Overview of the Amendment of the Japanese Antimonopoly Act and Its Practical Points

Overview of the Amendment of the Japanese Antimonopoly Act and Its Practical Points
by Yoshiya Usami and Takashi Tsuboi

Japan recently made important amendments to the Japanese Antimonopoly Act (“AMA”).  The amendments will have a significant impact on the fact finding process that could, in turn, have important implications on U.S. criminal and civil proceedings arising out of allegedly anti-competitive activity in Japan.   The amendments become effective on April 1, 2015.

Overview of the Amendment
Under the current AMA, an accused party facing an administrative order from the Japan Fair Trade Commission (“JFTC”) must first raise its objections in the context of an administrative hearing.  Appeals from the decisions of the administrative hearing are filed with the Tokyo High Court.   This process has been criticized, primarily because the JFTC itself conducts the administrative hearing—in effect, serving as the primary judge to determine the validity of its own orders. 

The new AMA amendments will abolish the administrative hearing as it is currently constructed and replace it with a new “opinion hearing.”  The amendments will also create a new appeal structure to expand the extent to which JFTC administrative orders are subject to meaningful judicial review.

The New Opinion Hearing
Under the earlier system, the investigated party received the underlying factual findings of the JFTC and was given a limited explanation of the evidence supporting those factual findings prior to the issuance of the final administrative order.   Though parties under investigation were given limited access to inspect specific evidence, permitted to copy materials that the investigated party submitted to the JFTC or had confiscated by the JFTC, and pose questions to the investigator, they were not permitted to make their own copies of employee statements made to the JFTC.

The new opinion hearing process is designed to expand the rights of the party being investigated.  Under the new procedure, the hearing will be presided over by a neutral “designated officer,” a JFTC officer who was not involved with the underlying investigation.   The investigators provide the designated officer with an explanation of the contents of the proposed administrative order, including the factual findings, the evidence supporting the establishment of those facts, and an explanation of the application of the facts to the relevant law.   The investigated party is given expanded rights related to the examination of evidence—namely, employee witness statements can now be copied.  Investigated parties are also given the opportunity to present argument, question investigators, and offer their own evidence to neutral designated officer prior to the issuance of the administrative order.

The designated officer has the general authority to manage the opinion process to promote a fair and efficient process.   At the conclusion of the hearing, a written report is prepared by the designated officer which is then submitted to the JFTC for “due consideration” prior to issuing the final administrative order.

The New Appeal Process
Under the new amendments, the investigated party may now appeal the administrative order directly to the Tokyo District Court, which has exclusive jurisdiction over such appeals.  A panel of three or five judges, all expected to be knowledgeable about complex issues involving law and economics, will hear the appeals.

The amendments also include a change to the standard of review on the initial appeal.  Under the prior system, the factual findings of the JFTC could not be overturned if supported by “substantial evidence.” The new amendments will abolish this restriction and allow the courts to undertake a de novo review of the JFTC’s factual findings. The amendments also give investigated parties greater leeway to submit evidence to the reviewing court even if that evidence was not previously presented at the opinion hearing.

Though unclear at this point, it appears that the JFTC will continue to bear the burden of proof of proving illegality, just as it does under the earlier system.

The new amendments have the potential to create substantial additional due process rights for parties being investigated by the JFTC under the AMA.   That said, the need for even more reform is still being hotly debated.   Such reforms could include the creation of a variant of an attorney-client privilege and the recognition of a right of witnesses to be represented by counsel at JFTC interviews.   The Japanese Cabinet Office advisory panel considered such reforms as part of the current amendment process, but conclusively decided that such changes were not necessary at this point.  Ultimately, the true value of the new amendments can only be evaluated once they can be reviewed in practice.

- Yoshiya Usami is a counsel in Lane Powell PC’s Portland office, who is seconded from a Japanese law firm, Homma and Partners. Mr. Usami is admitted in Japan and New York.
- Takashi Tsuboi is a law clerk in Lane Powell PC’s Portland office, who is seconded from a Japanese law firm, Nishimura and Asahi. Mr. Tsuboi is admitted in Japan.


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