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Rethinking the Legislative Framework for Tackling Cartels: A Japanese Perspective [Volume 8-2018]

3 January 2018

(Steven Van Uytsel)[1]

1. Introduction

Deterrence has, for decades, been the mantra of competition law enforcement authorities in their fight against cartels.[2] Fines and, if available, jail sentences reached record heights.[3] Leniency policies were adopted to reach a higher probability of detection.[4] The focus on high fines and increased probability of detection was inspired by assumption that firms are rational profit maximizers, weighing the costs and benefits of entering in a cartel, and that the height of fines and the probability of detection are determining factors for the cost of participating in a cartel.[5]

Japan has for a long time not paid any attention to the deterrence mantra.[6] To the contrary, the Japanese government undertook several initiatives to encourage cartel formation in the 1950s and 1960s.[7] It could be stated that the favorable stance towards cartels finally faded away in the late 1990s, with an exception in the 1970s.[8] In the 1970s, the Japanese legislator conceptualized a new sanction, the administrative surcharge.[9] During the 1990s, the final pro-cartel legislations were abolished.[10] At the same time, the legislator has taken steps to increase the level of fines and the Japan Fair Trade Commission has stepped up its enforcement initiatives.[11]

The step towards a stricter application of the Anti-Monopoly Law (AML) continued since the turn to a new century. In 2005, Japan followed the steps of the United States and the European Union in implementing a leniency policy with the aim of increasing the probability of detection.[12] In 2015, a long standing debate in academic writing was taken up in order to study whether it could be transformed into a policy goal.[13] If implemented, this would mean that the JFTC would not be bound anymore by a legally determined percentage of the turnover when deciding on the surcharge.

Recent international scholarship is questioning whether the neoclassical economic paradigm of deterrence is effective.[14]  Maurice Stucke, for example, is pointing out, with four indicators, that cartel activity is persistent.[15] A first indicator is the fact that penalties do not decrease. A second indicator is that the duration of cartels does not diminish. A third indicator is the continued workload of the enforcement authority in dealing with cartels. A fourth indicator is that firms persist in cartel formation even after publicizing record high fines.

Even though steps have been taken towards deterrence, Japan does still score badly on several of the indicators mentioned by Stucke. It may thus be questioned whether a continued emphasis on deterrence would deliver better results. This will be especially true if cartel formation is the result of a cost-benefit analysis, but of elements present in a certain society. That these societal elements are present in Japan will be the argument of this paper. Their presence will require a different approach, one that focuses on improving corporate culture, if one is serious of tackling cartel formation.

The paper is structured as follows. Section B will give a theoretical overview of the economic thinking that has influenced competition law enforcement over the past decades. By pointing out that deterrence has been one of the main factors in this economic thinking, Section C informs about the evolution Japan has gone through in terms of its stance towards competition law enforcement. The argument will be made that Japan, even though not completely, is gradually moving towards the goal of deterrence. Section D questions the path towards deterrence and introduces international empirical evidence to show that cartel formation is not necessarily the result of an economic calculus. This Section will also show that similar elements are present in Japan’s society. Before concluding cartel formation in Japan will not be deterred by solely focusing on higher fines and increased probability of detection, Section E will introduce what possible legislative actions could be taken in order to achieve a better result.

1. Deterring Cartels under Neoclassical Economic Theory

1.1. Rational Profit Maximizers Calculating Costs and Benefits

Law enforcement has been influenced by the seminal article of Nobel Prize laureate Gary Becker, titled Crime and Punishment: An Economic Approach.[16] In this article, Becker proposed that a criminal fine could be understood as a price attached to violating the law and can thus be seen as a potential cost for a person willing to engage in the undesirable conduct.[17] Becker further indicates that the fine is not the only element determining the cost. The cost is also influenced by the probability of detecting the violation of the law and whether actual punishment follows upon detection.[18] Presuming than that people act rational, Becker pretends that the costs will influence the behavior of people.[19] High costs, either in the form of a high fine or a high degree of detection and punishment, will make people refrain from violating the law. Low costs, to the contrary, will inspire people to violate the law.

It has been claimed that Becker’s view on “criminal sanctions is most relevant for the enforcement of the cartel prohibition.”[20] “Whereas the assumption of rational behavior may be criticised with regard to irrational crimes (such as murder), calculating behaviour is a rather realistic scenario for white-collar crimes. Antitrust violations generally result from calculating business decisions,”[21] so purport Roger Van den Bergh and Peter Camesasca. They further indicate that, if one applies Becker’s view on competition law, “[f]irms will engage in price fixing if the gains derived from this activity are higher than the costs, both adjusted for the probability that they will be materialise.”[22]

The highest level of deterrence could be reached either by imposing the highest feasible level of fines or by improving the probability of detection. If a high fine can be imposed, the probability of detection could be low. To the contrary, fines could be low if a high probability of detection can be guaranteed. Law and Economics has traditionally argued that the imposition of high fines is the most efficient choice for competition authorities.[23] These authorities will not have the resources to control all kinds of behavior. Very often, the enforcement budgets are limited and cannot easily be changed.[24] More recently, it has been put forward that detection should not be neglected too much. Without a sufficient rate of detections, people lose sight of the potential high fines that can be imposed.  Moreover, a situation in which detection is low fines may need to take a magnitude beyond the capacity of a firm to pay. It goes without saying that leniency programs are addressing this issue.[25] Without spending much of its own resources, competition authorities could increase the probability of detection by relying on information from the law infringers themselves.

1.2. Procedural Justice and Corrective Justice

Deterrence is one goal of law enforcement. [26]  To achieve deterrence, economist have advocated for high fines. These high fines may, for several reasons, not be socially accepted. Instead, the legislator may adjust the optimal fine for deterrence so that it becomes proportionate “to the degree in which society disapproves of the harm caused.”[27] Enforcement will in this case be driven by proportional justice. [28] Legislators may also opt for prioritizing the compensation of the harm that is caused by a violation of the law and so serve corrective justice.[29]

Roger Van den Bergh and Peter Camesasca point out that these principles may be inconsistent with each other.[30] They point out, for example, that deterrence may require the imposition of extremely high fines that cannot be borne by the competition law infringer. In such cases, competition law should provide for alternative sanctions, such as imprisonment of the company directors that have decided to violate the competition law. This insight may conflict with proportional justice, especially in jurisdictions that perceive jail sentences for company directors as too harsh. Only fines may be considered as appropriate sanctions within these jurisdictions. It is quite possible that these fines will be too low to have any deterrent effect on potential infringers.

The various principles can also show tensions.[31] Due to the focus on compensation for the harm caused by competition law infringement, corrective justice may only be focusing on the profits generated through infringement and the harm caused to society. The amount that corrective justice envisages is likely to be lower than the amount necessary for achieving deterrence. Deterrence also requires taking the probability of detection into consideration. Only a high probability of detection will bring the amount of the sanction for deterrence into the neighborhood of the amount that is sufficient for corrective justice. Low detection probability, to the contrary, will require a sanction of which the amount is much higher than what corrective justice envisages.

