to capture acquisitions of start-ups that are active in the digital economy or innovative markets.

Similar consideration has been given to competitor collaborations falling short of M&A, which normally would not be subject to mandatory notifications but often have a similar competitive impact to that of mergers.

Where to draw the line – regulation versus innovation Balancing the interventionist approach under competition law while allowing incentives for innovation is key. As competition law seeks to promote innovation and competition, antitrust authorities are concerned that an interventionist approach may ultimately hinder innovation.

In countries where technological innovation is critical for growth as well as being the focal point of industrial policy, stakeholders wishing to promote innovation and investment in big data and other analytical technologies may be less welcoming of the interventionist approach seemingly taken by antitrust authorities.

Behavioural remedies relating to big data When competition concerns arise from M&A transactions, there are usually two types of remedy in merger reviews: the first is the traditional 'structural' option (ie, divestiture of assets or businesses such as production facilities) and the second, more complex type is the 'behavioural' option.

Competition authorities – especially in Europe and the United States – are more reluctant to choose behavioural remedies, partly because the monitoring of behavioural remedies over a long period would be too costly and burdensome.

However, in view of anti-competitive concerns relating to parties' overlap in certain databases, in the Thomson Corporation and Reuters Group merger reviewed by the European Commission in 2008, the commission acknowledged that:

"The content sets are not produced and supplied by distinct business entities that could simply be divested to remedy the Commission's concerns. For this reason full divesture of certain Reuters or Thomson businesses was not contemplated. Since these relevant content sets take the form of databases and can be copied and transferred, the parties offered to transfer copies of the databases together with tangible and intangible assets which are used in connection with the relevant databases."

Japan's industry policy – applicable to broader Asia?

While merger cases reviewed by the European Commission from the perspective of big data often relate to consumer-facing businesses, one feature of the JFTC report is that it gave special attention to industrial data, including:

  • sensor data (eg, autonomous driving cars, mining machines and power distribution panels);
  • device data (eg, aircraft engines); and
  • organism data (eg, collected by millions of sensors attached to wearables for humans and animals).

No clear policy direction has been declared, but the JFTC report appears to recognise that the accumulation and analysis of big data promotes innovation and competition – and is not necessarily all bad.

The Ministry of Economy, Trade and Industry (METI) has declared that innovation is key to solving issues relating to Japan's aging population and stagnant economy, and that over-regulation may hinder such innovation.

On June 28 2017, less than a month after the release of JFTC's report, METI published its own report on the digital economy that focused on innovation.

If Japan prioritises innovation over regulation, other Asian countries may follow suit because promoting technological innovation is equally critical for these countries' success and growth.

Future enforcement

Although the JFTC has so far been one of the least 'politically charged' regulators, there are signs of an implicit political agenda – occasionally nationalistic, some say – in the enforcement of some competition authorities.

While the anti-competitive impact of big data is still debatable and no firm positions have been established, it would be unfortunate if politically motivated over-regulation in this space had a cooling effect on innovative business models.

According to government statistics, US-based digital businesses are more likely to have larger user bases than Japanese counterparts:

  • Google has 14 times more monthly users than Yahoo! Japan;
  • Amazon has seven times more monthly users than Rakuten; and
  • Facebook has 86 times more monthly users than Japanese social network Mixi.

Although the report clarifies that Japanese competition law would apply if competition is affected in the Japanese market regardless of where the responsible parties are located, there are concerns that the JFTC may readily regulate US tech giants on the grounds that Japanese platforms play second fiddle to US platforms.


In the digitalised economy, data has a decisive influence on the survival of and competition among businesses. In the context of merger reviews, if antitrust authorities driven by protectionist motivations use their enforcement power to force existing data owners to grant access to national champions (which lag in data competition), competition in the digital economy may become highly distorted.

For further information on this topic please contact Kaori Yamada or Yusuke Sasaki at Freshfields Bruckhaus Deringer LLP by telephone (+81 3 3584 8500) or email ( or The Freshfields Bruckhaus Deringer LLP website can be accessed at

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