Measures for enhancing private enforcement of competition law in Japan
-Can collective actions offer a solution in Japan?-
Abstract
Introduction
1 Importance of private enforcement of competition law
(1) Evaluation of public enforcement in Japan
Before 1990
After 1990
Analysis of data
(2) Evaluation of private enforcement in Japan
AMA Article 25 suits, Civil Code Article 709 suits
Injunction suits
Analysis of data
(3) Possible reasons for inactive private enforcement in Japan
Issues to be examined in this paper
2 Concentration of enforcement powers in the JFTC and Tokyo High Court
(1) Why the enforcement powers are concentrated in the JFTC and Tokyo High Court
Situation and analysis
(2) Gradual changes in the concentration of enforcement powers
Situation and analysis, comparison with EU modernization reform
(3) Why was the injunction suit introduced in Japan with a limited coverage?
Situation and analysis
3 Relationship between the JFTC’s findings of fact and the court’s findings of fact
(1) Problems of cases decided by recommendation decisions
Comparison with U.S. rules (de facto presumption)
(2) Change in the recommendation decision system in 2005 and its meaning for private enforcements
Analysis
(3) Increase of cases decided after full hearing proceedings
Situation and analysis
(4) Amendment of Article 84 and its meaning for private enforcement
(5) Possible impacts of elimination of the JFTC hearing proceedings on private enforcement in Japan
(6) Summary the above analysis
4 Measures to encourage private enforcement of competition law in Japan
(1) Situations as for bid-rigging cases
(2) Situations as for other types of cartel cases
(3) Why don’t injured companies try to sue for damages even if the JFTC finding became final and conclusive?
Analysis of corporate governance
(4) Measures by the JFTC to facilitate private damage suits
Analysis
(5) Elimination of Article 70-15 and its possible effects on private enforcement in Japan
(6) Introduction of representative suits by qualified associations for violations of the Excessive Premium and Misrepresentation Act
(7) Summary of the above analysis
Conclusion
Private enforcement in Japan is insufficient and measures to encourage private enforcement of competition laws are warranted. If private enforcement functions well, the JFTC could leave it to injured persons to recover their damages caused by AMA violations as for the cases where there are sufficient incentives to do so, and can concentrate on more serious cases. This will enhance the deterrent effect of the AMA.
However, the situation in Japan is quite different and the solution is not simple because the reason for inactive private enforcement of competition law is in the business attitudes of companies themselves.
The first reform should start from the measures encouraging more frequent use of damage suits by injured companies when the final and conclusive JFTC finding of facts became available. This is a key for change in private enforcement in Japan. For this purpose, some triggering measures might be necessary.
Various systems of civil proceeding in general need to be reviewed. However, such review should not offer any excuse for necessary changes in competition law enforcement scheme. A pragmatic approach is highly recommended.
Collective measures could be one solution for such change but may not be an effective solution without changing the incentive system in Japan. The 2005 Amendment of the Antimonopoly Act made it possible for the JFTC to impose larger amounts of surcharges due to the introduction of leniency program in Japan, it would offer a strong incentive for the injured companies to sue for damages even if the average amount of damage remains at 5% to 6% of purchased amount of cartelized goods, because it now means billions of yen for injured companies.