Japan: Japan Fair Trade Commission Publishes Draft Rules Under Anti Monopoly Act


On June 30, 2005, the Japan Fair Trade Commission ("JFTC") published for public comment four draft rules implementing the new Anti Monopoly Act ("AMA"), which was enacted on April 20, 2005.1 The deadline for submission of comments is August 3, 2005.

The draft rules respectively address implementation of the recent AMA Amendments in the following substantive areas:

  1. Rules concerning JFTC administrative investigations ("Investigation Rules");
  2. Rules concerning JFTC administrative (Shimpan) hearings ("Shimpan Hearing Rules");
  3. Rules concerning JFTC criminal investigations ("Criminal Investigation Rules"); and
  4. Rules concerning the JFTC’s new leniency program ("Leniency Rules").

An overview of the structure and operation of these new rules is provided below.

Overview of Proposed Rules

Proposed Rules Concerning JFTC Administrative Investigations

Historically, the JFTC has not had separate rules governing administrative investigations and shimpan hearings. The AMA Amendments made a fundamental change in the shimpan hearing system, however, and the JFTC will no longer use that formal process prior to issuing a formal cease and desist order. For that reason, the JFTC’s proposed rules implementing the AMA Amendments have two separate sets of rules relating to administrative investigations before issuance of a formal order (Investigation Rules) and to shimpan hearings after the formal order (Shimpan Hearing Rules). The proposed Investigation Rules also contain new provisions relating to the issuance of cease and desist orders.

The JFTC’s proposed rules relating to administrative investigations is based upon the existing "Investigation and Shimpan Hearing Rules," with relatively minor changes.2 The most notable changes in the proposed rules include:

  • The new rules provide defending companies with a right to review or copy documents the JFTC has seized from the company.
  • The new rules require the JFTC, when conducting an on-site inspection of a company’s facility, to provide the company with a document indicating the name of case, summary of facts giving rise to the inspection, and applicable provision(s) of the AMA. The conduct described in this document would delineate the scope of company’s eligibility for leniency under the new leniency program (described below), as there is a substantial advantage for companies who seek leniency prior to a JFTC on-site inspection.

Pursuant to the AMA Amendments, the JFTC now may issue formal cease and desist orders without a formal shimpan hearing. Under the Amendments, the JFTC will simply give the allegedly offending company an opportunity to submit its arguments and evidence prior to a formal order, but the company is not entitled to formal hearing until after issuance of the order. To implement these changes, the JFTC has proposed new rules regarding the presentation of arguments and evidence prior to issuance of a cease and desist order:

The proposed rules do not require the JFTC to provide any minimum amount of time for a company to submit arguments and evidence in response to an advance notice of a proposed cease & desist order.

  • Companies must submit their arguments in writing, unless the JFTC specifies otherwise.
  • All evidence must be submitted in writing, which likely would mean that companies are no longer able to submit third-party testimony prior to issuance of an order because it is very difficult for companies to obtain a voluntary written statement from a neutral third party.
  • The proposed rules provide the JFTC with discretion to refuse to offer additional explanation, beyond what is offered on the face of the notice, regarding the proposed cease & desist order, findings of fact, and legal conclusions.
  • If the JFTC elects to offer additional explanation of the proposed order, then the JFTC must also explain its findings of fact to the extent necessary to make clear such additional explanation. This procedure would enable the JFTC, if it deems appropriate, to indicate to the companies the existence of decisive evidence so that the companies will not challenge the JFTC order.
  • The company is not afforded an opportunity to argue its position orally, unless the JFTC determines such oral argument is necessary.

The AMA Amendments, and these proposed rules, significantly limit a company’s ability to present evidence and argument once the JFTC has issued notice of a cease and desist order. It therefore has become considerably more important for companies to explore strategy and options earlier in the investigative process and, where appropriate, to engage the JFTC well before the JFTC issues formal notice of a cease and desist order.

Proposed Rules Concerning JFTC Shimpan Hearings

Pursuant to the AMA Amendments, formal administrative or shimpan hearings will no longer be conducted prior to issuance of a formal cease and desist order, and shimpan hearings will now become a post-issuance review procedure. Except for this significant change in the timing of the shimpan hearing, the rules governing those procedures remain substantially the same. Notable provisions of the proposed rules include:

  • There is an apparent tension between the Amendments, which generally do not permit the JFTC staff to make new arguments detrimental to the defendant companies during a shimpan hearing, and the proposed rules, which permit new arguments unless doing so would result in a substantially different legal case.
  • The proposed rules provide only one week for a company to raise objections to an order or instruction issued by the examiner (this would include, for example, an examiner’s decision during the course of hearings, but not the final decision on the case).
  • The examiner may accept testimony of witnesses or defendants in distant places through video conference.
  • The examiner and the parties are obligated to make efforts to finish the shimpan hearing within two years.

In addition, while JFTC Commissioners continue to be technically required to preside over shimpan hearings, the proposed rules reflect the current practice that hearing examiners preside over almost all the cases.

Rules Concerning JFTC Criminal Investigations

The AMA Amendments provide the JFTC with significant new criminal investigative powers, and the proposed rules provide the details of the JFTC’s new authority.

Under the proposed Criminal Investigation Rules:

  • Only the staff in the tentatively-named Special Investigation Department within the JFTC Investigation Bureau will exercise the criminal investigation power.
  • The proposed rules create somewhat of a "firewall" between the criminal investigative staff and the administrative investigative staff, but limited exchange of information is permitted. Administrative investigators must report evidence of a potential crime to the Director General of Investigation Bureau, and may not directly inform the criminal investigation staff. However, the Director General of Investigation Bureau may provide information to the criminal investigation staff.

Rules Concerning New Leniency Program

The AMA Amendments created a new leniency or amnesty program3 somewhat similar to the successful programs in place in the United States and European Union, but the Amendments provide only the general structure of the system. The proposed Leniency Rules will provide the remaining details regarding the nature and operation of the new leniency program.

Most notably, the proposed Leniency Rules provide:

  • At a minimum, a company making an initial report to the JFTC regarding anticompetitive conduct must identify the affected products or services, the nature of the conduct, and the affected time period.
  • In addition to information provided in the initial report, the proposed rules require reporting companies to (a) identify officers or employees who actually committed the illegal conduct; (b) firms that participated in the illegal conduct and the employees of those firms who actually committed the illegal conduct; and (c) any other useful information.
  • The JFTC will accept a voluntary report up to 15 business days after a JFTC on-site inspection (raid) at the company’s facilities – although in such cases the company may not be entitled to full exemption from the applicable administrative fines.

The JFTC also explained in its press release that potential reporters may, prior to formally making a report to the JFTC, anonymously consult with the tentatively-named JFTC Information Control Officer regarding the order of companies making reports. The JFTC’s legal basis for this informal consultation is unclear, although private companies would certainly benefit from such a system.

Finally, the AMA Amendments and proposed Leniency Rules continue to leave a number of questions unanswered regarding the specific timing and content of voluntary reports. It will be important to monitor developments over the coming months to determine whether the JFTC offers further guidance in any of these areas.


1. Please see "Amendments to Japanese Anti Monopoly Act: Japan Significantly Strengthens Its Antitrust Laws" (Legal Update, April 2005) with respect to the new AMA.

2. Investigation in this context means administrative investigations which have existed since before the Amendments as opposed to the criminal investigation which was newly introduced by the Amendments.

3. Under the Amendments, the first member of a cartel who reports its violation and provides the relevant information to the JFTC prior to the commencement of the JFTC’s investigation will generally 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.

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