Inconsistencies and tensions among the principles underlying law enforcement require policy makers to make choices. Policy makers have to express to what extent the non-economic principles of proportional and corrective justice trade-off with the principle of deterrence.[32] The decisions taken will have an impact on different elements, such as the type of sanction, the severity of the sanction and the resources to be spent on enforcement.

The following section will identify to what extent the different goals have been implemented in the Japanese AML. The argument will be made that in the original enforcement policy proportional justice was reigning, but that deterrence is gradually moving to the fore. Corrective justice has as good as no place within the enforcement policy.

2. The Neoclassical Economic Theory of Deterrence in Japan

2.1. Proportional Justice Marking the Enforcement Policy

Japan received one of the most strict competition laws in the aftermath of WWII. The Antimonopoly Law that was adopted in 1947 made almost any form of cooperation illegal, whether it was at the domestic or the international level. When Japan regained its sovereignty in 1952, Keidanren, the Japanese Business Federation, was eager to change that situation and went even so far as advocating for the abolition of the Antimonopoly Law. The regulating authority, the Ministry of International Trade and Industry (MITI), agreed that something had to change about the Antimonopoly Law. However, MITI did not agree with an abolition. Instead, MITI suggested substantive changes to the Antimonopoly Law.

Article 4 AML, which was basically a per se prohibition for cartels, was abolished. Good cartels, which were recession or depression cartels (fukyou karuteru) and rationalization cartels (gourika karuteru), were put under a licensing system.[33] The JFTC was given this task to operate the licensing system.[34] Cartels that did not fall within any of these two categories were not necessarily bad cartels. MITI also started to exploit the fact that Article 3 AML, dealing with unreasonable restraints of trade and generally be regarded as the article applicable to cartels after the repeal of the per se prohibition of cartels in Article 4 AML,[35] was open for a liberal interpretation. One could argue that cartels would be allowed if they served the public interest. MITI would, often in response to industry requests, study the market structure of several industrial sectors. When overcapacity was found in an industry, MITI would recommend a reduction of the output (kankoku soutan) to all entrepreneurs in this industry.[36] These ministerial recommendations, commonly referred to as administrative guidance or gyousei shidou, had no formal legal standing.[37]

Several special statutes were enacted to exempt various forms of cartels.[38] These bypass statutes, which at some point almost reached the number of 30, regulated, among others, cartels among small and medium sized entrepreneurs, import cartels, export cartels and cartels of entrepreneurs belonging to a specific industry such as insurance and air transportation.[39] Unlike under the direct AML exemptions for recession and rationalization cartels, these statutory cartels did not need to obtain approval of the JFTC. Approval was usually granted by the ministry in charge of the particular industry. The JFTC had merely to be consulted, which often just meant notified, by the competent ministry.[40]

For a long time, the JFTC was not able to counter the MITI’s emphasis on industrial policy. The JFTC was institutionally not as strong as the ministries, which also translated itself in the lower ranking of senior JFTC officials compared to the senior officials in the ministries. Further, both at the senior and lower level, the JFTC faced the problem of secondment due to which it was difficult to steer an independent course. Many of the officials in the JFTC came from the ministries regulating the market and they were usually prone to follow the policy set up by their respective ministry. The low importance attached to competition law also resulted in understaffing and low support from other ministries, such as the Ministry of Justice, to pursue action against infringements of the AML.[41] This state of affairs led Japanese to refer to their country as the “cartel archipelago.”[42]

The hollowing out of the substantive provisions of the Antimonopoly Law could be regarded as a stepping away from deterrence as an enforcement goal and introducing proportional justice as an enforcement goal. The 1947 Antimonopoly Law adhered to incarceration and criminal fines as a way to punish infringements of the law. This kind of sanctions have, for a long time, been regarded as the most severe sanctions one can impose. The evolution since 1952 did not really reduce these sanctions in order to adjust them to an acceptable level. Instead, the government chose the path of limiting the scope of application of the criminal sanctions in order to bring the enforcement of the Antimonopoly Law into proportion with the expectations of society.

2.2. An Enforcement Policy Moving Towards Deterrence
2.2.1. Creating New Sanctions, Invigorating Existing Ones

There have been several calls to strengthen the Antimonopoly Law. The oil shock of the 1970s and the following economic slowdown triggered the first call for strengthening the Antimonopoly Law. Initiated by the Japan Fair Trade Commission, in particular the Antimonopoly Conference (JFTC’s advisory body),[43] supported by the opposition parties[44] and the general public[45], the call was given acknowledgement by the Liberal Democratic Party. The cabinet led by Prime Minister Miki was the one to implement a stronger grip of the government on business excesses. Near the end of the 1970s, the revision of the AML was a fait accompli. In terms of cartel enforcement, the revision meant a real step forward in the reform of the cartel archipelago. Criminal sanctions were raised from 500.000 yen to 5 million yen.[46] A new kind of sanction, the administrative surcharge on illegal cartels, was introduced. This sanction allowed for taking away between 0.5% and 2% of the sales of the cartel goods or services.[47]

A second call for strengthening came from the US government. The US saw the weak enforcement of the Antimonopoly Law as a structural impediment for US firms to enter the Japanese market.[48] To silence the US criticism, Japan promised to take action. Soon after the SII talks in 1992, the government raised the amount of the sanctions provided in the AML. The administrative surcharge increased to four times the previous rate, with a maximum of 6%. Criminal sanctions were multiplied twentyfold to the amount of 100 million Yen.[49] In 1996, the JFTC was upgraded from a Secretariat to a General Secretariat, allowing it expand and reorganize its daily operation.[50] One year later, in 1997, the number of exempted cartels was reduced through the acceptance of the Omnibus Act to Repeal and Reform Cartels and other Systems Exempted from the Application of the Antimonopoly Act under Various Laws.[51] For the cartel exemptions that remained, the exemption criteria became stricter. Recession and rationalization cartels were abolished in 1999.[52]  In 2000, a civil injunction system was implemented.[53] Another change was added in 2002 to this series of gradual changes. The criminal penalty increased to 500 million Yen.[54]

At the start of this century, the then Prime Minister, Junichiro Koizumi, led its country into a major reform in order to stop the downward economic spiral in which Japan was caught for more than a decade. The idea of his reform was to decrease government involvement and leave the economy to the free market. In such an environment, the law controlling the free market had to be strengthened. One of the elements that the Koizumi Cabinet prepared for this purpose was the introduction of a leniency program. The leniency program should increase the probability of detection as it provides an incentive to cartel participants to defect the cartel and report the cartel to the enforcement authorities. The incentive given in Japan ranged from immunity to 30% reduction of the administrative surcharge. The leniency program went into effect in 2006, and was revised in 2009. The revision had mainly to do with the maximum number of firms eligible for leniency.[55] At the same time that the leniency program was introduced, the level of the surcharge increased to a maximum of 10%. Recidivists will face a surcharge of 15%.[56]

The Japan Fair Trade Commission turned again to study a change in the sanctioning system, more specific the administrative surcharge, in 2016. On February 10, 2016, the Japan Fair Trade Commission initiated a Study Group to reconsider the administrative surcharge.[57] Two elements will be discussed. On the one hand, the administrative surcharge will be studied against the sanctioning systems in place in other jurisdictions. On the other hand, the study group will consider the necessity for establishing a discretionary surcharge, something which already has been discussed at length among the Japanese academics.[58] This system would enable the Japan Fair Trade Commission to adjust the surcharge depending upon the cooperativeness of the firms with the enforcement authority.

