Comparative Guides

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4. Results: Answers
Cartels
3.
Investigations – general
3.1
On what grounds may the enforcement authorities commence an investigation?
Japan

Answer ... The Japan Fair Trade Commission (JFTC) typically commences its investigation based on either one or a combination of the following:

  • a report from the general public;
  • a leniency application;
  • an ex officio investigation by the JFTC; or
  • a request for action from the Small and Medium Enterprise Agency.

See questions 4.1 and 4.2 for further details on the preconditions for conducting an investigation.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.2
What investigatory powers do the enforcement authorities have in conducting their investigation?
Japan

Answer ... In general, three types of investigations are conducted by the JFTC:

  • administrative investigations;
  • criminal investigations; and
  • voluntary investigations.

The first two types of investigation are specified in the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (AMA) and the JFTC’s powers differ for each type of investigation. Voluntary investigations are conducted based on the voluntary cooperation of the party.

Administrative investigations: In an administrative investigation, the JFTC may undertake the following measures in order to conduct the necessary investigation with regard to a case:

  • Order persons concerned with a case or witnesses to appear to be interrogated or collect their opinions or reports;
  • Order expert witnesses to appear to give expert opinions;
  • Order persons holding books and documents and other objects to submit such objects to, or keep such submitted objects at, the JFTC; and
  • Enter any business office of the persons concerned or other relevant sites, and inspect conditions of business operation and property, books and documents, and other materials.

The evidence gathered during an administrative investigation cannot be used for criminal purposes.

Criminal investigations: Criminal investigations are conducted whenever necessary in the investigation of a criminal case (ie, cases relating to crimes set forth in Articles 89 to 91 of the AMA, including cartel activities).

In a criminal investigation, the JFTC may conduct the following measures:

  • Request a criminal suspect or witness to appear before the JFTC and question him or her, and inspect an object possessed or abandoned by, or retain an object voluntarily submitted or abandoned by, a criminal suspect or witness; and
  • Conduct an on-site inspection, search or seizure, by virtue of a warrant issued in advance by a judge.

The measures set out in the first bullet above are considered voluntary, as they may lead to self-incrimination. On the other hand, the JFTC can directly or physically exercise its power to conduct the measures set out in the second bullet above.

Voluntary investigations: Voluntary investigations are conducted based on the consent of the party and therefore the JFTC cannot exercise any investigatory powers under the AMA. However, the JFTC may attempt to shift from voluntary investigations to administrative or criminal investigations, as described above, if during the course of the investigation it identifies a specific alleged violation of the AMA or if the party refuses to cooperate in the investigation without any justifiable reason.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.3
To what extent may the enforcement authorities cooperate with their counterparts in other jurisdictions during their investigation? How common is such cooperation in practice?
Japan

Answer ... Under Article 43-2(1) of the AMA, the JFTC:

may provide any foreign authority responsible for enforcement of any foreign laws and regulations equivalent to those of this Act (a “Foreign Competition Authority”) with information that is deemed helpful and necessary for the execution performance of the Foreign Competition Authority’s duties…; provided, however, that this does not apply if the provision of said information is found likely to interfere with the proper execution of this Act or to infringe on the interests of Japan in any other way.

However, the JFTC is bound by confidentiality obligations set forth in Article 100 of the National Public Service Act and Article 39 of the AMA, and is thus unable to provide information to foreign competition authorities in violation of these articles. Further, Article 43-2(2) of the AMA sets forth the matters the JFTC must confirm when providing information to a foreign competition authority. The JFTC often cooperates with foreign authorities by exchanging information in international cartels.

Mutual agreements: Japan has entered into cooperation treaties with the United States, the European Union and Canada. Further, most economic partnership agreements that Japan has entered into have a section regarding cooperation between competition authorities. Moreover, the JFTC has entered into cooperation agreements with the competition authorities of the Philippines, Vietnam, Brazil, Korea, Australia, China, Kenya, Mongolia, Canada and Taiwan. These agreements are mainly focused on information exchange between competition authorities.

Cooperation in criminal investigations: Evidence necessary for criminal investigations will be provided to foreign authorities pursuant to the Act on International Assistance in Investigation and Other Related Matters. Japan has entered into a treaty on mutual legal assistance in criminal matters between the United States, Korea, China, Hong Kong, the European Union and Russia. In such cases, legal assistance for criminal investigation will be provided pursuant to the treaty.

