The Private Competition Enforcement Review: Japan

Overview of recent private antitrust litigation activity

Private antitrust litigation remains active in Japan. This reflects the active enforcement of the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (Act No. 54 of 1947, the AMA) by the Japan Fair Trade Commission (JFTC) and the general trend and willingness in the Japanese business community to utilise the AMA and other competition-related laws as a means to secure fair competition.

There has not been so much change in terms of legislation in the context of private antitrust litigation, except for the relatively recent introduction of an opt-in class action mechanism for certain consumer protection-related claims that came into effect in October 2016. On the public enforcement side, there has been a significant amendment to the AMA in 2019 in terms of the calculation of the surcharges (which is expected to significantly increase the amount of surcharges) and how the reduction of surcharges would be calculated for leniency applicants. The impact of this amendment on the private enforcement side is yet to be seen, but the active enforcement of the AMA on the public sector would likely result in more enforcement in the private sector as well.

There have been developments in case law as well: the landmark 2017 Supreme Court decision in relation to the cathode ray tubes cartel investigation has set the precedent for the first time on extraterritorial application of the antitrust law.

General introduction to the legislative framework for private antitrust enforcement

Private antitrust actions can be brought in the form of a follow-on litigation following a public enforcement by the JFTC or a stand-alone litigation. The AMA provides certain special rules for bringing private actions. The general legislative framework for private antitrust enforcement in Japan is as follows.

i Private antitrust actions based on the general tort claims pursuant to the Civil Code

Private antitrust action can be brought in the form of stand-alone litigation seeking monetary compensation for damages or injunctive relief under the general tort claim pursuant to Article 709 of the Civil Code (Act No. 89 of 1896) or an unjust enrichment claim pursuant to Article 703 of the Civil Code. To bring a general tort damages claim, the claimant must demonstrate infringement of the claimant's rights; the existence of fault on the part of the defendant; damage; and the casual link between the fault and the damage.

The statute of limitations for general tort claims is whichever comes first from the following (Article 724, Civil Code):

  1. three years from the time when the claimant came to know both the damage and the identity of the perpetrator; or
  2. 20 years from the time of the tortious act.

A party to an agreement can seek declaratory judgment from the court alleging violation of the AMA which, if established, would render the relevant provision in question null and void pursuant to Article 90 of the Civil Code. Similarly, a defendant in a litigation can claim that a certain provision in an agreement is void by alleging its violation of the AMA as a defence to a contractual claim made by the plaintiff.

ii Private antitrust actions based on the no-fault liability rule pursuant to the AMA

The AMA provides for the no-fault liability rule where the JFTC has made a determination that there has been an Article 3 (which includes cartels and bid-riggings) or Article 19 (which includes refusal to deal, price discrimination, resale price maintenance and abuse of superior bargaining position) violation and such determination has become final (Article 25(1), AMA).

The claimant need not prove the defendant's fault – in other words intent or negligence as to the illegal act – which would otherwise be required in damages action based on general tort claims (Article 25(2), AMA). However, the claimant would still need to demonstrate the damages and the casual link between the infringing act and the damages. The court may determine the amount of damages based on all the circumstances of the case (Article 248, Code of Civil Procedure, Act No. 109 of 1996), and in doing so, may request the JFTC to provide an opinion on the amount of damages to be recovered by the plaintiff (Article 84(1), AMA).

The claimant may also seek an injunction pursuant to Article 24 of the AMA when there is an Article 19 (Unfair Trade Practice) violation or when there is a likelihood of such violation. The claimant would need to demonstrate the existence or likelihood of significant damages resulting from the violation. It should be noted that Article 24 of the AMA only applies to Article 19 violation and it does not apply to Article 3 violations such as unreasonable restraint of trade or private monopolisation claims.

The statute of limitations for such a no-fault liability rule is three years from when the JFTC's determination becomes final (Article 26(2), AMA).


