Enforcement proceedings in dominance in Japan

Enforcement proceedings

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The JFTC is responsible for the enforcement of the AMA.

Under the AMA the JFTC has the power to do the following:

• order persons concerned with a case or a witness to appear to be interrogated, or to collect their opinions or provide a report;
• order expert witnesses to appear to give expert opinions;
• order persons holding books and documents and other objects to submit such objects, or maintain such submitted objects at the JFTC; and
• enter any business office of the persons concerned with a case or other necessary sites, and inspect the conditions of the business operation and property, books and documents, and other materials.

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

As for private monopolisation, the JFTC can issue a cease-and-desist order. Furthermore, the JFTC can impose a surcharge (administrative fine). The amount of surcharge is calculated by mutiplying the amount of sales of the relevant products or services during the period in which private monopolisation was implemented (the maximum is three years) by the surcharge calculation rate in the following table. Administrative fines on private monopolisation were introduced in January 2006 for the controlling type of private monopolisation, and in January 2010 for the exclusionary type of private monopolisation. To date, there has been no case in which an administrative fine was imposed.

Theoretically, an undertaking who engages in private monopolisation would be subject to a criminal penalty under the AMA. However, until now, the JFTC has never issued criminalised charges based on private monopolisation.

As for unfair trade practices, the JFTC can issue a cease-and-desist order. Furthermore, for certain types of unfair trade practices, the JFTC can impose an administrative fine as follows, depending on the applicable category:

An undertaking that engages in unfair trade practices is not subject to a criminal penalty.

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

28 Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The JFTC can issue a cease-and-desist order without the involvement of any other authority. However, if the JFTC seeks to issue a cease-and-desist order, it must conduct a hearing with the would-be addressee of the cease-and-desist order.

What is the recent enforcement record in your jurisdiction?

In recent years, there have not been many cases concerning private monopolisation. Regarding that point, it might be the case that the introduction of a non-discretionary surcharge (administrative fine) system may have made the JFTC hesitant to move forward as the firm is likely to fight to the end in the event a surcharge is imposed.

In addition, after the introduction of an administrative fine for both types of private monopolisation, there has been no case to date in which an administrative fine was imposed.

The most recent case was against Fukui Economic Federation of Agricultural Cooperatives Associations published on 27 January 2015, which amounted to the control type of private monopolisation. In this case, the JFTC did not impose an administrative fine due to the fact that the association had no sales revenue. The most recent case of exclusionary type of private monopolisation is the JASRAC case, where the Japanese Society for Rights of Authors, Composers and Publishers (JASRAC), a copyright management company, was deemed to exclude other copyright management companies from the market by engaging in the business practice of concluding ‘comprehensive contracts’ with almost all broadcasting companies.

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

A violation of the AMA does not automatically render the clause (or the entire contract) void (and thus unenforceable), however, if the clause is in violation of public policy (article 90 of the Civil Code), the provision (or the entire contract) will be invalid.

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

The operation of the AMA is exclusively within the purview of the JFTC. However, any person who believes that there has been an infringement of the AMA can report the relevant facts to the JFTC and request that appropriate measures be taken. In such cases, the JFTC is obliged to conduct at least a preliminary investigation. Only selected cases trigger a formal full-fledged investigation.

With regard to unfair trade practices, it also is possible to file a lawsuit in court seeking an injunction against the other party. These special injunctions are not available in cases of private monopolisation.

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

In cases where a third party has suffered damages and is requesting damages owing to an act in violation of the AMA, a claim based on article 709 of the Civil Code and a claim under article 25 of the AMA may be considered.

To claim damages based on the Civil Code, the plaintiff is required to establish:

• an infringement of rights;
• damage;
• causation; and
• intention or negligence.

However, in case of a claim under article 25 of the AMA Act, which can be claimed when the defendant is subject to a final and binding cease and desist order or a payment order for surcharge (administrative fine), the element of intention or negligence is not required.

To what court may authority decisions finding an abuse be appealed?

An undertaking that is the subject of a cease-and-desist order or an administrative fine order can file a suit for revocation of those orders (administrative disposition) with the court within six months from the date of the order (Administrative Case Litigation Act article 14).

Unlike ordinary administrative lawsuits, a violation of the AMA is targeted for complex economic matters. Because of the high level of expertise required, all actions for revocation of an administrative disposition shall be filed in the Tokyo District Court.