Answer ... A ‘cartel’ is defined as an “unreasonable restraint of trade” under the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (AMA). Article 2(6) of the AMA defines an ‘unreasonable restraint of trade’ as:
such business activities, by which any enterprise, by contract, agreement or any other means irrespective of its name, in concert with other enterprises, mutually restrict or conduct their business activities in such a manner as to fix, maintain or increase prices, or to limit production, technology, products, facilities or counterparties, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.
Answer ... Other than what has been described in question 2.1, the AMA does not stipulate any specific offences.
Answer ... Cartel participants may be subject to administrative, criminal and civil liabilities.
Administrative liability: The Japan Fair Trade Commission (JFTC) may issue a cease and desist order and/or an administrative surcharge order against cartel participants.
In a cease and desist order, the JFTC may order the relevant enterprise to:
- cease and desist the relevant act(s);
- transfer a part of its business; or
- take any other measures necessary to eliminate the act in violation of the provisions.
An administrative surcharge order compels the recipient to pay a surcharge calculated pursuant to a certain formula set forth in the AMA. See question 6.3 for a detailed description of the calculation of the administrative surcharge.
Criminal liability: In addition to the administrative liabilities described above, cartel participants are subject to criminal penalties under the AMA. A JFTC accusation is a precondition for prosecuting crimes set forth in Articles 89 to 91 of the AMA, which include cartel activities. See question 6.1 for details of the criminal penalty.
In practice, the JFTC does not make criminal accusations against all violations that fall under Articles 89 to 91 of the AMA. The JFTC has made public its intention to actively seek criminal penalties in the following two types of cases in the Fair Trade Commission’s Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Anti-monopoly Violations dated 7 October 2005:
- vicious and serious violations which are considered to have a widespread influence on people’s lives by substantially restraining competition in certain areas of trade, such as price-fixing cartels, supply restraint cartels, market allocations, bid rigging, group boycotts, private monopolisation and other violations; and
- in the case of violations involving companies or industries that are repeat offenders or do not abide by the elimination measures, violations for which the administrative measures of the JFTC are not considered to fulfil the purpose of the AMA.
Civil liability: Cartel participants may also be subject to civil liabilities. See questions 8.1 to 8.6 for details.
Answer ... Yes. If a representative of a company or an agent, employee or any other worker of a company has, with regard to the business or property of the company, effected an unreasonable restraint of trade, in addition to the offender being punished, the company shall be sentenced to a fine of not more than JPY 500 million.
Answer ... In theory, it is considered that if some of the elements that constitute cartel activity or some of the outcomes of cartel activity occur in Japan, the participants in such cartel activity, including foreign companies, can be prosecuted under the Japanese cartel legislation. In practice, however, there have been no court precedents in which the extraterritorial reach of the criminal penalties of the AMA was at issue.
Answer ... With respect to administrative sanctions, it is understood that, regardless of where cartel activity takes place, insofar as such activity has anti-competitive effects on the Japanese market, the AMA is applicable. However, the JFTC does not have authority to conduct compulsory investigations, such as dawn raids in foreign countries.
Answer ... The statute of limitations is five years for both a cease and desist order and an administrative surcharge order. The statute of limitations for an administrative surcharge order will be extended to seven years in the 2019 revision of the AMA (see also question 9.1).
Cease and desist order: The JFTC will be unable to issue a cease and desist order if five years have passed from the discontinuation of the relevant act. For example, if a party withdraws from a cartel agreement, such party is deemed to have discontinued cartel activities. Discontinuation of cartel activities can also be triggered by external factors, such as a dawn raid conducted by the JFTC.
Administrative surcharge order: Once five years have passed since the end of the period of implementation, the JFTC may not order payment of a surcharge for the relevant violation. The ‘period of implementation’ is the period from the date on which the enterprise began implementing the act in violation to the date on which it stopped implementing such act (if this period exceeds three years, during the three years preceding the date on which the business activities constituting the relevant act were discontinued). Thus, the maximum span of the period of implementation subject to an administrative surcharge order is three years. However, this period will be extended to 10 years once the 2019 revision of the AMA comes into effect (see also question 9.1).