For administrative sanctions such as cease-and-desist orders and surcharge payment orders, the Supreme Court of Japan rendered a judgment on 12 December 2017 in relation to the Cathode Ray Tubes (CRT) cartel investigation that the AMA applies to cartel conduct that took place outside of Japan to the extent that the conduct at issue relates to the functioning of free competition and trade in the Japan market. This was the first decision in which the Supreme Court ruled on the extraterritorial application of the AMA.

Earlier, the JFTC imposed surcharge payment orders against CRT manufacturers, including the appellant CRT manufacturer. The appellant CRT manufacturer argued that the appellant should not be subject to the AMA because the price-fixing cartel took place in South-East Asian countries and the direct purchasers of the product at issue were foreign manufacturing subsidiaries of Japanese television manufacturers. However, the Supreme Court determined that the Japanese parent companies of the television manufacturers presided over overall manufacturing and sales of televisions throughout the region and directed their foreign manufacturing subsidiaries to purchase CRTs from the foreign CRT manufacturers (including the appellant). The Japanese parent companies were even found to be directly involved in the negotiations with the CRT manufacturers when purchasing those CRTs. The Supreme Court held that the transaction was carried out by Japanese parent companies and their local subsidiaries together, and therefore the conduct at issue damaged the competitive functioning of the relevant market involving the Japanese television manufacturers. It should be noted that the Supreme Court decision is based on the specific facts and circumstances of the case: it is yet to be seen how it would rule if the facts and circumstances are different.

For criminal sanctions under the AMA, it is generally understood that the Act applies only to conduct that took place within Japan. However, there is no precedent to date on this issue and it is yet to be seen how the courts would rule on the extraterritorial application of the criminal sanctions under the AMA.


Any claimant injured by the violation of the AMA has standing to bring stand-alone or follow-on actions.

As discussed in Section II, to bring a stand-alone general tort damages action, the claimant needs to demonstrate: (1) infringement of the claimant's rights; (2) the existence of fault on the part of the defendant; (3) the damage; and (4) the casual link between (2) and (3). To bring a follow-on damages action, the claimant only needs to demonstrate (1), (3) and the casual link between the infringement and the damages.

Both direct and indirect purchasers can bring stand-alone or follow-on actions if and to the extent that they can demonstrate the damage and the casual link.

The process of discovery

There are principally two procedures for disclosure of documents in the course of litigation under the Code of Civil Procedure:

  1. a commission to send documents; and
  2. a document production order.

A commission to send documents is a request made by a party to a civil action addressed to anyone in possession of documents to produce these documents for the requesting party (Article 226, Code of Civil Procedure). There is no sanction available for the failure to comply with such a request. However, this procedure can be an effective tool in obtaining documents from a third party including the JFTC because the JFTC respects such requests in certain situations and will provide investigative records and documents in response to such requests from an alleged victim of the AMA.

The JFTC has set out guidelines on complying with commission to send documents requests that are sought in relation to follow-on damages actions.2 The guidelines state that under certain conditions the JFTC will produce documents that formed the basis of the administrative orders (or where there was an administrative hearing, the case files) in response to a request forwarded by the court handling a follow-on damages action. These conditions include redacting from the documents information which the JFTC considers to constitute business secrets, or which unnecessarily invades the privacy of the relevant parties. In addition, it is the JFTC's general policy not to disclose leniency material.

Alternatively, a party to a civil action can request that the court issue a document production order against those who possess relevant documents. In making such a request, the requesting party must specify the document, the general content, the possessor, the issue the requesting party seeks to prove and the grounds for the request (Article 221, Code of Civil Procedure).

The court must grant the request for the document production order unless the document falls under the following categories specified in the statute:

  1. documents stating the matters the possessor can refuse to testify on due to kinship;
  2. documents concerning a secret in relation to a public officer's duties which public disclosure of would likely harm the public interest or the performance of the public duties;
  3. documents concerning a business secret or matters certain professionals like doctors and lawyers can refuse to testify about due to their confidentiality obligations;
  4. documents created exclusively for use by the possessor (excluding documents held by the state or a local public entity, which are used by a public officer for an organisational purpose); or
  5. records or seized documents concerning a criminal case or juvenile protection case.

