wednesday, 19 june of 2019

Law

Japan´s antitrust law amended to encourage companies under investigation to cooperate with FTC

The Diet enacted Antimonopoly Law amendments on Wednesday designed to provide companies involved in anti-competitive practices with stronger incentives to cooperate in investigations under a leniency system.

The House of Councilors approved the amendments by a unanimous vote at a plenary session. The amendments passed the House of Representatives in May.

The revised law will come into force within 18 months following its promulgation.

Under the existing system, which permits penalty exemptions and reductions for companies that step forward to confess to their roles in anti-competitive practices, penalty reduction rates are set uniformly in accordance with the order in which confessions come through.

By adopting flexible rates, the revised law is aimed at better encouraging violator companies to cooperate with the Fair Trade Commission and help facilitate its antitrust investigations. Ahead of the law’s enforcement, the FTC plans to compile guidelines as to what types of cooperation will be considered for penalty exemptions and reductions.

Under the amendments, the first company that owns up to its antitrust practice before investigations begin will be fully exempted from penalties, as was the case before the revision.

In addition to revised penalty reduction rates of 20 percent to 5 percent for the second and subsequent companies, the revised law calls for additional rates of up to 40 percentage points according to the degree of cooperation.

The upper limit of five on the number of businesses covered by the leniency system will be scrapped to allow as many companies as possible to report their antitrust activities even after investigations are launched.

Stricter standards will also be adopted for calculating penalties. The scope of company sales used for figuring out penalties will be expanded to include those at subsidiaries that were ordered by their parent companies to join in on the wrongdoing.

The maximum period for sales covered for penalty calculation will be extended from three years to 10 years, while calculations based on estimated figures will be permitted when related documents are lost.

The penalty rates will be unified at 10 percent, with lower industry-specific rates that have been applied to wholesalers and retailers scrapped.

Also under the revised law, the maximum fine imposed on corporations for obstructing investigations will be raised from ¥3 million to ¥200 million.

In line with the enforcement of the law, a rule for secrecy will be codified to allow companies to protect documents on their communications with outside lawyers to receive legal opinions.

The rule will apply only to administrative investigations into cartels and bid-riggings. Companies will be allowed to reject FTC requests for disclosure of such documents when certain conditions are met.

(Published by The Japan Times, June 19, 2019)
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