Competition Law Legal Update (July 2023)
Popular: Writer from Japan, July 2023
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JFTC's FY2022 Antimonopoly Act Cases: Processing Status
Yoshiharu Usuki and Hiroki Kitada
On June 1, 2023, the Japan Fair Trade Commission (JFTC) released its report titled "Processing Status of Cases in Violation of the AMA in FY2022". With the COVID-19 pandemic's impact diminishing, there has been a significant increase in legal actions, resulting in a record high of ¥101.9 billion ($890.9 million) in surcharges. The report highlights the investigation of bid-rigging cases in the electric power and event industries, as well as the first public announcement of a case utilizing the surcharge reduction system. We will now provide a brief overview of the JFTC's handling of the reported antitrust cases. As the effects of the COVID-19 pandemic have lessened, there has been a notable rise in legal actions, leading to a record-breaking total of JPY 101.99 billion (approximately USD 731.76 million) in surcharges for FY2022. The report highlights the JFTC's investigation into bid-rigging cases within the electric power company and event sectors, as well as the first public disclosure of a case utilizing the surcharge reduction system. In the following section, we will provide a concise commentary on the JFTC's management of the published antitrust cases.
1.1 Latest Developments in Cease and Desist Notices
During the fiscal year 2022, there were a total of 11 legal actions initiated, which consisted of 8 orders to cease and desist. These orders were specifically targeted towards addressing a price-fixing cartel, 3 different types of cartels, as well as 4 cases of bid rigging in public demand. However, no bid rigging cases were reported in relation to private demand. Additionally, 3 commitment plans were approved in order to combat unfair trade practices. It's noteworthy that this represents a notable rise compared to the previous fiscal year, which only saw 5 cases being addressed.
(Source: The JFTC "Current Progression of AMA Violation Cases in FY2022" (June 1, 2023) page 2)
(Alternative 1) Other syndicates are groups that engage in controlling the amount of goods, distribution methods, limitations on customer mobility, limitations on facility access, and so on. (Alternative 2) Additional criminal organizations involve aspects like the quantity of products, distribution channels, restrictions on customer movement, facility limitations, and more.
(Alternative wording) An endorsement of the commitment plan is an official decision made by the JFTC (Japan Fair Trade Commission), in which they give their approval to a plan submitted by a company that has received the Notice of Commitment Procedures. If the JFTC determines that the approved commitment plan is not being followed as agreed, they may reconsider their endorsement and resume the investigation procedure that was carried out prior to the issuance of the Notice of Commitment Procedures.
(Updated) Legal actions consist of cease and desist orders, surcharge payment orders, and the approval of commitment plans. When a cease and desist order and a surcharge payment order are both issued, they are considered as a single legal action.
(Blog Section) Instances that fall within the realms of both private monopolization and unfair trade practice are classified as "Private monopolization".
The surge in legal cases during the fiscal year 2022 can be attributed to the fact that the COVID-19 pandemic has imposed constraints on both economic and investigative undertakings.
In FY2022, the authorities took strict actions against large-scale cartel cases and bid rigging cases. One important instance is the JFTC's issuance of cease and desist orders and surcharge payment orders against the Former General Electricity Utilities and others on March 30, 2023. Another notable action is the JFTC's criminal accusation regarding bid-rigging in the outsourcing contracts for planning test events related to the Olympic and Paralympic Games Tokyo 2020, which was ordered by the Tokyo Organizing Committee. In the former case, the JFTC instructed the involved businesses to pay a surcharge of approximately JPY 101 billion. This led to a record-breaking amount of surcharges in FY2022.
Another important point to note is the response to actions that unfairly harm small and medium-sized businesses. This was highlighted in the "Report from SEVEN-ELEVEN JAPAN ceasing Product Guide Production Fee in PB manufacturing contract" published on December 22, 2022. It's worth mentioning that while this particular case was not made public, the JFTC (Japan Fair Trade Commission) has issued a warning to a business operator who informed their outsourced illustrator that if they do not switch to being a taxable business operator and instead choose to be tax-exempt once the invoice system is implemented, 10% of the transaction value (equivalent to the consumption tax rate) will be deducted.
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