If the addressee does not produce the specified documents despite the court order, the court can deem the proposition the requesting party sought to prove through those documents to be true (Article 224, Code of Civil Procedure). In the case of third-party addressees, the court can impose an administrative fine of up to ¥200,000 (Article 225, Code of Civil Procedure).

A party to a civil action can request the testimony of factual and expert witnesses. In the case of factual witnesses, parties can appoint the witness, whereas in the case of expert witnesses, parties cannot appoint the witness – but the court will.

There is a third category of witness: a quasi-expert witness upon whom the parties call but who is not a court-appointed expert witness. There is no strict regulation concerning the admissibility of opinions by a court-appointed expert or a privately appointed expert. The value of evidence will be determined by the judge taking into consideration all the circumstances.

Often, witnesses are requested to prepare a written statement providing the overview of his or her testimony in advance of his or her testimony. Both factual and expert witnesses are cross-examined on their testimony.

Use of experts

As discussed in Section V, a party to a civil action can request the testimony of expert witnesses and the court will appoint the witness. The court will select the appropriate witness from academic institutions or economist firms that can assist the court in evaluating the relevant facts and calculating the damages.

The use of economists was not very common in the context of private antitrust enforcement, but it is becoming more common in recent times as the antitrust issues are increasingly more complex and challenging for courts to handle.

Class actions

In Japan, class actions are introduced to a limited extent and mainly in the area of consumer protection.

Certain qualified consumer organisations can seek injunctive relief for the benefit of consumers against business operators if there is violation of certain consumer protection laws – such as the Consumer Contract Act (Act No. 61 of 2000), which prohibits misrepresentation and other deceptive practices, and the Act Against Unjustifiable Premiums and Misleading Representations (Act No. 134 of 1962), which prohibits misleading representation of the quality of goods and services offered to consumers. This mechanism is actively pursued by various qualified consumer organisations and has resulted in verdicts or settlements in more than 30 cases since the start of the 2019 fiscal year alone.3 This includes a settlement between MUFG Bank, Ltd and the Consumer Organisation of Japan over an alleged violation of the Consumer Contract Act, and a settlement between Esta Co, Ltd and the Consumer Organisation of Japan over an alleged violation of the Act Against Unjustifiable Premiums and Misleading Representations.

The Act on Special Provisions of Civil Procedure for Collective Recovery of Property Damage of Consumers (Act No. 96 of 2013, the Collective Recovery Act) introduced an opt-in class action mechanism for seeking monetary compensation. Under this mechanism, the existence of liability will be determined at the first stage based upon claims brought by certain qualified consumer organisations. If affirmed, the action will move forward to the second stage, where the amount of damages will be determined based upon individual claims filed by consumers who elected to opt in to the procedure upon circulation of proper notice following the first stage.

It should be noted that the Collective Recovery Act only covers claims arising from consumer contracts. A consumer contract is defined as any contract (excluding employment contracts) entered into between an individual and a business operator (Articles 2(iii), Collective Recovery Act). Class actions seeking the recovery of damages from an antitrust violation can be brought under the Collective Recovery Act if a business operator (e.g., a retailer) engages in an antitrust violation (e.g., a price-fixing cartel with its competitors) and the purchaser of the product or service at issue allegedly suffered damage from such violation.

Claims subject to this class action mechanism must satisfy the following three requirements:

  1. 'numerousness', meaning that claims must relate to damages owed to a considerably large number of persons;
  2. 'commonality', meaning that claims must arise from common obligations (in other words, the same factual and legal cause); and
  3. 'predominance', meaning that individual issues such as damage must not predominate over common issues such that appropriate and swift determination of individual claims cannot be achieved at the second stage.

It should also be noted that the Collective Recovery Act does not apply to antitrust actions based on a no-fault liability rule pursuant to the AMA; it only applies to antitrust actions based on the general tort claims, etc., pursuant to the Civil Code.

The Collective Recovery Act came into effect on October 2016. However, to the best knowledge of the authors, no private antitrust action has been brought using this class action mechanism yet.

