Can the New Antimonopoly Act Change the Japanese Business

Community?

The 2005 Amendment to Antimonopoly Act and Corporate Compliance

Kazukiyo Onishi

Introduction: Japanese Antitrust Regime and Business Community

• Antimonopoly Act, a comprehensive and advanced antitrust law was introduced and JFTC was set up in 1947: Long history of antitrust enforcement, but this regime did not work well

• It was said for a long time: Existence of many hard core cartels, especially bid riggings and Japanese Business Community did not think highly of AMA

• The situation is changing after 2005 amendment to AMA• 2005 amendment provides the JFTC with measures to fight

cartels: Leniency Program and Criminal Investigation Power• Successful crackdowns on big bid riggings involved by big and

famous companies

Recent Important Cases

Recent Criminal Cases from 2002 to 2007

Date Case

May 2007 Bid rigging over main forest road projects procured by Japan Green Resources Agency

Feb. 2007 Bid rigging over subway construction procured by Nagoya City

May 2006 Bid rigging over human waste disposal facilities construction procured by local municipalities

May 2005 Bid rigging over 　 steel 　 bridge 　 construction 　 procured 　 by　 the 　 Japan 　 Highway 　 Public 　 Corporation 　 and 　 the　 Ministry 　 of 　 Land, Infrastructure and Transport

July 2003 Bid rigging over water meters procured by Tokyo Metropolis

Recent Bid Rigging Cases prosecuted by the Japanese Penal

CodeDate Case

October to December 2006

Three Governors of Fukushima, Wakayama and Miyazaki Prefectures were prosecuted for assisting bid riggings

January 2006 The 　 Deputy 　 Director-General, 　 the 　 Defense 　Facilities 　 Administration 　 Agency 　 and 　 two 　 other　 officials were 　 prosecuted for assisting bid riggings

December 2005 Two managers, Tokyo International Airport Authority were prosecuted for assisting bid riggings

Brief History of Japanese Legislation and Enforcement

Basic Structure of the AMA

Original Penalties in the AMA

History of the Number of JFTC’s Employees

Year 1947 1950 1960 1970 1980 1990 2000 2008

Employees 284 316 238 351 422 474 564 795

Increase 32 -78 113 71 52 90 231

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Employees 558 564

571 607 643 672 706 737 765 795

Increase 6 8 7 36

36 29 34 31 28 30

2005 Amendment to the AMA

Introduction of Surcharges in 1977

Argument over Surcharges in 2005

Surcharge and Criminal Fines for Corporations

Reform of Surcharge in 2005

History of Surcharge Rates(small businesses)

Year Basic Retailers Wholesalers

1977 1.5% 1.0% 0.5%

1991 6.0% (3.0%) 2.0% (1.0%) 1.0% (1.0%)

2005 10.0% (4.0%) 3.0% (1.2%) 2.0% (1.0%)

Australia and Japan: Criminal and Administrative Fines

Australia: Draft Bill for Corporations

Japan ： Concurrent Fines for Corporations

Australia and Japan: Level of Penalties

Australia: Administrative fine (maximum) Japan: Criminal and Administrative

Penalties against Cartels in Other Countries

The Number of Legal Measures taken by the JFTC

Fiscal Year 2002 2003 2004 2005 2006 Total

Bid Rigging 30 14 22 13 6 85(65.9%)

Price Cartel 2 3 2 4 3

14(10.9%)

Private Monopolisation 0

1 2 0 0 3(2.3%)

Unfair Trade Practices 3 7 8 2 4 24 (18.6%)

Others 2 0 1 0 0 3(2.3%)

Total 37 25 35 19 13 129(100%)

Penalties against Bid rigging

Japanese Leniency Program

Leniency Program and Corporate Compliance

Effective Leniency Program

Conclusion