2.2.2. Japanese Sanctions: Increased Deterrence, but Surely not Optimal Deterrence

It has been stated that deterrence can be achieved by either imposing a sufficiently high fine or by increasing the probability to being caught. The probability of being caught has always been very low for cartel cases. This would mean that Japan should have put forward serious sanctions for cartel behavior. In 1947, criminal sanctions were inscribed in the Antimonopoly Law. The criminal sanctions were revised 1977, 1992 and 2002. The administrative surcharge was added in the 1970s. The height of the surcharge was increased several times. The first time in 1992, the second time in 2005. Currently, there is a Study Group reconsidering the surcharge. Besides the sanctions, Japan also tried to increase the probability of detection by adopting a leniency program.

To achieve optimal deterrence, it has been worked out by Becker, Stigler and Landes, “the total sanction imposed for violations of antitrust law equals the harm of the violation to society, multiplied by the inverse probability of a sanction being imposed.”[59] There are various indicators that the enforcement policy of the Antimonopoly Law in Japan does not reach optimal deterrence. First, incarceration is considered to be one of the better types of sanctions to obtain deterrence, because it makes the individual decision makers accountable.[60] It is also important not to limit the criminal sanctions to monetary ones, as the firm can compensate the employees ex ante.[61] The Japanese Antimonopoly Law has jail sentences on top of criminal fines. In terms of deterrence, the law should score well. However, criminal accusations in Japan are few. If there are criminal accusations, the individuals usually end up with a suspended sentence. The deterrence that should be achieved by the criminal sanctions is jeopardized. Due to the weakening of the criminal sanctions, the enforcement policy is more reflecting proportional justice than deterrence. Second, the administrative surcharge is determined based on the turnover. Van den Bergh and Camesasca point out that turnover is “not a sound basis for calculating the fine if it does not allow for the reversal of the gains of the infringement.”[62] It is thus important that the height of the fine exceeds the gains of the infringement. Even though there may be issues with the identification of the gains,[63] there have been studies that point out that the average gain of a cartel in Japan ranges from 15% to 30%.[64] Taking into consideration that Japan started out with only taking away 0.2% and increased it to 10% of the turnover, the amount is still too small to achieve optimal deterrence. The fact that the administrative surcharge has not yet increased up to the level that might be regarded as the profit of a cartel may again reveal that proportional justice has been one of the motives driving the enforcement policy. Third, even though not highlighted in what has been described above, private enforcement is “nowhere near ‘institutionalised’ in [Japan] as in the US.”[65] Whenever private enforcement, in the form obtaining civil damages, increased,[66] the legislator intervened to revise the system and make it more difficult to obtain these damages. Corrective justice goals are thus also set aside, most likely also to serve proportional justice.

Proportional justice seems to drive the enforcement policy of the Japanese Antimonopoly Law. Deterrence, in the format of optimal sanctions, is not what drives the enforcement policy. However, a gradual change is noticeable. The favorable stance towards cartels was first tarnished by the implementation of the surcharge in the 1970s. From that point onwards, each decade has been characterized by events that further decreased the importance of proportional justice. The surcharge increased from 2% to 10% over a period of 28 years. Criminal sanctions went up from 500.000 yen to 500 million yen. Since 2000, there is also an increase of the application of the criminal sanctions, even though the jail sentences are still suspended. To add to the increased fines and sanctions, Japan introduced the leniency program to improve the detection rate of cartel activity. Recently, the Japan Fair Trade Commission is considering more changes towards the surcharge system, which may eventually bring it closer to the enforcement policy of deterrence.

3. Cartel Activity despite Increased Sanctions and Higher Possibility of Detection

3.1. The Evolution of the Sanctions in Japan

The Japan Fair Trade Commission has the possibility to apply two different kind of sanctions: an administrative surcharge and a criminal file/imprisonment. The surcharge has been created in 1977, while the criminal sanctions have been existing since 1947. The most frequently used sanction is the surcharge. The following table gives an overview of the development of the total amount of surcharges since 1977 (source: Shuya Hayashi, Discretionary Surcharge System Model (draft version on hold with the author)):

Year No. of Cases
(see Note 2)
No. of Payment Orders
(No. of Parties in Receipt)
Surcharge Amount
(Unit: 10,000 JPY)
1977 0 0 0
1978 1 4 507
1979 5 134 157,174
1980 12 203 133,111
1981 6 148 373,020
1982 8 166 48,354
1983 10 93 149,257
1984 2 5 35,310
1985 4 38 40,747
1986 4 32 27,554
1987 6 54 14,758
1988 3 84 41,899
1989 6 54 80,349
1990 11 175 1,256,214
1991 10 101 197,169
1992 17 135 268,157
1993 21 406 355,321
1994 26 512 566,829
1995 24 741 644,640
1996 14 368 748,616
1997 16 369 282,322
1998 16 576 314,915
1999 20 335 545,891
2000 16 719 851,668
2001 15 248 219,905
2002 37 561 433,400
2003 24 468 386,712
2004 26 219 1,115,029
2005 20 399 1,887,014
2006 13 158 926,367
2007 20 162 1,129,686
2008 11 87 2,703,642
2009 24 106 3,607,471
2010 15 156 7,208,706
Total: 463 8,016 26,751,714
Table 1: Application of ‘Order for Payment of a Surcharge’ to Date[67]

The table indicates that the total amount of surcharges that have been levied on an annual basis has been constantly increasing since its inception in 1977. The absolute amount of the surcharge has increased, but if the relative level of the surcharge is taken into consideration, one can notice that fewer firms are paying higher amounts of fines. The fact that there are fewer firms may be explained by several elements that could debunk a conclusion that this lower number of firms may indicate first signs of deterrence. First, the high number of public procurement related bid rigging cases has dropped since 2005. These bid rigging cases usually involved many firms. Second, since 2006, a larger number of price fixing cartels have been detected, which usually are formed by fewer firms. These fines are being published by the Japan Fair Trade Commission on its website. Even though this information is publically available, the effect of a high surcharge being imposed on firms seem to be little.

