All questions


The JFTC may issue a cease-and-desist order or a surcharge payment order, or both, by way of administrative sanctions for violations of the AMA.

Cease-and-desist orders aim to stop illegal acts, restore an appropriate competitive environment, and prevent a recurrence of such violations of the AMA by ordering the relevant party or parties to cease the actions in question and to take preventive measures. In addition to cease-and-desist orders, surcharges may be imposed in cases involving cartels and bid rigging. In 2018, the JFTC issued cease-and-desist orders for 15 cartel or bid-rigging cases and the total amount of surcharges imposed for 14 cases in 2018 was approximately ¥2.2 billion, which is significantly lower than the total surcharges of ¥7.5 billion in the preceding year. The highest surcharge (¥1.1 billion) in 2018 was imposed in the price-fixing cartel concerning hard disc drive suspensions.

Moreover, the JFTC has a policy to seek criminal penalties in the following cases: (1) in serious cases, which are considered to have widespread impact on people's welfare; and (2) when firms or industries are repeat offenders, or have not complied with administrative measures issued by the JFTC. In 2018, the JFTC made a criminal accusation against construction companies involved in a bid-rigging case related to a magnetic-levitation train project.

i Significant casesCartel for suspensions used in hard disc drives

On 9 February 2018, the JFTC issued cease-and-desist orders and imposed surcharges (¥1,076 million in total) on two manufacturers of suspensions used in hard disc drives for participating in a cartel.

From at least 2013 to 2016, NHK Spring Co, Ltd and its Hong Kong-based subsidiary (NAT) exchanged competitively sensitive information such as sales prices of suspensions and market shares, and agreed with TDK Corporation and its Hong Kong (SAE) and Thai (MPT) subsidiaries to maintain sales prices. The coordination took place with a view to obtaining and maintaining market shares and profits in relation to suspensions for hard disc drives sold to Toshiba Corporation, which was the only hard disc drives manufacturer in Japan at that time.

NHK Spring had collaborated closely with TDK. For instance, SAE purchased suspensions from NHK Springs, and SAE made an investment in NAT. However, NHK Spring and TDK competed with each other in the market for hard disc drive suspensions due to TDK's acquisition of MPT. NHK Spring and TDK decided to cooperate with one another in order to better compete with overseas suspension manufacturers. Under this mutual cooperation, from 2009 Toshiba started to purchase suspensions from NHK Spring and TDK. Since around 2013, the two company groups supplied to Toshiba most of its suspension purchase volume requirements.

While in addition to the price-fixing agreement, an effect of restricting competition needs to also be established in order to find an infringement of the AMA, the JFTC concluded that competition was restricted through the agreement to maintain prices and that this took place from at least 2013 when the two-company group covered most of Toshiba's demand for suspensions even though they had reached the price-fixing agreement around 2007 when TDK started to plan the acquisition of MPT.

TDK and its subsidiaries were exempted from surcharges and NHK Spring was granted a 30 per cent reduction in surcharges as they applied for leniency.

Bid-rigging case related to a magnetic-levitation train project

In December 2017, the JFTC in cooperation with Japanese prosecutors conducted inspections of four construction companies over alleged bid rigging related to a magnetic-levitation train project. These four companies were suspected to have coordinated bids to win 15 out of 22 contracts for a magnetic-levitation train project and each won three or four contracts. Two of the four companies (Obayashi Corporation and Shimizu Corporation) applied for leniency after the JFTC's dawn raids. On 23 March 2018, the JFTC made a criminal accusation against the four construction companies and two executives from Taisei Corporation and Kajima Corporation. This case was considered a serious case that would have a broad impact on people's welfare since (1) the magnetic-levitation train project was conducted on a large scale and involved certain public aspects including financial support form the government, and (2) the relevant construction companies had already previously received criminal and administrative penalties for bid rigging.

In October 2018, the Tokyo District Court imposed fines of ¥200 million and ¥180 million on Obayashi and Shimizu, respectively. Obayashi and Shimizu reported to the JFTC their involvement in the bid-rigging conduct and admitted the same during the trials. Taisei and Kajima as well as their two executives, on the other hand, denied their involvement in the conduct, and their court hearings started in February 2019 and have continued for several months.

ii Trends, developments and strategies

Cartel enforcement continues to be a top priority for the JFTC. While cartel or bid-rigging cases for which cease-and-desist orders and surcharge payment orders were issued by the JFTC in 2018 related to domestic markets in Japan (other than the above cartel case for hard disc drive suspensions), the JFTC maintains a close relationship with authorities in other jurisdictions dealing with international cartels.

iii OutlookReform of the surcharge system

The surcharge system in Japan, introduced in 1977 as an administrative sanction, aims to prevent violations of the AMA by imposing financial penalties for violations. While it has been amended several times since its introduction, increasing globalisation and complexity of business structures has led the JFTC to conduct a further review of the current surcharge system.

The JFTC therefore established a Study Group on the AMA in 2016 with the objective of re-evaluating the surcharge system and addressing problems with the current system. The Study Group issued its report in April 2017, identifying problems with the current system, and proposing future revisions of the surcharge system.

The main problems of the current system that the Study Group has identified are that the surcharge calculation methods are not flexible and that there are insufficient incentives for businesses to cooperate in investigations conducted by the authority. In order to resolve these problems, the report makes several proposals for reform, including revisions of the method for calculating surcharges, and amendments to the leniency policy in order to increase incentives to cooperate in investigations.

Between April and June 2017 the JFTC carried out a public consultation on the issues raised in the report. The JFTC then started preparing the submission of a bill to amend the AMA in 2018. However, the governing political party, the Liberal Democratic Party (LDP) pointed out the necessity of having discussions on the legalisation of attorney-client privilege, and the JFTC therefore decided to postpone the submission of the bill at that time.

Since January 2018, the JFTC continued to have discussions on attorney-client privilege with the relevant parties including the LDP, and it appears that a certain consensus has been reached on this. The JFTC is preparing to submit the bill to the Diet of Japan in 2019. The draft amendment of the AMA includes a new leniency programme and a new surcharge calculation method based on the level of a company's cooperation with a JFTC investigation. The attorney–client privilege is planned to be introduced in the rules under the provisions of the AMA for the purpose of making the new leniency programme more effective.

Bargaining system

In June 2018, a bargaining system was introduced in the Japanese criminal procedure, which is applied to certain types of crimes including violations of the AMA, such as cartels and bid rigging. Under the bargaining system, a prosecutor and an accused entity or individual may enter into an agreement under which the accused entity or individual cooperates to prove a third party's infringement by providing evidence or giving a statement and, in exchange for this cooperation, the prosecutor drops the case or imposes a lighter sentence on the cooperating entity or individual. While the first to apply for the leniency before the commencement of an investigation by the JFTC will be exempted from criminal prosecution, other companies or individuals who are suspected of antitrust infringements will need to consider the merits of participating in the new bargaining system.