Extradition of offenders: Upon request from a foreign country, on condition that there is a guarantee from the requesting country that it would honour a similar request from Japan, Japan may extradite an offender pursuant to the requirements and procedures set forth in the Act on Extradition. Japan has entered into a treaty for the extradition of offenders with the United States and Korea. There is no precedent in which the extradition of offenders in violation of the AMA has been at issue.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.4
Is there an opportunity for third parties to participate in the investigation?
Japan

Answer ... The AMA does not stipulate any right of a third party to participate in the investigation.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.5
What are the general rights and obligations of the enforcement authorities during the investigation?
Japan

Answer ... See question 4.3 with respect to the specific powers of the enforcement authority during a dawn raid.

Administrative investigations: In an administrative investigation, the JFTC cannot directly or physically exercise its powers to conduct the investigation if the party concerned refuses. However, if individuals or companies involved in an alleged violation do not comply with the JFTC’s orders or interfere with the JFTC’s investigation without justifiable reasons, they may be subject to criminal penalties.

Criminal investigations: In a criminal investigation, the JFTC can directly or physically exercise its power to conduct the investigation to the extent permitted by the warrant issued by a judge. Warrants for on-site inspections, searches or seizures must be shown to the person that is subject to such measures. When conducting questioning, inspections, retentions, on-site inspections, searches or seizures as part of criminal investigations, JFTC staff members must carry an identification card that indicates their official status and produce it at the request of the persons concerned.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.6
What are the general rights and obligations of the target company during the investigation?
Japan

Answer ... See question 4.4 with respect to the rights and obligations of the target company or individual during a dawn raid.

Administrative investigations: With respect to administrative investigations, it is understood that Article 35 of the Constitution, which requires a warrant issued by a judge for a search or seizure, is not applicable, as this article covers only criminal investigations or those investigations that directly lead to criminal prosecution. Therefore, a warrant is not required for administrative investigations.

It is also understood that Article 38(1) of the Constitution, which sets forth the right against self-incrimination, is not applicable for the same reason. As such, notwithstanding this article, if an individual refuses to appear or testify in violation of the JFTC’s administrative order, he or she may be subject to a criminal penalty pursuant to the AMA. Further, the JFTC does not allow an attorney to be present during the interview of an individual.

Criminal investigations: Articles 35 and 38(1) of the Constitution are applicable to criminal investigations. Therefore, in a criminal investigation, a warrant issued by a judge is required for the JFTC to conduct an on-site inspection, search or seizure, and the JFTC cannot compel an individual to appear and testify before the JFTC. In practice, if an individual agrees to appear and testify before the JFTC, the JFTC will not allow his/her attorney to be present during the interview.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.7
What principles of attorney-client privilege apply during a cartel investigation?
Japan

Answer ... In Japan, it is generally understood that attorney-client privilege is not set forth in the law or explicitly recognised in judicial precedent. In a 12 September 2013 decision, the Tokyo High Court ruled that: “It is difficult to find reason to understand that the attorney-client privilege is guaranteed as a specific right or interest.” The JFTC takes the same position and may order submission of communications between an attorney and his or her client.

However, concurrently with the 2019 revision of the AMA, which will come into effect within 18 months from the date of promulgation of the bill (26 June 2019), the JFTC plans to introduce (partial) attorney-client privilege. This privilege will be admitted only in administrative investigations and will apply to communications between an enterprise and its counsel containing legal opinions in connection with an unreasonable restraint of trade. There will be four requirements for the application of this privilege:

  • The enterprise must request the application of this privilege at the time of issuance of the JFTC’s order for the submission of documents;
  • The relevant document must be handled appropriately (eg, title of the document, place of storage, maintenance of confidentiality);
  • The enterprise must submit a list of required information, such as the date of creation and the author of the document, within a certain timeframe; and
  • The enterprise must have no illegal purposes.

A designated staff member of the JFTC will decide whether the document submitted meets these requirements. If the staff member decides that the requirements are met, the document will be returned to the enterprise. As this regime is still under review at the JFTC, this may be subject to change.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
3.8
Are details of the investigation publicly announced? If so, what principles of confidentiality apply?
Japan

Answer ... The JFTC may, in order to ensure the proper operation of the AMA, make any necessary matters public except for the secrets of enterprises.

Though the JFTC will not officially make public the implementation of a dawn raid, dawn raids are often reported by the media.

The cease and desist order issued by the JFTC and a general outline of the case will be made public on the JFTC’s homepage. Cease and desist orders are brief - usually only several pages in length. Documents submitted by the related parties are not made public. See also question 4.7 with respect to the inspection or photocopying of documents by the parties concerned during the hearing of opinions procedure.

The JFTC previously did not disclose information on enterprises that were granted leniency, unless the enterprise desired such publication. However, to enhance transparency, with respect to leniency applications made on or after 1 June 2016, the JFTC now publicly discloses information in this regard, including the name, location, name of representative and percentage of reduction (or immunity) of enterprises that are granted leniency.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
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