The Public Competition Enforcement Review: Japan


The year 2020 was a busy one for the Japan Fair Trade Commission (JFTC), with the change in leadership from Mr Kazuyuki Sugimoto to Mr Kazuyuki Furuya as international and domestic economic activities stagnated as a result of covid-19.

Anti-cartel enforcement activity under the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (AMA) has been an important part of the JFTC's enforcement efforts. Active enforcement was carried out against domestic cartels, which mainly consisted of bid rigging and price fixing in various industries, even as dawn raids may have been limited under covid-19 conditions.

Recently, the JFTC has been focusing on enforcement in the IT industry, particularly on enforcements against digital platforms – a trend that expanded significantly in the past year. Enforcement against Amazon under the commitment procedures (abuse of a superior bargaining position), as well as the submission of a petition for an urgent injunction order – a framework rarely used by the JFTC – surrounding Rakuten's arrangements with the vendors for Rakuten's online mall, were particularly remarkable. It is also worth noting that the commitment has been utilised in a number of JFTC enforcements and has become a widely accepted procedural alternative for suspected companies.

The JFTC also maintained a steady level of enforcements in merger control. While the number of transaction notifications in total, transaction notifications involving foreign companies and limited cases reviewed in Phase II remained stable, in multiple cases a clearance decision involving remedies was issued. It is worth noting that in the previous year, under the JFTC guidelines that were revised to adequately deal with M&A transactions in the digital market, the JFTC reviewed a number of issues, including market definition and substantive assessment surrounding this sector, in the integration between Z Holdings and LINE.

On the policy side, the amended AMA enacted in 2019, and the relevant detailed rules and regulations that include reforms to leniency regimes as well as newly introduced attorney–client privilege, entered into force in December 2020. In addition, the JFTC actively contributed to the Japanese government's trans-agency efforts to promote competition and innovation in digital markets and implement multiple market inquiries.


Cartels and bid rigging, still among the JFTC's top priorities, are prohibited by the AMA under the category of 'Unreasonable Restraint of Trade'.

The JFTC may issue a cease-and-desist order or a surcharge (administrative fine) payment order, or both, by way of administrative sanctions for violations of the AMA, including violations of 'Unreasonable Restraint of Trade'. Cease-and-desist orders aim to stop illegal acts, restore an appropriate competitive environment, and prevent a recurrence of such violations of the AMA by ordering the relevant party or parties to cease the actions in question and to take preventive measures. In addition to cease-and-desist orders, surcharges may be imposed in cases involving cartels and bid rigging.

In 2020, the JFTC issued cease-and-desist orders for four cartel or bid rigging cases. The total amount of surcharges imposed was approximately ¥4.3 billion – rather low compared to the previous year (¥69.3 billion in 2018) but not strikingly low in view of the aggregate penalties in other years (¥2.2 billion in 2018 and ¥7.5 billion in 2017). One of the five cases that the JFTC issued cease-and-desist orders for involved four construction companies over alleged bid rigging related to a magnetic-levitation train project. This is the same case that the JFTC had filed criminal charges for in 2018. In 2018, the Tokyo District Court imposed criminal fines on two of the construction companies that admitted to their involvement in the bid rigging (¥200 million on Obayashi Corporation and ¥180 million on Shimizu Corporation). The JFTC imposed surcharges of ¥3.118 billion and ¥1.203 billion on these two companies respectively on 12 December 2020.2 The amount of surcharges were determined by subtracting half of the criminal fines from the base calculation of surcharges. Both companies also received the 30 per cent reduction applicable for leniency applicants. The two other construction companies, Taisei Corporation and Kajima Corporation, as well as their former executives, denied their involvement in the conduct. The court expects to reach a verdict on the case against them in March 2021.

The JFTC has a policy to seek criminal penalties in cases that: (1) it considers as serious or having a widespread impact on consumer welfare; and (2) involve firms or industries that are repeat offenders, or that have not complied with administrative measures issued by the JFTC.3 Last December, the JFTC filed criminal charges against three pharmaceutical companies and their employees over their alleged bid rigging involving drugs purchased by the Japan Community Healthcare Organisation (JCHO). This was the only case that the JFTC filed criminal charges for in 2020, as discussed further below.