A second sanction that the Japan Fair Trade Commission could impose is the criminal sanction. The criminal sanction has as good as never been used in Japan before the 1970s. Criminal prosecutions were started against the oil cartel, which ended in the 1980s before the Supreme Court.[68] Criminal prosecutions were stepped up in the 1990s, in order to have about one per year from 2006 onwards.[69]

3.2. Duration of Cartels in Japan

The duration of cartels has been relatively short in Japan. In an overview of cartel enforcement by the Japan Fair Trade Commission, there were 51 cartels that lasted about 1 year. 39 cartels lasted for about 2 years. 91 cartels had a duration of about 3 years. 71 cartels lasted for about 4 years. Only 15 cartels had a duration of about 5 years. Not more than 7 cartels lasted around 6 years. 17 cartels were able to sustain itself for more than 6 years. Some of them were even able to remain active for about 10 years.[70]

The study covered a period before the implementation of the leniency program.[71] The leniency program was able to unveil several cartels. One of the major cartel detected in that period was the car parts cartels, many of which lasted for about 10 years.[72] The Power Cable Cartel had a similar duration.[73] Other cartels, such as the Marine Hose cartel, lasted for about 20 years.[74]

3.3. Workload of the Japan Fair Trade Commission

It is generally known that the Japan Fair Trade Commission has been badly staffed in its early years of operation. The number of personnel has, however, drastically increased over the last couple of years to almost 800 people. Around 450 of them are investigators. Below is a table reflecting the evolution of the number of total staff and investigators at the Japan Fair Trade Commission between 1995 and 2012:

Year Number of total staff Number of Investigators
2012 799 456
2011 799 452
2010 791 451
2009 779 442
2008 795 429
2007 765 409
2006 737 383
2005 706 360
2004 672 331
2003 643 318
2002 607 294
2001 571 269
2000 564 263
1999 558 260
1998 552 254
1997 545 248
1996 534 236
1995 520 220
Table 2: FY 1995-2012: Total number of staff and number of investigators[75]

The number of cases that the Japan Fair Trade Commission is dealing with may indicate that there is no real decrease in cartel activity that has to be dealt with. Another proxy for detailing that the Japan Fair Trade Commission is still overwhelmed with cartel behavior is the number of leniency applications. Over a period of 8 years, the Japan Fair Trade Commission has received not less than 775 leniency applications. As is apparent in table 3, there has been s steady increase in leniency applications the first 6 years of its application, after which two years of decline followed:

Fiscal Year[76] 2006 2007 2008 2009 2010 2011 2012 2013 Total
Number of Applications 79 74 85 85 131 143 102 50 775
Table 3: Number of leniency applications between fiscal years 2006–13[77]

It has been pointed out that the Japan Fair Trade Commission is not able to deal with all these leniency applications. If we compare the total number of leniency applications with the total number of successful leniency applications, we can see that there is a backlog of about 540 leniency applications. Table 4 provides an overview of the total number of successful leniency applications between 2006 and 2013:

Fiscal Year 2006 2007 2008 2009 2010 2011 2012 2013 Total
Successful Leniency Applicants 16(15) 37(38) 21 50 10 27 41 33 235

Table 4: Number of successful leniency applicants between fiscal years 2006–13.[78]

3.4.Persistence of Cartels in Japan

The increasing height of the surcharge, the length of the duration of the cartels and a continuing heavy workload of the Japan Fair Trade Commission are elements pointing to the fact that cartels persist. Since the secrecy in which cartels are veiled, it is impossible to make a statement in relation to the total number of cartels. However, it is possible to indicate how many cartels exist in Japan. The only thing we can do is to check the number of cease-and-desist orders the Japan Fair Trade Commission has been taking. What we can see is that, despite the increased fines, criminal prosecutions and the use leniency, new cartels are being detected. Cartels persist to exist.[79]

4. Looking Beyond the Deterrence Debate

4.1. Empirical Research on Law Compliance

Neoclassical economics makes several assumptions regarding business people. The assumptions being made are the following. First, business people have full information.[80] Second, business people make a rational choice based upon the full information.[81] Research has pointed out that neither of these assumptions hold. This research does not deny the importance of calculations about the costs and the gains of compliance or non-compliance with the law in business thinking, it reveals that inaccurate information, cognitive biases or situational factors often lead to non-optimal results.[82]

Empirical research has shown that the severity of sanctions do not necessarily determine compliance behavior. It is rather the perception of business people of the probability of being detected and sanctioned that drives the compliance with the law. In order to achieve deterrence, it is thus not desirable to put all emphasis on high sanctions. Even a threat of incarceration is not necessarily going to outweigh a low probability of detection. Therefore, enforcement authorities should increase their monitoring and enforcement activities and the business community should also perceive it like that. The perception may be tainted by an overconfidence bias or an availability heuristic. Business people may overestimate their ability to hide their illegal activity and avoid detection. Industries without recent cartel cases or few media attention in relation to cartel cases may create an underestimation of the likelihood of detection.[83]

Other empirical research has indicated that, when informal or social sanctions are available, compliance with the law tends to be better. Informal or social sanctions could be, for example, consumer boycotts, stock price declines, or reputational loss. There is no abundant empirical evidence that cartel behavior triggers any of the informal or social sanctions, such as stock prices that would drop in the wake of a cartel investigation.[84]

A calculation on whether to comply with the law may be corrupted by situational factors. Empirical evidence has shown that situational factors could be more important for attracting business people to engage in cartel conduct. Financial gains, or greed if one would like, are not always the reason why cartels are being formed. The situational factors could be multiple and linked to the industry or market environment, the firm’s context, or characteristics specific to the individual. An industry could be entrenched with cartel behavior. In such an industry, sales staff will be directed to meet with competition. The constant guidance towards coordination will create a situation in which the sales staff will lose sight of the fact that they are engaging in illegal activity.[85] The industry may also bully or coerce other companies into participating in a cartel.[86] An economic downturn of the market could drive the sales force to opt for a comfortable situation of coordination. Coordination will create predictable outcomes and take away uncertainty, so that a steady stream of profit can be generated.[87] In some cases, this strategy may be followed to secure the survival of the company.[88] Companies that have organized their payment structure of the sales force in terms of the profits and volume or have determined that bonuses and commissions constitute a large proportion of the salary, experience relatively more cartelization than firms in which other remuneration structures are in place.[89] Individuals may be confronted with a crisis in their personal life or an opportunity to which they respond. This response may trigger an infringement.[90]

4.2.Business Culture in Japan

Much of the above-described empirical research, if not all, is done outside of Japan. Studies on the persistence of cartel behavior in Japan have almost all focused on bid-rigging. Bid-rigging has been a practice often recurring in Japan, the success of which often depended on a dysfunctional procurement system, greedy politicians, cooperative bureaucrats and coordinating trade associations. These studies do not explain why cartel behavior may occur outside of the construction industry. The focus on the construction industry could easily be explained. Most of the enforcement actions inside Japan were focused on bid-rigging. It is only recently, after the adoption of the leniency program, that more and more domestic price fixing cases have been exposed. Since the cartel behavior is not limited to the construction industry, other elements should be identified on why cartels occur in Japan. The focus in thus paper will be on the other elements and the argument will be that these elements could be found in some of the typical characteristics of the corporate governance in Japan. By looking at these elements, a story parallel to the empirical findings described-above could be constructed.

