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4. Results: Answers
Cartels
6.
Penalties and sanctions
6.1
What penalties may be imposed in criminal proceedings on companies? What penalties may be imposed on individuals?
Japan

Answer ... Companies that have committed an unreasonable restraint of trade (including cartel activities) may be subject to a criminal fine of up to JPY 500 million.

Self-employed individuals who have committed an unreasonable restraint of trade, and individuals (eg, officers, directors or employees) who have committed an unreasonable restraint of trade with respect to the business or property of companies, may be subject to a criminal fine of up to JPY 5 million and/or imprisonment for up to five years.

In addition, if a company has committed an unreasonable restraint of trade, a criminal fine of up to JPY 5 million may be imposed on company representatives who failed to take any necessary measures to prevent the violation or to rectify such violation, even though they were aware of it.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
6.2
What penalties may be imposed in civil proceedings on companies? What penalties may be imposed on individuals?
Japan

Answer ... Apart from administrative surcharges that may be imposed on enterprises (companies and self-employed individuals), in civil proceedings, person that suffered damages from cartel activities – including direct and indirect purchasers – may file a damage claim against cartel participants. Such claims are usually based on Article 709 of the Civil Code, which is a general clause for a tort claim; or Article 25 of the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (AMA), which sets forth the requirements for a follow-on action (see question 8.4). Plaintiffs can only recover actual damages. Treble damages are not available in Japan.

Theoretically, a claim under Article 709 of the Civil Code can be brought against both companies and individuals. However, in practice, such claims are normally brought against companies only, taking into account the assets of the defendant. A claim under Article 25 of the AMA can be brought only against enterprises (companies and self-employed individuals). See questions 8.1 to 8.6 for details.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
6.3
How are penalties in cartel cases determined? In deciding on the applicable penalties, will the enforcement authorities consider penalties imposed in other jurisdictions?
Japan

Answer ... In cartel cases, administrative sanctions are imposed by the JFTC and criminal penalties are imposed by the competent courts.

Administrative sanctions: If the JFTC finds that a company has engaged in cartel activities, it can issue a cease and desist order and/or an administrative surcharge order against it, unless the total amount of the administrative surcharge is under JPY 1 million, after the hearing of opinion process set out in the AMA.

The method for calculating the amount of the administrative surcharge is set out below, although this will change as a result of amendments to the AMA enacted on 19 June 2019 (see question 9.1).

In principle, the administrative surcharge is calculated by multiplying the sales volumes generated from the cartel activities for up to three years by the following rates:

  • 10% for large manufacturers;
  • 4% for medium and small manufacturers;
  • 3% for large retailers;
  • 1.2% for medium and small retailers;
  • 2% for large wholesalers; and
  • 1% for medium and small wholesalers.

The rates listed above may be adjusted upwards or downwards as follows:

  • If the company ceased such cartel activities at least one month prior to implementation of the JFTC’s investigation and the term of such cartel activities is under two years, the rate may be reduced by up to 20%.
  • If the company was engaged in such cartel activities repeatedly or played the leading role in such cartel activities, the rate may be increased by up to 50%.
  • If the company was engaged in such cartel activities repeatedly and played the leading role in such cartel activities, the rate may be doubled.

In addition, if both administrative surcharges and criminal penalties for the same cartel case are imposed on a company, the JFTC must deduct an amount equivalent to one-half of the criminal penalties from the amount of the administrative surcharges.

The JFTC does not consider any penalties imposed in other jurisdictions when calculating the amount of the administrative surcharges.

Criminal penalties: There are no clear thresholds for deciding the amount of criminal penalties under the AMA. The competent court will decide the amount of criminal penalties by taking into account various circumstances of the case.

For more information about this answer please contact: Shinichiro Mori from Momo-o Matsuo & Namba
6.4
Can a defendant company pay the legal costs incurred by and/or penalties imposed on its employees?
Japan

Answer ... No rule explicitly prohibits a defendant company from paying the legal costs incurred by its employees. However, because there may be legal conflicts between the defendant company and its employees, payment by the defendant company of such legal fees could be problematic, in that it could trigger shareholder derivative suits against the officers of the defendant company.

On the other hand, the defendant company cannot pay any penalties imposed on employees on their behalf.

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