Calculating damages

Damages are limited to actual loss that the claimant suffered as a result of the antitrust violation. Punitive or exemplary damages are not available under Japanese law.

Quantification is at the sole discretion of the court (Article 248, Code of Civil Procedure). In bid-rigging and cartel cases, the courts in many cases rely on the 'before and after' analysis in quantifying the damages (see, for example, the Supreme Court decision on 8 December 1989 in the Tsuruoka Toyu damages action). Under this approach, the courts would compare the actual prices paid during the pre-cartel and post-cartel periods and those paid during the cartel period and calculate the difference between the two periods as the damage caused by the cartel.

The court can, at their discretion, reach a finding on the amount of damages based on all facts and circumstances of the case. In bid-rigging cases, the courts have at times awarded approximately 5 to 10 per cent of the bid price as antitrust damages. On the higher end of the spectrum, there are cases where the courts awarded 20 per cent of the bid price as antitrust damages (see, for example, the Osaka High Court decision dated 24 August 2010 in bid-rigging for Nara Prefectural Survey Business).

Recently, there has been a trend for local governments and public corporations to insert a provision in contracts for liquidated damages in the case of bid-rigging or cartels. These provisions often provide for liquidated damages of 10 to 15 per cent of the relevant sales and the courts would normally award the damages based on the provision unless the agreed amount is so unreasonable as to render the provision void pursuant to Article 90 of the Civil Code.

Each party generally bears its own attorneys' fees. Although there has been discussion about requiring the losing party to pay the attorneys' fees of a winning party, such a system has not been implemented. However, in some complex cases, courts have ordered that reasonable attorneys' fees be borne by the losing party.

Pass-on defences

In Japan, pass-on defence is not allowed per se. For instance, under the general tort theory, to seek economic compensation for damage from a price cartel violation, the claimant must demonstrate the actual loss it suffered as a result of the cartel. As long as the claimant can demonstrate an actual loss by establishing that there is a difference between the price it paid and the hypothetical price that it would have paid but for the cartel, the claimant should be entitled to recover the entirety of the difference under Japanese law, even when part or the whole of this difference was passed on to its downstream customers.

Follow-on litigation

As discussed in Section II.ii, the AMA provides for no-fault liability rule where the JFTC has decided that there has been an Article 3 or Article 19 violation and such determination is final (Article 25(1), AMA).

The claimant may also seek an injunction pursuant to Article 24 of the AMA when there is an Article 19 violation or when there is a likelihood of such violation.


Attorney–client privilege (including attorney work product and joint work product defences) is not recognised in Japan. However, the amendment to the AMA (the 2019 Amendment) was passed by the Diet on 19 June 2019 and is expected to come into effect by December 2020. Along with the 2019 Amendment, the JFTC is expected to introduce certain measures in its guidelines to make clear that it would respect the confidentiality of attorney–client communications.

Under the 2019 Amendment, when calculating the surcharges, the JFTC can go back 10 years instead of three years, to the extent that the conduct continued, as a basis for the calculation of the surcharge. The statute of limitations has also been extended from five years from the end of the conduct to seven years. The starting point for the statute of calculation was not affected by the amendment, so, following the 2019 Amendment, the JFTC can prosecute a case until seven years have passed since the cessation of the conduct.

The 2019 Amendment further abolished some reduced calculation rates for wholesale and retail businesses (2 and 3 per cent respectively) and would apply the same 10 per cent flat rate for cartels and bid-rigging. These changes are expected to result in a significant increase in the amount of surcharges.

Under the 2019 Amendment, the leniency programme will be amended to allow the JFTC to have certain discretion in determining the reduction rate of surcharge payments – going forward, the JFTC will take into account the degree of cooperation it received from each leniency applicant throughout its investigation. The rate of surcharge reduction would not simply be based on the order of leniency application (as is the case now) but also on the qualitative value of cooperation that each leniency applicant provided. Under the 2019 Amendment, the effective communication between the client and its attorneys becomes ever more important.