4.2.1. Perception of Detection and Enforcement

Deterrence, as we have seen, requires an optimal sanction. This optimal sanction may, for various reasons, not yet be implemented in Japan. It could thus be argued that deterrence in Japan will not be achieved. This may well be trough for cartels that operate in the domestic market. However, nearly all international cartels that have been detected in the last two decades had major Japanese companies involved. This could trigger the argument that also the other jurisdictions in which these cartels operate do not achieve deterrence. Also this argument may be plausible were it not that empirical research indicates that the perception of detection and enforcement is an important factor in determining whether to comply with the law or not.

After WO II, Japan has built a system that advocated coordination and cooperation. Once it regained its sovereignty, Japan turned its antimonopoly law to a piece of paper without any meaning. The strict prohibition on cartels was abolished. A licensing system for good cartels was being established. Loose interpretation of the remaining provisions of the Antimonopoly Law incentivized the industry to form cartels. Legislation further exempted different kind of agreements out of the Antimonopoly Law. In terms of enforcement, we see that the Japan Fair Trade Commission was given a weak status compared to ministries controlling the economy. These ministries further increased their influence within the Japan Fair Trade Commission by positioning their officials in top positions. Human resources and the attributed budget were also not sufficient to undertake fierce enforcement actions.[91]

As I have indicated elsewhere, “Akinori Uesugi informs us the result of the fiddling with the AML. By the end of 1966, and this was probably the peak in the postwar period, there were 1079 cartels exempted.[92] This number does not include quasi-legal cartels and illegal cartels. Quasi-legal cartels, which were cartels pushed for by MITI without the AML or specific legislation as a basis and which could be justified under a liberal reading of Article 3 AML, have not reached the number of exempted cartels. However, the numbers available indicate that they were not unimportant.[93]

A legal environment in which there is an almost a general acceptance of coordination and cooperation, the perception that there will be detection and enforcement will be low. The legal environment has changed. Japan has done quite a lot to make an end to what once could have been regarded as the cartel heaven. The newly created environment needs to spread in the business community. The Japan Fair Trade Commission may hope that by releasing the information on their investigations online there is a better awareness that the Antimonopoly Law is being enforced and that exceptions are rare. Two comments could be made to this. First, the online news on cartels is most likely only going to be consulted by professionals dealing with competition law. At best, in-house lawyers of a company will consult the website. Business people, engaged in transactions, will most likely not do so. Second, a sarcastic view on the data spread by the Japan Fair Trade Commission could be that not much has changed over the last 20 years. In absolute numbers, there are not more cases than there were in the decade before the leniency program.

Media could alter this situation. Media have the power to educate and influence people’s values and behavior.[94] The bigger question is the newsworthiness of a cartel. As an offense (in some countries a crime), a cartel is less exciting than other forms of crimes. Cartel stories get sidelined.[95] If something appears on a cartel, it is, like in Japan, usually limited to a statement of dry facts, being that there has been a dawn raid or that a penalty of several million or billion yen has been imposed. These are mere fact that do not raise any further caution among business people as it does not explain what went wrong and why it should be avoided. This probably has to do with the difficulty to actually report accurately on the harm that has been done by the cartel cases.

The poor perception of detection and enforcement is further exacerbated by other elements of corporate governance in the Japanese firm. More in specific, Japanese firms prefer to educate personnel inside the firm. Personnel that occupies crucial positions in a firm enjoy life-time employment. Legal departments, and more specific compliance departments or officers, have only been late in Japanese firms.

4.2.2. Corporate Governance Aspects of The Japanese Firm

Japanese firms have grown in a legal environment in which coordination and cooperation was allowed and even stimulated. Three Japanese lawyers, Kentaro Hirayama, Kei Amemiya, and Kazuyasu Yoneyama, have confirmed this situation and stated that that “[t]raditionally, Japanese companies have been tolerant about meeting with competitors. Indeed, some companies, even large listed companies, have no clear policy about meeting with competitors […].”[96] Taking into consideration that Japanese firms educate their personnel inside the firm and that few external expertise is being brought into the firm, it is difficult to change the perception that meeting with competitors is not problematic.

Lifetime employment and a seniority based promotion system has characterized Japanese corporate governance.[97] In a typical Japanese firm, employees would enter as fresh graduates from high school, vocational school or university. The employees would start at low ranked positions. After being trained at various positions throughout the firm, usually for a period of three years, the employees would be promoted to a higher ranks.[98] In other words, the position of peers is always occupied by people who have experienced the same corporate culture. Even though it may occur, outside influence at a higher ranked positions is very seldom in Japan. This has several implications for compliance with competition law. First, the generation that has grown up within an environment in which competition law does not play an important role, will transfer this kind of experience on to a new generation of employees. Second, to change the perception that competition law is important and actually being enforced may require several generations of employees. Third, no new business culture will find its way into a firm by not attracting employees from other firms.

Raising the business elite within a firm puts less emphasis on the need for people with a profound business training in which the need to comply with competition law is explained. Empirical research shows that such a call for qualified personnel is limited.[99] If it exists, the firms may be interested in attracting graduates from law faculties or business schools. However, these graduates do not necessarily have a background in economic law, the subject name for competition law in Japanese universities. Even though many universities have a professor of competition law and offer economic law as part of their curriculum, economic law is not a compulsory subject. Combining that with the above described lifetime employment and seniority based promotion, new employees will most likely not bring in a sense of compliance with competition law either.