In 2020, cease-and-desist and surcharge payment orders in cartel and bid rigging cases were issued only for conduct related to domestic markets. The authority, however, maintains a close relationship with competition agencies in other jurisdictions in respect of international cartels.

i Significant cases

Trial decision on cartel by manufacturers of shutters

On 31 August 2020, the JFTC partially revoked its surcharge payment orders issued in 2010 against three shutter manufacturers: Sanwa Shutter Corporation, Bunka Shutter Co Ltd and Toyo Shutter Ltd. The trial was conducted in accordance with the JFTC's appellate procedure under the old AMA, before the 2013 amendment that abolished the JFTC's trials for future appeals cases.4

The three shutter manufacturers are alleged to have taken part in a cartel affecting Japan's nationwide market and in bid rigging in the Kinki region. With regard to the cartel, the three companies' executives are said to have reached an agreement at a meeting in March 2010 to raise prices for certain types of shutters (light shutters and heavy shutters) by 10 per cent. As for the bid rigging, from May 2007 onwards, all three companies are said to have arranged to assure the successful bidder and the price standards for bids of over ¥50 million in the Kinki region.

For the most part, the JFTC's partial revocation of its decision resulted from the exclusion of the double-counted amount in the base calculation of surcharges. These surcharges are calculated by multiplying the prices of products or services that were subject to the Unreasonable Restraint of Trade (i.e., cartel or bid rigging) by the statutory rates. The JFTC stated that the surcharge system aims to confiscate unlawful profit and allow the systematic calculation of administrative fines. Accordingly, profit double-counting is not necessarily prohibited as long as discrete cartel conduct or bid rigging resulting in such profits is found. However, in this case, the three companies arranged to assure price standards for bids of over ¥50 million in the Kinki region as part of their plan to raise the prices of shutters nationwide. The bid rigging in the Kinki region and the cartel covering all regions in Japan should therefore not be interpreted as two separate facts. The JFTC decided that even under the previously mentioned objective of the surcharge system, the double-counting of profits from the nationwide cartel and the Kinki region bid rigging could not be justified. Profits from the successful bids in the Kinki region were excluded from the basis of surcharge calculation, and the JFTC deducted about 13 per cent from the original surcharge payment orders.

Criminal accusation on bid rigging by pharmaceutical companies

On 9 December 2021, the JFTC filed criminal accusations with the Public Prosecutor General against three pharmaceutical companies – Alfresa Corporation, Suzuken Co Ltd, and Toho Pharmaceutical Co Ltd – and their seven employees involved in the bidding and price negotiations for the sale of drugs to JCHO.5

The case came to light because of the 28 November 2019 dawn raid against the three pharmaceutical companies and Mediceo Corporation by the JFTC, and later the 13 October 2020 dawn raid that was jointly conducted by the JFTC and the special investigation unit of the Public Prosecutors' Office. Mediceo Corporation is reported to have been the first applicant for leniency in the case, and the JFTC refrained from filing criminal charges against Mediceo Corporation.

Through the investigations, the JFTC found that, in June 2016, at a conference room in Tokyo, five of the seven accused employees set the bid success rate of each of the three companies for orders from the JCHO in relation to the 57 hospitals the organisation operates. To accomplish the set success rates, the employees agreed on the successful bidder in each category of the ordered drugs and conspired to tender at prices that would allow the chosen bidder to win the bids. The JCHO holds the same bid every two years, and in June 2018, six out of the seven accused employees agreed to a similar arrangement for the bids for the JCHO's 57 hospitals.

The JFTC's secretary general commented that bid rigging of necessities such as drugs has a serious and widespread impact on consumer welfare. The Ministry of Health, Labour and Welfare eliminated the sales data of the relevant purchases by the JCHO from their calculation basis of the market prices of drugs, which are used in the medical payment revision system once every two years. The media reported that the JCHO's relevant purchases amount to approximately ¥73.9 billion, and each of the four pharmaceutical companies including Mediceo Corporation is said to have been successful in 20 to 30 per cent of the bids. The criminal case at the Tokyo District Court and the JFTC's administrative review will proceed in parallel to decide on the criminal penalties and the administrative sanctions against the three companies and their seven employees.

ii Trends, developments and strategies

Covid-19 and cartels

Covid-19 did not stop the authorities from conducting the dawn raid in the aforementioned investigation against the three pharmaceutical companies. The JFTC announced its policy of strict enforcement against cartels taking advantage of scarce supplies in April 2020.

Overview of amendments to the AMA

The surcharge system in Japan, introduced in 1977 as an administrative sanction, aims to prevent violations of the AMA by imposing financial penalties. While the system has had several amendments since its introduction, increasingly globalised and complex business structures have led the JFTC to conduct a further review of the surcharge system.

In 2019, the National Diet passed the bill amending the AMA,6 and the new amendment came into full force on 25 December 2020. The amendment includes the revised leniency programme in which the reduction rate of the surcharges is determined on the level of a leniency applicant's cooperation with the JFTC's investigations, the revised surcharge calculation basis, and increased fines for interfering with investigations. In addition to these amendments, the new attorney–client privilege has been introduced under the JFTC regulations and guidelines.

iii Outlook

Revised leniency programme/surcharge system and introduction of attorney–client privilege

In accordance with the new leniency programme, the JFTC has discretion to reduce surcharge amounts by up to 40 per cent (20 per cent for applicants after the commencement of an investigation), depending on the level of the leniency applicant's cooperation with JFTC's investigation in addition to the base rate. The base rate of reduction has changed from 50 per cent to 20 per cent for applicants second in line, and from 30 per cent to 10 per cent for those third to fifth in line. Applicants beyond sixth in line who had no incentive to apply for leniency in the old leniency system will now be able to apply for the 5 per cent reduction as the base rate. The immunity granted to the first applicant prior to the initial investigation is unchanged.

Under the new surcharge system, the JFTC extended the period of transactions to be included in the basis of the calculation of surcharges from three to 10 years. In addition, the calculation basis of the surcharge will now include purchase prices of not only the transactions subjected to the cartel or bid rigging but also of the 'closely related transactions', as well as the total sales of companies that belong to the same company group as the violators and which receive instructions or information from the violators. The surcharge is calculated by multiplying the basis amount by the surcharge rate, which is 10 per cent in principle, and adjusted by adding any financial gain obtained from taking part in the cartel by not supplying, and by making any applicable reductions under the leniency programme.

The newly established attorney–client privilege will apply to administrative investigation procedures against 'Unreasonable Restraint of Trade' (i.e., cartels and bid rigging). If conditions are met, JFTC investigators cannot access documents containing communications between a company and its external attorney (in some cases, a qualified in-house lawyer) regarding legal opinions on cartel or bid-rigging conduct. The JFTC's guidelines explain the conditions for application, but Japanese attorney–client privilege is unlike that in other jurisdictions in many ways. In particular, documents or electronic data for which privilege is asserted must be stored appropriately in accordance with these conditions: (1) appropriate labelling; (2) suitable storage location; and (3) limited number of persons who know the contents of the communications. As a condition for privileged emails, for example, the email must only be sent from a designated email account, and the email account may not be used for any other purpose.

Antitrust: restrictive agreements and dominance

The JFTC took notable enforcement action in a number of non-cartel cases, namely those involving unfair trade practices, such as restrictive conditions and abuse of superior bargaining position, particularly in the IT and digital sectors. The JFTC has expressed strong concerns about major companies in the IT sector, as well as online platforms' activities. Investigations in this sector included probes into an alleged conduct by Amazon and Rakuten on suspicion of infringing the AMA by abusing a superior bargaining position.

In 2020, five cases that the JFTC investigated were closed under the commitment procedures, which were introduced in December 2018 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Of the five cases, two cases related to abuse of a superior bargaining position, two to restrictive conditions and one to private monopolisation and interference with a competitor's transaction.

In addition, the JFTC issued a cease-and-desist order and a surcharge payment order against Mainami Aviation Services Co Ltd on its anticompetitive conduct deemed private monopolisation, which is prohibited under the AMA. The cease-and-desist order for private monopolisation is not often issued and the last order was issued in 2009. This is also the first case where the JFTC imposed surcharges for an exclusionary type of private monopolisation.

i Significant cases

Commitment accepted from Amazon in respect of certain abusive conduct

One of the cases related to abuse of superior bargaining position was an investigation against Amazon Japan. Amazon was suspected of abusive conduct, including requests to its supplier to bear the cost of discounts because of competing prices, accepting unreasonable product returns and providing excessive contributions to improving its system.

Amazon proposed commitments that included the termination of the alleged anticompetitive conducts and refunds for the suppliers. Amazon was expected to return approximately ¥2 billion in total to around 1,400 suppliers. Having accepted the commitment plan, the JFTC closed the case in September 20207 and did not determine whether Amazon's alleged conduct was an infringement of the AMA. Accordingly, no sanctions, including cease-and-desist orders, were imposed on Amazon.

Other cases closed under the commitment procedures

The JFTC raided three contact lens manufacturers in June 2019 on suspicion that they had requested retailers of their disposable contact lenses not to display the retail prices in their advertisements and not to sell the lenses online to customers who had a prescription. While the manufacturers' alleged conduct may be deemed restrictive and the type of unfair trade practice prohibited by the AMA, two of them proposed commitment plans that the JFTC accepted in June and November 2020.8 Their commitments included cessation of the alleged anticompetitive conduct; notice to retailers, customers and employees about the cessation; and training for employees.

In another case, a radiopharmaceutical company submitted commitments that the JFTC approved in March 2020.9 The company had been the sole manufacturer of fludeoxyglucose (FDG), a radioactive tracer used for neuroimages in cancer diagnosis, until a new company entered the market. The JFTC suspected the company of interrupting the new entrant by informing its wholesaler that the company would refuse the trade if the wholesaler purchased from the new entrant, as well as informing hospitals that the new entrant's devices were incompatible with FDG produced by the company. These conducts may be deemed private monopolisation and interference with a competitor's transaction.

