Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
Global Competition Law also provides insight into possible future developments in the field.

Global Competition Law

   Article 19 of the Japanese Antimonopoly Act is modeled on Article 5 of the US Federal Trade Commission Act (FTCA). As originally enacted, it prohibited “unfair competition practices” but was thereafter amended to prohibit “unfair trade practices.” The interpretation of Article 19 following this change greatly expanded its scope of application.
Unfair trade practices can be divided into three ca …

Scope

   Article 19 of the Japanese Antimonopoly Act is modeled on Article 5 of the US Federal Trade Commission Act (FTCA). As originally enacted, it prohibited “unfair competition practices” but was thereafter amended to prohibit “unfair trade practices.” The interpretation of Article 19 following this change greatly expanded its scope of application.

Unfair trade practices can be divided into three categories:

  - acts which may restrict free competition, for example, refusal to trade, discriminatory pricing or resale price maintenance;

  - acts which are unfair in themselves, for example, customer enticement by deceptive measures, unjust benefits, etc.;

  - conduct by undertakings with a large market share whereby unreasonable demands are made of trading partners.

  Some of these practices, such as resale price maintenance, are clearly unfair; however, others are only considered an offense where they are only likely to impede fair competition and thus require a case by case evaluation by the control authorities.

  Article 2(9) of the Antimonopoly Act lists 15 acts that are considered as unfair trade practices prohibited under Article 19 including: unjust refusal to trade (or boycott), discriminatory treatment on trade terms, unjust low price sales or unjust high price purchasing, tie-in sales, trading on exclusive terms or making use of one's dominant bargaining power.

  Article 2(9) thus sets out broad concepts regarding the types of acts that constitute unfair trade practices, which allowed the JFTC to cope with vertical agreements not covered by the prohibition of restraints of trade. The JFTC has authority to designate concrete practices. In this regard, the JFTC issues both General Designations (Ippan Shitei), which apply generally to all types of businesses (Public Notice No 15 of 18 June 1982, revised in 2009) and more tailor made Specific Designations (Tokushu Shitei): applying to the newspaper business (JFTC Notification No 9 of 21 July 1999); applying to large-scale retailers in relation to trade with suppliers (JFTC Notification No 11 of 13 May 2005).

The JFTC has issued General Designations prohibiting the following as unfair trade practices:

- unilateral or concerted refusal to deal;

- unfairly low pricing or unfairly purchasing at high prices;

- deceptive customer inducement or inducing customers with unfair benefits;

- dealing on exclusive terms, dealing on restrictive terms;

- abuse of a dominant bargaining position; and

- interference with a competitor's transaction or with the internal operations of a competitor.

1) Unilateral or concerted refusal to deal

  Refusal to deal, either individually or in concert with other firms, is prohibited as an unfair trade practice where it is aimed at excluding firms from the market or achieving another unfair result. In addition to a direct refusal to deal, indirect refusal to deal, whereby a party causes another business entity to refuse to deal, constitutes a violation of unfair trade practices provisions of the Antimonopoly Act. A retailer who pressures a wholesaler not to do business with a competing retailer is an example of such indirect refusal to deal.

  It is considered unlawful to unjustly apply different prices for the same goods or services. It is also considered unlawful to unjustly apply different terms depending on the sales region involved or the transaction partners. An act is considered unjust where firms actively exclude competitors from the market through discriminatory pricing or where the aim or effect is to place certain partners in a disadvantageous position.

  Further, unjustly excluding a business entity from a trade association or concerted activity thereby causing difficulties in its business activities constitutes an unfair trade practice. On the other hand, given the private autonomy of a trade association or cooperative activity, business entities may be excluded where such exclusion is reasonable.