Japanese firms have for a long time been neglecting to set up separate legal affairs departments.  Legal expertise, if present, was part of the general affairs department. When legal affairs departments were being set up, staff of formerly non-legal units, often without legal skills, were transferred to these new departments. Just like anywhere else in the firm, the people in these legal departments were usually generalists and the work to be done focused mainly on contract and corporate related law.[100] Compliance with competition law was way down the list of things to be occupied with.[101] It was a new issue by the end of the 1990s, but still less important than product liability or shareholder derivative litigation. Over a period of 10 – 15 years, legal departments have professionalized. However, there are still some issues that may call for questions. The number of professional lawyers in legal departments has increase from 64 to 707 in 2013,[102] but this is even not 1 lawyer per listed firm.[103] The in-house lawyers have grouped themselves in a Japanese In-house Lawyer Association that has reached 1200 member in 2016. This Association is subdivided into several sections. None of the sections seem to deal with compliance.[104]

5. Improving Corporate Culture

5.1. The Economic Model Must Account for Social Realities

Discarding the neo-classical model of law enforcement is not something scholars advocate for. Scholars do not argue that it is not important to have or maintain high sanctions or that enforcement agencies should not engage in every possible effort to uncover cartel activities. These elements are essential in an enforcement policy. However, current scholarship advocates that improving the corporate culture may be as important. In this sense, William Kolasky, a senior antitrust official during the Bush administration, stated that:

In the cases that we prosecute, we find almost invariably that in companies that violate the antitrust laws, the tone of disrespect for the law and for competition permeated the entire company, usually starting at the very top. Look at some of the people we have prosecuted: Alfred Taubman, the chairman and principal shareholder of Sotheby’s; Mick Andreas, son of the long-time chairman and CEO, Dwayne Andreas, who was himself being groomed to take over the reins. In fact, ADM is a particularly good illustration of the kind of corporate culture that breeds antitrust crimes. It was a culture that believed, as one senior executive put it, that, ‘Our competitors are our friends. Our customers are the enemy.’ Both in representing defendants in criminal investigations in private practice and now as a prosecutor, this is exactly the attitude I’ve found in almost every company that commits antitrust crimes.[105]

In order to curb the negative attitude towards the competition law, Kolasky advocates for compliance programs in order to establish a culture of competition. These compliance programs, however, need to be an expression of the values of the senior management and being communicated to the employees. Needless to say, scholarship does not only focus on the adoption of compliance manuals or making the compliance manuals more effective. In the next section, I will explain why it may be worthwhile to consider a focus on compliance in Japan.

5.2. Corporate Compliance in Japan

The Japan Fair Trade Commission has conducted several times surveys on the presence of compliance manuals among Japanese companies. In 2010, the Japan Fair Trade Commission issued a study on Corporate Compliance Systems. The study indicates that the existence of compliance manuals is not uncommon[106] and they are often complemented by compliance sessions.[107]

The study received about 1200 responses. The majority of the responses, 86%, mention that they have a compliance manual (whatever the title of the manual may be). Most of the firms had a director in charge of the legal compliance. Only 60% answered that a specialized in-house organization of legal compliance had been set up. About 70% indicate that a special compliance committee existed, either within the compliance organization or on self-standing basis. Active training sessions on compliance with the Antimonopoly Law are less popular than compliance manuals. Only 56% of the respondents have organized training sessions.

Despite the presence of the compliance manuals and a structure to sustain the compliance manuals, the study also indicates that a majority of the respondents see a violation of the Antimonopoly Law as likely. 51% of the respondents indicate that it is likely, while 41% of the respondents stipulate it is unlikely. This answer is troublesome, the more that 81% of the respondents, thus almost as many respondents that have a compliance manual, admit that compliance with the Antimonopoly Law is part of their compliance manual. In terms of what is generally considered to be a competition law infringement, price fixing, bid rigging, and low pricing was given particular consideration in the manuals.

The likelihood of violations may be linked to the ineffectiveness of the compliance manuals and its surroundings. Only 31% of the respondents indicate that the compliance efforts are satisfactory. In one way or another, the other respondents make clear that their efforts are not adequate in one way or another. 17% stipulate that the compliance is not working in practice, 29.5% says that formally their compliance is not adequate, and another 22% indicate that formally and in substance the compliance is not adequate.

Hirayama, Ameyama, and Yoneyama point out that the weakness of the existing compliance programs is the lack of detail. Many firms that they advise in their capacity as a lawyer have, for example, only one sentence explaining how to deal with competitors. Sentences, such as “you should not meet with competitors without a legitimate reason,”[108] are still too often found in the compliance manuals. Employees are left on their own to judge what the legitimate reason could be. Towards the firm, this kind of sentences do not force the employees to report if they have meetings with competitors and therefore they are potentially at risk as they “do not know who is meeting with whom for what purpose.”[109]

Another reason why the compliance is not delivering result is related to the compliance training sessions. Of all the training sessions that were being organized, the majority of the training sessions were orientated to newly employed staff. In 40% of the firms, the training sessions were being held at the time of the employment. In an environment where a lot of emphasis is put on the internal training, the effect of a training sessions could be immediately squashed by the superiors, who seem to get a yearly training in only 34% of the responding firms.

5.3. A Turn to Compliance among Violators of the Antimonopoly Law

Compliance has been present in Japanese firms. Despite the presence of compliance, cartels survived or were formed. Compliance is also controversial in the literature. There is as much literature advocating that compliance does not matter, as there is literature indicating that compliance is the direction firms need to take. There is no definite answer yet to this conundrum. Empirical research is too few to draw conclusions. It is for sure, though, that several violators of the Antimonopoly Law in Japan (and somewhere else in the world) have turned to compliance. More in specific, several of these firms have revised their approach to compliance. Three examples will be briefly discussed.

Furukawa Electric was involved in several cartels during the last decade, both in Japan and abroad.[110] A cease-and desist order and a surcharge payment order was received in December 2013 and January 2014 from the Japan Fair Trade Commission for participating in an overhead power transmission line construction cartel. Something similar occurred in the European Union in 2014 for its participation in the power cable producers’ cartel. China fined Furukawa Electric for its participation the auto parts cartel. Furukawa Electric apologized itself on its website for this behaviour. At the same time, it indicates its efforts to comply with the law. One of these efforts is compliance education. The compliance education is directed at all levels of employees: executives, managers, assistant managers and employees. The kind of education is only given at the moment that the employees, no matter which level, take up their position.[111]

Denso Corp. has been part of a price fixing scheme related to auto parts. This cartel has been running for over 10 years and this despite a long history of business ethics and compliance. According to the website, Denso Corp. started with a Business Ethics and Compliance Committee. In 2003, an internal whistle-blower program followed. Employment education programs started in this year as well. CSR leaders were appointed in 2007, who would do compliance education based upon a case study. ELearning supplemented the training courses from 2009 onwards. However, if you look at their compliance manual, bold statements are made that we comply with each country’s competition laws. What the content of these competition laws is, is not further explained.[112] The only message the Code of Conduct for Denso Group Associates puts forward is that “we will not be engaged in fixing prices with, allocate customers among, or make unnecessary contact with competitors.”[113] This compliance manual leaves the employees, as has been pointed out by Hirayama, Ameyama, and Yoneyama, out in the cold and do not explain how they should behave.