Against this backdrop, the JFTC is expected to make clear in its guidelines that the confidentiality of attorney–client communications will be respected during the course of the JFTC's investigation. The JFTC has yet to announce the draft change to the guidelines, but it is expected that the JFTC will introduce certain measures to ensure that the JFTC would return those documents that contain confidential attorney–client communications to the parties under certain conditions and through certain procedures.

Note, however, that the new measures only apply to administrative (not criminal) investigations by the JFTC and to suspected unfair restraint of trade behaviour (such as cartels and bid-rigging). The new measures would only cover confidential communications between a client and its external attorneys; it is expected that they would not cover communications between a client and its in-house counsel.

As discussed in Section V, there are certain avenues for the claimants to access the information or documents once produced for or seized by the JFTC. The new measures are expected to provide certain comfort to the defendants that the confidentiality of attorney–client communications will be maintained.

Settlement procedures

Parties to a civil action can at any point in time during the course of a litigation reach a settlement either with or without the involvement of the court. Settlements, if recorded on the court records, would have the same legal effect as a final judgment of the court, and would thus would be legally conclusive and enforceable against the opposing party (Article 267, Code of Civil Procedure).


Private antitrust claims can be dealt with through an alternative dispute resolution mechanism such as arbitration or mediation.

Arbitration proceedings are administered by private institutions like Japan Commercial Arbitration Association and Bar associations. More recently, the Japan International Dispute Resolution Center was launched in Osaka in May 2018 and is expected to launch in Tokyo in March 2020. Mediation proceedings are administered by private and public institutions as well as the courts. The Japan International Mediation Center was launched in Kyoto in November 2018.

Historically, the use of alternative dispute resolution mechanisms in private antitrust enforcement was not very common, but these new additions to the existing platform for alternative dispute resolution mechanisms are expected to facilitate resolution of international and domestic disputes including private antitrust claims through arbitration and mediation.

Arbitral awards and court-administered mediated settlement agreements would have the same legal effect as a final judgment of a court, and thus be legally conclusive and enforceable against the opposing party (Article 45, Arbitration Act and Article 16, Civil Mediation Act).

Indemnification and contribution

Parties who have jointly committed tortious acts could be deemed joint tortfeasors and held joint and severally liable for damages (Article 719(1), Civil Code). One of the joint tortfeasors, upon compensating the claimant for the damages in their entirety, could seek compensation from other joint tortfeasors and demand contributions equivalent to their respective proportion of the damages. In bid-rigging cases, for example, it is common for claimants to seek compensation for damages from one of the joint tortfeasors with deep pockets, and for the latter to seek compensation from other joint tortfeasors who participated in the same bid-rigging conspiracy.

Future developments and outlook

The 2019 Amendment is expected to come into effect by December 2020. There will be a series of new regulations and guidelines as well as amendments to the existing regulations and guidelines that will follow the 2019 Amendment, including the new measures to maintain the confidentiality of attorney–client communications, that may have an impact on private antitrust enforcement.

In addition, in recent years the JFTC has publicly announced a series of changes to the way it applies the AMA, in an effort to regulate digital platform operators. For instance, the JFTC announced on 17 December 2019 that it would not hesitate to apply the abuse of superior bargaining position (Article 2(9)(v), AMA) against transactions between digital platform operators and consumers who provide personal information in exchange for the goods or services that digital platform operators provide. This marks a change in the historical stance of the JFTC, which used to apply the abuse of superior bargaining position against transactions among and between business operators only. This means that the consumers can now bring an antitrust claim against digital platform operators alleging violation of the abuse of superior bargaining position.

Private antitrust enforcement cannot remain isolated from such changes in legislation and the trend in public enforcement of antitrust laws in Japan. The impact of such changes in public enforcement on private enforcement is yet to be seen, but the general trend towards the active use of antitrust laws to regulate digital platform operators, for instance, is likely to encourage private enforcement of antitrust laws by consumers and private businesses.


1 Aruto Kagami is a partner and Aiko Mizuguchi is an associate at Mori Hamada & Matsumoto.

2 In re Production of Documents Concerning Anti-Monopoly Damages Actions, General Secretariat Notice No. 6 dated 15 May 1991.

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