The Japanese government has proposed significant changes to the
procedures for challenging orders issued for antitrust violations
by the Japanese Fair Trade Commission (JFTC). The Cabinet submitted
a bill of amendments to the Antimonopoly Act (AMA) to the House of
Representatives (Shugiin) on March 12, 2010. Most
significantly, the bill would abolish the administrative hearings
on alleged antitrust violations that currently are conducted by the
JFTC and establish certain due process rights for parties being
investigated prior to the issuance of a JFTC order.
Under the current AMA, the JFTC issues cease and desist orders or
surcharge orders (administrative fines) to parties accused of
violating the AMA, with no prior hearing. Parties that choose to
contest a JFTC order may, after the order is in place, request that
the JFTC conduct a hearing. A lawsuit to challenge a JFTC order can
be filed with the Tokyo High Court only after the conclusion of the
JFTC hearing. The proposed bill would abolish the JFTC hearing
procedure altogether but allow parties to challenge a JFTC order by
filing a lawsuit directly with the Tokyo District Court.
In addition to abolishing JFTC hearings and revising the process
for court review, the bill would provide certain due process
protections for parties under investigation by the JFTC, including
requiring that the JFTC (i) provide an explanation of the content
of an anticipated order, (ii) allow the parties informally to
present arguments and evidence to the JFTC, and (iii) allow them to
review evidence obtained by the JFTC from the party and its
employees, absent legitimate reason for refusing access to those
materials. The ability to review such evidence is regarded as
important for parties' to prepare to challenge the order in the
Tokyo District Court.
Discussion
The JFTC's hearing procedure, known as the council system, has
been in place since implementation of the AMA in 1947. Until 2005
amendment of the AMA, JFTC hearings were conducted before the
issuance of a formal decision. The 2005 amendment initiated a
procedure under which an order was first issued and parties seeking
to challenge the order then had to request a hearing. Many
stakeholders, especially business groups, have challenged the
fairness of this procedure, arguing that it does not allow parties
under investigation to provide their arguments and evidence prior
to the issuance of an order and permits the JFTC to serve as both
prosecutor and judge. On the other hand, many Japanese legal
scholars have opposed abolition of the hearing procedure, concerned
that a significant amendment of the AMA, like abolition of JFTC
hearings, could lead to abolition of the JFTC itself.
The proposed bill would abolish the JFTC hearing procedure. As a
result, a party may file a complaint with the Tokyo District Court
without first undergoing a JFTC hearing. If passed, any challenge
to JFTC cease and desist orders or surcharge orders would be
subject to the exclusive jurisdiction of the Tokyo District Court.
Exclusive jurisdiction in this court is intended to ensure that
such cases are handled by a court with the requisite expertise and
that decisions on JFTC orders are consistent. A party that is
dissatisfied with a decision of the Tokyo District Court may appeal
to the Tokyo High Court.
The due process rights for parties under investigation –
requiring that the JFTC consider the parties' evidence and
explanations and allow them to review certain evidence collected by
the JFTC – reflects and important change, ensuring some
level of due process during the investigation to enable parties to
prepare for court challenges to JFTC orders.
The bill is expected to be passed by the end of June, and it would
become law within one and a half years after passage, during which
time the JFTC would develop implementing rules.
A brief outline of the Bill (in English) is available on the JFTC website .
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