Partial Amendments to the "Guidelines Concerning
Distribution Systems and Business Practices Under the Antimonopoly
On May 28, 2016, the Japan Fair Trade Commission announced that
it had concluded its draft of the partial amendments to the
"Guidelines Concerning Distribution Systems and Business
Practices Under the Antimonopoly Act" ("Distribution
Guidelines"). The amendments are based on the Implementation
Plan for Regulatory Reform decided by Cabinet Decision on June 30,
2015, and they revise the criteria for conduct to fall within the
so-called "safe harbor" under the Distribution
The Distribution Guidelines describe criteria and provide examples,
with respect to distribution and business practices in Japan, of
conduct that prevents free and fair competition and therefore
violates the Antimonopoly Act. Part I of the Distribution
Guidelines relates mainly to transactions concerning producer goods
and capital goods, and Part II relates mainly to transactions
concerning the distribution process through which consumer goods
reach customers. The Distribution Guidelines state that non-price
related vertical restrictions—such as restrictions on
distributors' trading partners, restrictions on the products
that may be handled by distributors, restrictions on the
distributors' sales territories, and prohibitions on mail order
sales and other types of methods of sales—will be illegal if
these restrictions could result in new market entrants experiencing
difficulty in securing alternative distribution channels or could
cause price stagnation. However, those restrictions would be
unlikely to violate the Antimonopoly Act if a firm other than an
"influential firm in the market" were to: (i) restrict
trading partners from dealing with competitors, (ii) restrict
distributors from handling competitive products, or (iii) strictly
restrict partners in respect of permissible sales territory.
Before the amendments, whether a firm was "influential in the
market" was indicated by its possession of a market share of
10 percent or more or by its occupying a position within the top
three firms in the market. Therefore, in general, where a firm was
not deemed as "influential in the market," its
restrictive conduct would not be illegal; such a position had been
widely considered as a "safe harbor." However, there had
been criticism that the safe harbor would not apply to a firm
occupying a top three position in the market even if it possessed
less than a 10 percent market share.
In the amendment, the market share criterion for the safe harbor
was increased from possession of a market share of less than 10
percent to possession of 20 percent or less, and the market
position criterion was abolished. Thus, under the new safe harbor
criteria, if a firm has a 20 percent or less market share, then
certain non-price related restrictive conduct will, in general, not
be illegal. Accordingly, even if a firm has the top position in a
market, the safe harbor will still apply as long as such firm has a
market share of 20 percent or less.
Enactment of an Amendment to the Act on Specified Commercial
Transactions and an Amendment to the Consumer Contract Act
On May 25, 2016, an Amendment to the Act on Specified Commercial
Transactions and an Amendment to the Consumer Contract Act were
enacted, and the amendments were promulgated on June 3, 2016. The
Amendment to the Act on Specified Commercial Transactions will come
into force on a date provided by cabinet order that will be within
one and a half years from June 3, 2016. The Amendment to the
Consumer Contract Act will come into force on June 3, 2017, except
for a provision regarding the obligation of consumers who have
exercised their right of rescission to return purchased items to a
seller. For an outline of the amendments, please see the
April 2016 issue of this Update.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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