3) Unfairly low pricing or unfairly purchasing at high prices

  In 1984, the JFTC issued Guidelines on Unjust Low-Price Sales, revised in 2009. The Guidelines deem that although there is no problem in providing goods at a low price that has been achieved through an enterprise's efficient operations, any attempt to acquire customers by offering a low price that totally disregards profitability runs counter to the purposes of the Antimonopoly Act. The Guidelines clarify that there are three elements required to establish such a violation. First, the price must be “excessively below the cost required for the supply”, where the cost of goods means the manufacturing cost, i.e. for an ordinary manufacturing business, the production costs plus the selling costs and general and administrative costs, and, for an ordinary selling business, the purchasing costs plus the selling costs and general and administrative costs. The second element is the impact on competition; in other words the likelihood that the low-price sales will harm other business entities. However, if there are justifiable grounds behind the price charged, the low-price sale will not constitute an unfair trade practice. Justifiable grounds include disposal of seasonal or perishable goods or excess inventory, or a change of business activity.

  As regards unjustly high purchasing prices, it is rare for goods to be artificially sold at unjustly high prices; however, there may be cases where dominant firms corner the market in raw materials at high prices, thereby driving competitors from the market.

4) Deceptive customer inducement or inducing customers with unfair benefits

Although undertakings are free to try their best to attract clients, they are not allowed do so by means of:

- inducing customers of a competitor to deal with oneself though offering unjust benefits in light of normal business practices.

It is also considered illegal for an undertaking to unjustly force trading partners to deal exclusively in one's goods or services.

6) Dealing on exclusive terms, resale price restrictions, dealing on restrictive terms

Where as a result of exclusive dealing an undertaking has the possibility of depriving competitors of trade opportunities and/or hindering new market entry, such conduct will be considered unlawful. In the same way, resale price restrictions have the effect of restraining competition between sellers and will be considered unlawful. Finally, the fact of carrying on trade at terms that have the effect of restricting the business activities of trading partners may be considered unlawful depending on the trading positions of the parties and the nature of the business activity subject to the restriction. Conduct that has been considered unlawful under this heading includes customer restrictions and territorial restrictions as regards sales areas.

Pursuant to Japanese competition law, in order to be liable for abuse of a dominant bargaining position, a party need not have a monopolistic or oligopolistic position on the market. Rather, an entity need only have a dominant position relative to another entity as regards the transaction in question which makes it possible for the former to unfairly impose a disadvantage on the other party.

Abuse of a dominant bargaining position is defined in Article 2(9)(v) of the Act as using a dominant position to do any of the following: causing the other party to purchase a good or service unrelated to the transaction; providing money or other economic benefits; refusing to receive goods related to a transaction; delaying or reducing the amount of payments or setting transaction terms disadvantageous to the non-dominant party. Where such conduct is established, proof of an actual reduction in competition is not necessary in order to establish a violation.

In evaluating dominance, the JFTC considers the overall difference in scale between the two parties, the opportunities for an undertaking to choose another transacting party, market circumstances and the types of goods or services concerned. In practice, this provision has been enforced with regard to transactions between financial institutions and borrowers, oligopolistic manufacturers and retail merchants, large scale retail firms and their vendors, and prime contractors with subcontractors. For further insight, see the JFTC's 30 November 2010 Guidelines Concerning Abuse of Superior Bargaining Position under the Antimonopoly Act.

On 17 December 2019, the JFTC published guidelines especially aimed at digital platforms whereby the collection of consumers' personal data may, under certain conditions, be considered as abuse of a dominant bargaining position.

8) Interference with a competitor's transaction or internal operations

Articles 14 and 15 of the JFTC's General Designations prohibit, respectively, interfering with the transaction of a competitor located in Japan or interfering with a Japanese competitor's internal operations. Article 14 provides as an example of interfering with a transaction, preventing the formation of a contract or inducing a breach of a contract, as well as any other means of interference.

Interfering with internal operations under Article 15 includes unjustly inducing shareholders of a competitor to engage in conduct that is disadvantageous to that entity, whether by exercising voting rights, transferring stock, divulging business secrets or by any other means.

Global Competition Law

1045. Scope

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Les notions juridiques connexes

1045. Scope

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Les notions juridiques connexes

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