Amendments to the Antimonopoly Act by Kosuke Yoshimura

I. Introduction
The amendments to the Antimonopoly Act1 will take effect on December 25, 2020 (when amended, the “Amended Antimonopoly Act”). While the amendments cover a wide range of aspects, this article will highlight some of the key that will result from the amendments.

II. Revision of the Surcharge System
Basically, as illustrated below,2 the amount of surcharges in cases of unreasonable restraint of trade is calculated by multiplying the amount of sales of goods or services subject to a cartel (“Basis of Calculation”) with the predetermined calculation rates (“Calculation Rates”).
This amount may be reduced through the leniency program.

A. Amendments to the Basis of Calculation
a. Extension of the calculation period
Under the current Antimonopoly Act, the surcharge is calculated for up to three years prior to the date of termination of the infringement. Under the Amended Antimonopoly Act, the calculation period will be extended to cover up to the past 10 years from the date the Japan Fair Trade Commission (“JFTC”) starts its investigation.3
Due to the extension of the calculation period, the amount of sales and other information to be used to calculate the Basis of Calculation may likely no longer be available because of the disposal of the relevant documents. Thus, a provision will be introduced under the Amended Antimonopoly Act to allow the JFTC to estimate the Basis of Calculation when the enterprise fails to respond to its request for a report of the facts or submission of materials.4
The statute of limitation will also be extended from 5 years to 7 years.5

b. Additional points to the Basis of Calculation
The following points will be added to the Basis of Calculation:
• The amount of sales of certain enterprises that belong to the same group as the violators, and receive instructions or information therefrom.6
• The amount of sales of the business related to goods or services that are the subject of the infringement.7
• The financial gains received for not supplying goods or services that are the subject of the infringement.8
B. Amendments to the Calculation Rates
The calculation rates by type of business and the reduced calculation rates for an early withdrawal from the infringement will be abolished.
The calculation rates for small-to-medium-sized enterprises will only be available for enterprises deemed to be substantially a small-to-medium (“SME”) enterprise.9 For example, an SME whose parent company is a large company (i.e., not an SME) cannot benefit from the calculation rates for SMEs.
Moreover, the scope of application of the increased calculation rates for repeated infringements will be revised.10 The Amended Antimonopoly Act will also subject the act of requiring another to obstruct the investigation to increased calculation rates.11

III. Revision of the Leniency Program
A. Background
In Japan, surcharge reduction and exemption through the leniency program was introduced in 2006. The Japanese leniency program has been actively used by enterprises.
It has become part of the established practice in dealing with cartels and bid rigging, and has contributed to the investigations of the JFTC. However, surcharge reduction and exemption through the leniency program under the current Antimonopoly Act has a limitation on the number of applicants. In addition, the reduction rate is uniformly set based on the order of the application, and the rate does not reflect the degree of cooperation given by the applicant in a JFTC investigation.
Under the Amended Antimonopoly Act, the limitation on the number of applicants that can avail of a surcharge reduction before the start of the investigation will be abolished12 and the reduction rate will depend on the degree of cooperation given in an investigation.13
B. Reduction Rate under the current Antimonopoly Act
The reduction rate is currently available as follows:14
*An applicant can obtain the reduction rate on the condition that the total number of applicants (including applicants who apply before the investigation start date) is five or less.
C. Reduction Rate under the Amended Antimonopoly Act
The reduction rate that may be availed of under the Amended Antimonopoly Act is as follows:15
*An applicant can obtain the reduction rate on the condition that the total number of applicants (including the applicants who apply before the investigation start date) is five or less.
The specific reduction rate will be determined by the agreement between the JFTC and the applicant after having a conference as outlined below.16

IV. Partial Introduction of an Attorney-Client Privilege
The Amended Antimonopoly Act will introduce a so-called attorney-client privilege that has not previously been recognized in Japan. In particular, it will create a system that will prevent investigators from accessing objects that contain confidential communications between an enterprise and an attorney about legal advice if certain conditions are met pursuant to the prescribed procedure (the “Privileged Treatment”).17
However, the scope of the Privileged Treatment is significantly narrower than that granted in the United States, the European Union and other countries, with the following limitations:
• The Privileged Treatment is designed to cover the JFTC’s administrative investigation18 (i.e., the procedures taken to investigate alleged antitrust cases that are potentially subject to administrative measures, such as cease and desist orders and surcharge payment orders) but not the compulsory investigation procedures (i.e., the procedures taken to investigate alleged antitrust cases that are potentially subject to prosecution that could result in the imposition of criminal punishment).
• The Privileged Treatment is designed to protect objects that record the content so confidential communications between the attorney and the enterprise about legal advice on the alleged act of violation, which is the subject of the leniency program.19 Communications relating to any private monopolization or unfair trade practices are not covered by the Privileged Treatment.
Attorneys who can avail of the Privileged Treatment are those who are engaged in the legal practice independently from the enterprise. In general, an attorney who is an employee of the enterprise (e.g., an
in-house Attorney) is not considered an attorney independently engaged in the legal practice. On top of that, foreign lawyers are not included in the scope of “attorneys.” Nevertheless, although communications between foreign lawyers and the enterprise are not subject to the Privileged Treatment, the guidelines on the treatment of object s that record confidential communications between an enterprise and an attorney indicate that the JFTC shall not issue a submission order with respect to objects that record the contents of confidential communications between the enterprise and　a foreign lawyer about legal advice relating to foreign competition actions to be taken in relation to foreign competition laws, unless such objects contain primary materials or fact finding materials, or are otherwise considered necessary for the JFTC investigation of the relevant case. The JFTC’s actions on this matter will likely attract attention in the future.

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1. Shiteki dokusen no kinshi oyobi kousei torihiki no kakuho ni kansuru horitsu [Act on Prohibition of Private Monopolization and Maintenance of Fair
Trade], Act No. 54 of April 14, 1947, as amended by Act No. 45 of June 19, 2019.
2. Source: JFTC, “The Outline of the Antimonopoly Act Amendment,” at https://www.jftc.go.jp/en/pressreleases/yearly-2019/June/190619071.pdf, p. 2.
3. The Amended Antimonopoly Act, art. 2-2, paras. 13 and 14, and art. 18-2, para. 1.
4. Id., art. 7-2, para. 3, art. 7-9, paras. 3 and 4, art. 8-3, and art. 20-7.
5. Id., art. 7, para. 2, art. 7-8, para. 6, art. 7-9, para. 4, art. 8-2, para. 2, art. 8-3, art. 20, para. 2, and art. 20-7.
6. Id., art. 7-2, para. 1, items 1 and 2, art. 7-9, para. 1, item 1, art. 7-9, para. 2, and art. 8-3.
7. Id., art. 7-2, para. 1, item 3, art. 7-9, para. 1, item 2, and art. 8-3.
8. Id., art. 7-2, para. 1, item 4, art. 7-9, para. 1, item 3, and art. 8-3.
9. Id., art. 7-2, para. 2.
10. Id., art. 7-3, para. 1, items 1, 2 and 3.
11. Id., art. 7-3, para. 2, item 3(c) and (d).
12. Id., art. 7-4.
13. Id., art. 7-5.
14. Supra at note 2, p. 3.
15. Id.
16. Id., p. 4.
17. Kouseitorihikiiinkai no shinsa ni kansuru kisoku [Rules on Investigations by the Fair Trade Commission], art. 23-2, para. 5.
18. Id., art. 23-2, para. 1.
19. Id., art. 23-2, para. 1, and art. 23-3, para. 1, item 1.