Another violator of the competition law, Nippon Yusen KK, has undertaken steps to improve its compliance regime after it was punished in Japan, the EU and the US. At the management level, Nippon Yusen KK established an Executive Committee Overseeing thorough Antitrust Law Compliance in 2013. This Committee would meet biannually and share information that is relevant for competition law compliance. Smaller business units within the firm were urged to draw up guidelines if a risk assessment shows that the unit has a potential danger of violating the law. In-house lawyers are now evaluating new investment projects. Individuals have to pledge compliance with competition law since 2014 after completing an e-learning course. Competition law compliance manuals have been made in Japanese, English and Chinese.[114]

Empirical research on these firms is necessary in the future. These firms will have to be closely followed on whether there will be recidivism among the firms that have changed their compliance structure in response to violations of the Antimonopoly Law.


Deterrence has been central in literature on competition law enforcement. Japan, for a long time, has rejected the idea of deterrence and somehow balanced the enforcement of the antimonopoly law with what the society (often limited to the Ministries controlling the economy) saw as acceptable. The enforcement record of the Japan Fair Trade Commission has thus not been as what was hoped for during the drafting of the Antimonopoly Law.

Societal acceptance of violations of the Antimonopoly Law changed, especially during economic crises. The societal change has often been accompanied with a change in the law. The changes in the law brought the Japanese enforcement policy of the Antimonopoly Law closer to deterrence. Despite the path towards deterrence, cartel activity did not diminish.

Behavioural law and economics would say that the deterrence debate rejects the societal elements that contribute to the violation of law. Japanese firms have corporate governance characteristics, such as lifetime employment and seniority combined with ‘in-house education’, that may explain why cartel participation is so persistent. This paper has put forward that compliance may be the only way to address these societal elements and that ways should be found to force companies towards implementing better compliance with Antimonopoly Law.


[1] Associate Professor, Kyushu University. This paper is an early draft reflecting ideas of an area not often highlighted in research on cartel enforcement in Japan. Further research needs to be done in relation to societal issues in relation to cartel formation and compliance. This research has been facilitated by This chapter has benefitted from a grant of the Japan Society for the Promotion of Science – Grants-in-Aid for Scientific Research © No. 15K03152, “Anti-Cartel Enforcement: Towards a Holistic Understanding of Leniency Policies.” This paper has been presented at the  “The Asian Law & Society Association Conference” (22 & 23 September 2016)

[2] See, e.g., Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 311-326 (2nd ed., London: Sweet and Maxwell, 2006); Simon Vande Walle, Deterrence of Antitrust Violations: Do Actions for Damages Matter in Japan?, 2 Asian Journal of Law and Economics (2012); Robert H. Lande and Joshua Davis, Comparative Deterrence from Private Enforcement and Criminal Enforcement of the U.S. Antitrust Laws (2010),; William M. Landes, Optimal Sanctions for Antitrust Violations, 50 U. Chi. L. Rev. 652 (1983)

[3] See Maurice Stucke, Am I a Price Fixer? A Behavioral Economics Analysis of Cartel Law, in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 264 (2010).

[4] See id., at 266.

[5] See id., at 263.

[6] See Steven Van Uytsel, Leniency under the Japanese Antimonopoly law: Towards the End of the Cartel Archipelago? In Cheng Th, Marco Colino S, Ong B (eds) Cartels in Asia: Law and Practice 67 (2015).

[7] See id.

[8] See id.

[9] See id.

[10] See id.

[11] See id.

[12] See id.

[13] See JFTC, Summary of Issues Concerning the Modality of the Administrative Surcharge System (2016),

[14] See, e.g., Maurice Stucke, Am I a Price Fixer? A Behavioral Economics Analysis of Cartel Law, in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 263 (2010); Christine Parker, Criminal Cartel Compliance: The Gap between Rhetoric and Reality, in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 239 (2010).

[15] See id.

[16] See Gary Becker, Crime and Punishment: An Economic Approach, 76 J. Pol. Economy 169 (1968).

[17] See id.

[18] See id.

[19] See id.

[20] Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 312 (2nd ed, 2006).

[21] Id.

[22] Id.

[23] See id., at 313.

[24] See id.

[25] See Caron Beaton-Wells and Christopher Tran, Anti-Cartel Enforcement in a Contemporary Age: Leniency Religion (2015).

[26] Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 311 (2nd ed, 2006); Deterrence and corrective justice are also mentioned by several other authors. S. E. Keske, Group Litigation in European Competition Law: A Law and Economics Perspective 58 (2010); P. Lewisch, ‘Enforcement of Antitrust Law: The Way from Criminal Individual Punishment to Semi-Penal Sanctions in Austria’ in K. J. Cseres, M. P. Schinkel and F. O.W. Vogelaar (eds.), Criminalization of Competition Law Enforcement: Economic and Legal Implications for the EU Member States 291 (Cheltenham: Edward Elgar, 2006).

[27] Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 311 (2nd ed, 2006).

[28] See id.

[29] See id.

[30] See id.

[31] See id.

[32] See id.

[33] See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 80-1 (2000); see also, Toshiaki Nakazawa and Leonard W. Weiss, “The Legal Cartels of Japan” (1989) 34 Antitrust Bulletin 641.

[34] See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 80-1 (2000).

[35] See Seichi Yoshikawa, Fair Trade Commission vs. MITI: History of the Conflicts between the Antimonopoly Policy and the Industrial Policy in Post War Period of Japan (1983) 15 Case W. Res. J. Int’l L. 489, at 491.

[36] See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 80-1 (2000).

[37] See John O. Haley, Japanese Antitrust Enforcement: Implications for United States Trade” (1991) 18 Northern Kentucky Law Review 335, at 348.

[38] See Seichi Yoshikawa, Fair Trade Commission vs. MITI: History of the Conflicts between the Antimonopoly Policy and the Industrial Policy in Post War Period of Japan (1983) 15 Case W. Res. J. Int’l L. 489, at 492.

[39] See, e.g., See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 85-90 (2000) (summarizing the export and import cartels and cartels for small and medium sized enterprises).

[40] Seichi Yoshikawa, Fair Trade Commission vs. MITI: History of the Conflicts between the Antimonopoly Policy and the Industrial Policy in Post War Period of Japan (1983) 15 Case W. Res. J. Int’l L. 489, at 493.

[41] See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 112 (2000).

[42] See Michael L. Beeman, Public Policy and Economic Competition in Japan: Change and Continuity in Antimonopoly Policy, 1973-1995, 40 (2002).

[43] See id.

[44] See id., at 71-2.

[45] See Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan 100 (2000).

[46] See id, at 95.

[47] See Masahiro Murakami, The Japanese Antimonopoly Act 76 (Shouji Houmu, 2003).

[48] See Michael L. Beeman, Public Policy and Economic Competition in Japan: Change and Continuity in Antimonopoly Policy, 1973-1995, 138-146 (2002).

[49] See Mitsuo Matsushita, “The Antimonopoly Law of Japan”, in Edward M. Graham and J. David Richardson (eds.) Global Competition Policy 151, at 155-6.

[50] See Masako Wakui, Antimonopoly Law: Competition Law and Policy in Japan 32 (Arima Publishing, 2008).

