JFTC consults on new rules on information gathering powers

In June 2022, the Japan Fair Trade Commission ("JFTC") announced policies to strengthen its advocacy and enforcement activities, particularly in response to digitalisation. As an initial step, it has issued draft rules on the use of its investigative powers under Article 40 of the Antimonopoly Act ("Article 40 submission order"). The new rules are expected to come into force in 2022.

Under the draft rules, there is a provision regarding constructive service outside Japan. In addition to the JFTC's commitment procedure, which was recently used to resolve a case involving a foreign company, an Article 40 submission order may also help overcome the enforcement challenges in investigations involving foreign firms.

The JFTC's advocacy work aims to support and recommend the improvement of business practices and regulations to promote competition. This includes conducting surveys and hearings; publicising reports based on the results of surveys; approaching relevant ministries and government agencies as well as requesting businesses to voluntarily amend their practices. The JFTC expects Article 40 submission orders to enhance its survey and hearing processes, since businesses often face difficulties in providing requested documents on a voluntary basis due to confidentiality and non-disclosure obligations.

JFTC sets up new economic analysis unit

In April 2022, the Japan Fair Trade Commission ("JFTC") announced a new unit established to strengthen its capabilities for digital, economic and information analysis in investigations and case reviews. The office began with 15 staff who will conduct economic analysis related to investigations for alleged anticompetitive conducts, merger review, and market research.

Best practice guidelines have since been issued regarding the submission of economic analysis, reports and data. The guidelines also indicate the JFTC's approach to assessing reports submitted in a merger review or investigation. It is expected that the guidelines will improve the transparency and predictability of JFTC investigations and improve timeframes and efficiencies in the handling of cases.

Outside of the merger review process, the JFTC intends to use economic analysis more proactively in various other cases and circumstances including the IT/digital sectors.

JFTC FY2021 annual report shows continued focus on IT/digital sectors

The JFTC continues to proactively enforce against conduct by digital platform operators despite a slight downturn in overall enforcement activity due to the pandemic.

The latest report reveals active enforcement in IT/digital sectors, though the number of cease-and-desist orders and the amount of administrative fines decreased. Notably:

  • the number of cease-and-desist orders issued by JFTC fell from 9 in the previous year to 3, which all related to domestic bid rigging cases;
  • administrative fines imposed by JFTC decreased from JPY 4,320 million to JPY 2,180 million;
  • with regard to IT/digital sectors, 1 case was closed under the commitment procedures and 3 cases were closed by accepting voluntary measures proposed by the suspected companies; and
  • 1 case involving parallel imports was resolved under the commitment procedures.

There were only 2 cases where JFTC closed the investigation under the commitment procedures, which were introduced in December 2018, compared with 6 cases in FY2020. Of the two cases, one related to trade obstruction involving parallel imports and the other to restrictive conditions by online travel platform.

In 3 cases, the JFTC closed the investigation after accepting the voluntary measures proposed by the party involved in the alleged conduct rather than under the commitment procedures. The JFTC has not provided clear guidance on the distinction between the commitment procedures and the proposal of voluntary measures, and it has stated that it will take the most appropriate measures to promptly resolve anticompetitive issues and restore competition.