Japan: Amendments to Japanese Anti Monopoly Act: Japan Significantly Strengthens Its Antitrust Laws

A bill to amend Japan’s Anti Monopoly Act (the "AMA"), which had been long pending at the Japanese Diet, was finally passed on April 20, 2005.

The amendments significantly expand the antitrust investigation and enforcement authority of the Fair Trade Commission of Japan ("JFTC") by effecting four significant changes in Japanese competition law:

  • The amendments increase by as much as 100% the applicable administrative fines (kachokin) for certain types of unreasonable restraints of trade (futo na torihiki seigen), such as price fixing, bid rigging or conspiracy to limit supply.
  • The amendments introduce a "leniency" or "amnesty" program somewhat similar to the successful programs in place in the United States and European Union. The proposed Japanese program exempts from administrative fines the first member of a cartel who voluntarily, independently reports its violation and provides relevant information to the JFTC. The second and the third reporting companies will be exempt from 50% and 30%, respectively, of the relevant fines.
  • The amendments abolish the JFTC’s current shimpan hearing process that permits companies to challenge, in an adversarial hearing before a JFTC examiner, allegations of unlawful conduct. The amendments permit the JFTC to issue cease-and-desist orders to alleged offenders after a much simpler hearing process, and affected companies will be permitted to challenge the allegations only after issuance of the cease-and-desist order.
  • The amendments expand significantly the JFTC’s criminal investigative powers by authorizing the JFTC to seize documents, with a court-issued warrant, directly from corporate offices or even from the homes of company executives, just as the police do in criminal investigations.


The amendments represent a significantly scaled-back version of the JFTC’s original proposal. The JFTC originally considered revisions that also would have included new restrictions on monopoly/oligopoly conduct. The JFTC dropped those proposed amendments in the face of tremendous criticism and opposition from private industry. In return, however, the opposition groups agreed to revisit the law in two years to determine whether further restrictions are warranted. The amendments, therefore, reflect only the first step in the ongoing reform of Japan’s competition law regime.

Discussion of Amendments

Increase of Administrative Fines (Kachokin)

The AMA permits imposition of administrative fines called surcharges (kachokin) for certain types of unreasonable restraints of trade (futo na torihiki seigen), such as price fixing, bid rigging or conspiracy to limit supply if such a conspiracy affects price. The fines are calculated based on sales of the relevant product(s) during the term of violation (up to three years). The following table provides a comparison of the current and amended fine structures:




Business other than wholesale and retail (e.g., manufacturing or service)

6% (3%)

10% (4%)


2% (1%)

3% (1.2%)


1% (1%)

2% (1%)

Note: Figures in parentheses indicate the rates for small and mid-sized firms.

The amendments permit a 50% increase in fines for additional violations within a ten-year period, and a 20% reduction in fines for conduct that is unilaterally terminated before a JFTC investigation. In addition, in response to criticism that levying administrative fines and criminal fines on the same conduct constitutes double jeopardy, the JFTC has added adjustment clauses providing that if a criminal fine is imposed for a violation, the administrative fine to be imposed on the same activity will be reduced by half of the amount of the criminal fine.

Reduction and Exemption of Fines (Leniency Program)

Under the amendments, the first member of a cartel who voluntarily, independently reports its violation and provides the relevant information to the JFTC prior to the commencement of the JFTC’s investigation will be completely exempt from administrative fines. The second and the third reporting companies will be exempt from 50% and 30%, respectively, of the applicable administrative fines. Even after the JFTC begins an investigation, violating companies may still receive leniency, provided fewer than three companies have reported to the JFTC. In such cases, the amount to be discounted from fines would be 30% regardless of the order of participation.

The newly introduced Japanese system has two unique features. First, the Japanese leniency program will permit the second and third reporting companies to receive leniency for a portion of the applicable administrative fine. Second, the leniency exemption covers only the relevant administrative fines. Under current law, the JFTC may request that the Public Prosecutor’s Office (the "PPO") issue a criminal indictment of the violating companies and individuals who actually committed the violation. The amendments do not restrict the JFTC’s power to request such indictments. The Chairman of the JFTC commented at a Diet session that the JFTC will not request the indictment of a first reporter, but will consider a request for indictment of the second and third reporters on a case-by-case basis (that is, exemption from prosecution is not guaranteed).

Change of Administrative Hearing Procedures (Shimpan)

Under current law, companies are able to challenge JFTC allegations of unlawful conduct in an adversarial hearing process, and the JFTC is not permitted to impose conditions on the companies, pending the outcome of the hearing. The amendments flip this process on its head.
Under the current law, if a company disputes the JFTC’s recommendation, the JFTC convenes a hearing called "shimpan." The shimpan is conducted in an adversarial style similar to a court hearing or trial, and is presided over by one or more examiners of the JFTC. In the course of the shimpan, the company is provided access to the evidence on which the JFTC’s charges are based. If, after the shimpan, the examiners and the Commissioners conclude there was a violation, then the JFTC will render a final cease-and-desist order. If not, the JFTC will declare formally that there was no violation. The company may appeal an adverse JFTC decision to the Tokyo High Court.

Similarly, current law subjects the JFTC’s levy of administrative fines to a separate but similar administrative review process. The JFTC issues a separate order to levy an administrative fine (normally after the issuance of a corresponding cease-and-desist order). The company may challenge the surcharge order in a separate adversarial-style shimpan hearing within the JFTC. If the company challenges the fine, the order will be voided, and a shimpan hearing will be commenced on whether the surcharge order will be issued. As with hearings related to cease-and-desist orders, the company may appeal an adverse decision by the JFTC to the Tokyo High Court.

The amendments abolish the current process and allow the JFTC to issue a cease-and-desist order to an offending company without a shimpan hearing. The company may still submit evidence and arguments to the JFTC prior to issuance of the cease-and-desist order, but this pre-issuance process seems to be designed as simply an opportunity for a company to provide an apology; there is no adversarial hearing. The adversarial shimpan process will be available only to review cease-and-desist orders that already are in effect. Further, the JFTC has discretion as to whether to suspend the effectiveness of a cease-and-desist order pending the hearing.

The amendments also allow the JFTC to issue administrative fines that will be due even before a hearing challenging the fines. A company faced with such a fine must either pay the fine before knowing the outcome of the challenge or risk paying deferred interest at higher-than-market rates.

Criminal Investigation Power

The fourth key element of the amendments expands the JFTC’s criminal investigative powers.

Under current law, the JFTC has technical authority to raid companies to collect information and interrogate employees, but it lacks the direct authority to compel companies to cooperate with such activities. If a company refuses the JFTC’s request for inspection or interrogation, it is merely subject to a criminal penalty for "rejection of inspection." This is called "indirect compulsory enforcement." In addition, the PPO is required to follow an entirely separate procedure to collect evidence for criminal investigations.

The amendments permit the JFTC to seize documents, with a court-issued warrant, directly from company offices or even from individual employees’ homes. These direct compulsory enforcement powers are modeled on the similar investigative authority already granted to Japanese agencies conducting tax or securities investigations.

Effective Date

The amendments are expected to be promulgated on April 27, 2005, and the new law shall be in effect within one year from the promulgation. The JFTC is now drafting the rules to supplement the law on the assumption that the amendments become effective from January 2006.

As noted above, the amendments will be further reviewed two years after the effective date.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions