Competition policy has become an increasingly hot topic in Japan with a number of recent high-profile and international investigations and recent amendments to the Antimonopoly Act. With further amendments pending in the current Diet session, and the new DPJ government’s eagerness to continue reform, further developments are on the horizon.
In 2008, the ACCJ launched its Competition Policy Task Force to ensure coordinated advocacy of the Chamber’s positions on any legal or policy developments. Two years later with amendments passed, and healthy dialogue with government, industry, and legal entities, the task force is positioned well.
The Journal’s Michael Condon joined task force vice chairs Joy Fuyuno (Partner, White & Case LLP), Yumiko Ito (Executive Officer & Associate General Counsel for Legal & Corporate Affairs, Microsoft Co. Ltd.), and ACCJ Special Advisor Larry Bates (General Counsel, Japan, Director, Government Relations, Asia-Pacific, GE Corporate) to discuss the progress made and challenges ahead.
Journal: The ACCJ Competition Policy Task Force started 2 years ago at a time when there was sense of change in the air regarding regulatory procedures in Japan. Can you take us through that initial phase?
Yumiko Ito: The government had recently passed substantial amendments to the antimonopoly law, effective in 2006, which included many developments such as the institution of a leniency program. We believed this was a good time to start the taskforce. Penalties improved, but on the other hand procedures had not really been improved. So we hoped we could contribute to the creation of better laws in Japan.
Joy Fuyuno: It took a fair amount of foresight to see that at that time, because the currently pending procedural amendments weren’t on the table and people weren’t really talking about due process then. Now “due process” has become a bit of a buzzword, so we should be clear about what it means. What we mean by due process, in the broadest sense, is fair procedures in every stage of an investigation through to the appeal phase. And I don’t think people were really looking at that, at least not the way they are today, at the time the task force was formed.
Thanks to the advocacy efforts of the task force and the ACCJ generally, as well as the new party (DPJ) being interested in these issues, it’s amazing that due process is being discussed in exactly the places you want it to be discussed—the JFTC (Japan Fair Trade Commission), the various ministries, the Keidanren, all kinds of business and legal groups. These days all of these entities seem to be very aware of and interested in these procedural issues, which is amazing considering a few years ago nobody seemed to be talking about it.
Journal: What changed?
Ito: The Japanese industry associations like Keidanren began collaborating and discussing these issues with the government, as well as academics and practitioners. Also, we have been quite actively participating in those discussions. These activities have been quite successful.
Fuyuno: A lot of things converged. The JFTC’s enforcement became much more active after the 2005 amendments. There were a number of high profile investigations and so people started becoming aware of competition policy issues as a result. The amendments not only expanded the scope of the AMA, but they also increased penalties across the board. And for whatever reason, although they are based on set percentages, we’ve seen higher penalties, as well as more surcharges and consistent statements by the JFTC that they would like to continue their active enforcement activities. All of that happened around the same time and led to increased concern about fair and transparent procedures.
Larry Bates: There was an increasing recognition in Japan that a lot of these major anti-trust related investigations did have an international dimension, and that they were more related to economics than some of the traditional bid-rigging cases. There was also the start of some recognition that the procedures that govern these kinds of investigations in different countries were all quite different. For example, you might disclose a document that was created by an in-house legal team in one country and present that to the authorities in that country, let’s take Japan as an example—there’s no legal privilege here. So would that document then lose its legally privileged status that it might have in the United States? This in turn leads to a host of other due process issues.
Jumping a couple of years ahead, we have this APEC opportunity—it really is a way in which, in the due process area, Japan and the U.S. could set a kind of developed world example for the developing, emerging economies of Asia.
If we have the appropriate procedures in place, they may not be identical in Japan and the U.S., but if we can relevantly harmonize them, and if they are perceived as fair, efficient and effective, in line with the goals of enforcement, that then perhaps creates a better competition environment in the rest of Asia.
Journal: Just rewinding a little bit to the issue of due process…
Fuyuno: The specific issues that have come up over the last couple of years are very different. Last year, when we were talking about some amendments to the substantive law, for example, there were some due process-type issues that got wrapped up in that, for example in the exclusionary monopolization guidelines which came out last summer.
A key point with respect to substantive guidelines is that they should not be vague so that they overly deter what would be otherwise competitive conduct—so our task force looked at those guidelines very carefully to try to ensure that they would provide clear guidance to companies so that they know what is okay. For example, in the area of low prices, this is something that you would generally consider to be good for the consumer, so what is considered anticompetitive low pricing (predatory pricing) needs to be defined very carefully and clearly.