[51] See id.

[52] See id.

[53] See id., at 37.

[54] See id.

[55] Steven Van Uytsel, Anti-Cartel Enforcement in Japan: Does Leniency Make the Difference?, in The Leniency Religion, Anti-Cartel Enforcement in a Contemporary Age (Beaton-Well ed., 2015)

[56] See Masako Wakui, Antimonopoly Law: Competition Law and Policy in Japan 32 (Arima Publishing, 2008).

[57] See JFTC, The JFTC convenes meetings of “Study Group on the Antimonopoly Act (2016),
[58] Shuya Hayashi, saryougata kachoukin seido no arikata nit suite [About Having a Discretionary Surcharge System], (2013) Journal of Law and Politics 177,

[59] Simon Vande Walle, Deterrence of Antitrust Violations: Do Actions for Damages Matter in Japan?, 2 Asian Journal of Law and Economics 3 (2012).

[60] Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 311 (2nd ed, 2006).

[61] See id.

[62] Id.

[63] See id. (indicating that “The gain equals the mark-up times the volume of the affected trade. Figures on sales are not difficult to obtain given the broad availability of market studies. It is more difficult to determine the mark-up, since this requires either econometric calculation or the identification of a benchmark of the competitive price in the absence of collusion”).

[64] McMillan, Dango: Japan’s Price Fixing Conspiracies (1991); Brian Woodall, Japan under Construction 48 (1996). Without giving a percentage, but agreeing that the profit is higher that 8% in 90% of the cases: Toshiyuki Nambu, Administrative Surcharge System to Deter Cartel Conduct: Experience from Japan,

[65] Roger J. Van den Bergh and Peter D. Camesasca, European Competition Law and Economics: A Comparative Perspective, 311 (2nd ed, 2006).

[66] See id.

[67] Shuya Hayashi, The Discretionary Surcharge System Model (on file with the author).

[68] Mitsuo Matsushita, The Antimonopoly Law of Japan, in in E M Graham and J D Richardson (eds.), Global Competition Policy 164 (1997 Washington, The Institute for International Economics),

[69] See Steven Van Uytsel, Leniency under the Japanese Antimonopoly law: Towards the End of the Cartel Archipelago? In Cheng Th, Marco Colino S, Ong B (eds) Cartels in Asia: Law and Practice 67 (2015).

[70] See

[71] See id.

[72] See id.

[73] See id.

[74] See id.

[75] See JFTC,

[76] A fiscal year in Japan starts on 1 April in a given year and ends on 31 March of the next year. Fiscal year 2006, for example, covers the period from 1 April 12006 to 31 March 2007.

[77] See JFTC, ‘kachoukin genmenseido no tekiyou jigyousha no kouhyou ni tsuite’, (Publication of the Entrepreneur’s Application for Exemption of Surcharges).
[78] See JFTC, ‘kachoukin genmenseido no tekiyou jigyousha no kouhyou ni tsuite’, (Publication of the Entrepreneur’s Application for Exemption of Surcharges).
[79] These figures are from K Yamada, ‘Antitrust and Procurement – Japan’ (2011) 7 Competition Law International 87 and JFTC, ‘Enforcement of the Antimonopoly Act in FY2013 (Summary)’ (28 May 2014)

[80] See Maurice Stucke, Am I a Price Fixer? A Behavioral Economics Analysis of Cartel Law, in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 264 (2010).

[81] See id.

[82] See id.

[83] See Christine Parker, Criminal Cartel Compliance: The Gap between Rhetoric and Reality, in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 239 (2010).

[84] See id.

[85] See id.

[86] See id.

[87] See id.

[88] See id.

[89] See id.

[90] See id.

[91] See Steven Van Uytsel, Leniency under the Japanese Antimonopoly law: Towards the End of the Cartel Archipelago? In Cheng Th, Marco Colino S, Ong B (eds) Cartels in Asia: Law and Practice 67 (2015).

[92] See Akinori Uesugi, “Japan’s Cartel System and Its Impact on International Trade” (1986) 27 Harv. Int.’l L. Rev. 389, at 401. A similar number is quoted by Douglas E. Rosenthal and Mitsuo Matsushita “Competition in Japan and the West: Can the Approaches be Reconciled?, Edward M. Graham and J. David Richardson (eds.) Global Competition Policy (Institute for International Economics, 1997) 313, at 317; Kotaro Suzumura, “Formal and Informal Measures for Controlling Competition in Japan: Institutional Overview and Theoretical Evaluation”, in Edward M. Graham and J. David Richardson (eds.) Global Competition Policy (Institute for International Economics, 1997) 439, at 447.

[93] Ulrike Schaede, Cooperative Capitalism: Self-Regulation, Trade Associations, and the Antimonopoly Law in Japan (Oxford University Press, 2000), at 84. The author indicates that in 1957 23 cartels were set up under the kankoku soutan and that another 18 ‘probable’ cartels were identified. In 1958, another 15 cartels were set up. In 1959, another 28 followed. Another 15 were added in 1960. Further, 23 industries were asked to allocate markets or set price. Iyori and Uesugi speak of 30 recommendations in 1958. See Hiyori Iyori and Akinori Uesugi, The Antimonopoly Laws and Policies of Japan (Federal Legal Publication, 1994) at 39.

[94] See Andreas Stephan, ‘The Battle for Hearts and Minds’: The Role of the Media in Treating Cartels as Criminal, in in Caron Beaton-Wells and Ariel Ezrachi (eds.) Criminalizing Cartels: A Critical Interdisciplinary Study of an International Regulatory Movement 381 (2010).

[95] See id.

[96] Kentaro Hirayama, Kei Amemiya, and Kazuyasu Yoneyama, Cartels in Japan, 2 Market Intelligence 57 (2015),

[97] Caslav Pejovic, Japanese Labor Law: Challenges Ahead, 4 Aoyama Law Forum 51 (2016).

[98] See id., at 55.

[99] See id., at 54.

[100] See T Kitagawa and L Nottage, ‘Globalization of Japanese Corporations and the Development of Corporate Legal Departments: Problems and Prospects’ (2006) (Sydney Law School, Legal Studies Research Paper No. 06/46),

[101] See id.

[102] See Rees Morrison, The dearth of Japanese participants in the GC Metrics benchmark survey may diminish (2013),

[103] There are currently 1975 firms listed.


[105] William J. Kolasky, Antitrust Compliance Programs: The Government Perspective (2002),
[106] See JFTC, ‘Survey on Corporate Compliance Efforts with the Antimonopoly Act’ (2012) 10,

[107] See id.

[108] Kentaro Hirayama, Kei Amemiya, and Kazuyasu Yoneyama, Cartels in Japan, 2 Market Intelligence 63 (2015),

[109] Id.

[110] See

[111] See id.

[112] See (page 3)

[113] Id.