In addition, the JFTC approved in August 2020 the commitments proposed by a drugstore chain suspected of abusive conduct and of using its superior bargaining position against its suppliers, by forcing them to purchase unrelated products, provide labour for displaying merchandise on shelves in stores, and accept unreasonable product returns.10

Urgent injunction against Rakuten

Rakuten, one of the biggest online mall operators in Japan, announced in 2019 a plan to introduce a free shipping services programme (shipping inclusive programme measures) from March 2020. Under the shipping inclusive programme measures, customers who spend ¥3,980 or more in Rakuten's online mall would get free shipping, while suppliers would bear the shipping costs. The JFTC started an investigation against Rakuten and raided the company in February 2020 on suspicion that shipping inclusive programme measures may constitute abuse of superior bargaining position – an unfair trade practice prohibited by the AMA.

Despite the JFTC's investigation, Rakuten expressed that it would start shipping inclusive programme measures from March 2020 as planned. Considering Rakuten's position, on 28 February 2020, the JFTC filed a petition for an urgent injunction order to the court against shipping inclusive programme measures.11 If the JFTC considers that immediate action is necessary, it can request the court to issue an urgent injunction order. This measure is rarely used, and the JFTC has not requested such an order since 2004.

Following the JFTC's injunction request, Rakuten announced its decision to postpone the uniform introduction of shipping inclusive programme measures due to the covid-19 situation and allow suppliers to choose whether to join the new shipping plan or not. In consideration of Rakuten's announcement, on 10 March the JFTC withdrew the petition for an injunction order since the urgency to seek a court order had diminished. The investigation against Rakuten on this new shipping plan is ongoing.

Mainami Aviation Services case

Mainami Aviation Services supplies aviation fuel at airports located in Japan. At Yao Airport in Osaka Prefecture, the company was the sole supplier until a new company entered the market in 2016. After the new supplier started offering fuel at Yao Airport, Mainami Aviation Services notified its customers that it would not provide fuel to those who purchased from the new supplier, and required them to sign a disclaimer absolving Mainami Aviation Services from any responsibility for accidents caused by mixing its fuel with the new entrant's fuel.

The JFTC found that new entrants were hindered and the conducts constituted a violation of the AMA as an exclusionary type of private monopolisation, and issued a cease-and-desist order on 7 July 202012 and a surcharge payment order (¥6 million) on 19 February 2021. Since Mainami Aviation Services continued the alleged conducts when the JFTC issued the cease-and-desist order and the JFTC could not determine the amount of surcharge, the JFTC was unable to issue a surcharge payment order at that time.

The company filed a lawsuit in court in January 2021 to cancel the cease-and-desist order and is planning to file another lawsuit for the surcharge payment order, arguing that the alleged conduct was a result of safety and quality control and that it did not intend to exclude its competitors.

ii Trends, developments and strategies

Digital Platform Transaction Transparency Act

The bill for the Act on Improvement of Transparency and Fairness in Trading on Specified Digital Platforms (the Digital Platform Transaction Transparency Act) was enacted on 27 May 2020 and was promulgated on 3 June 2020. After the relevant rules and regulations were prepared, the Digital Platform Transaction Transparency Act came into force on 1 February 2021.

Due to the heightened necessity of ensuring that these platforms operate with transparency and fairness, only a limited number of digital platforms called 'specified DPFs' are subjected to regulation. More concretely, only large-scale online mall operators (whose total domestic sales in Japan and those of its users exceed ¥300 billion) and app stores (whose total domestic sales in Japan and those of its users exceed ¥200 billion) are initially defined as specified DPFs.

Specified DPFs are required to disclose the terms and conditions of their contracts with users and to provide prior notice of revisions to these terms and conditions. They are also required to take other measures, including the establishment of procedures and administrative organs in accordance with the policies promulgated by the relevant ministry. Moreover, specified DPFs are required to submit regular reports on the implementation status of the above measures to the ministry, which it will then use to review and assess conduct.

Administrative measures (recommendations, public announcements and orders to take action) will be taken against specified DPF providers who fail to disclose information on the terms and conditions of transactions or to voluntarily develop the required procedures and systems. Fines may be imposed for failure to comply with these administrative measures or to submit the reports. In addition, if the Minister of Economy, Trade and Industry finds any conduct that is deemed likely to violate the AMA, the Ministry will request that the JFTC take measures under the AMA.

During a discussion about a draft bill, further consideration was given to the question of whether the bill set out specific types of unjustifiable digital platform operator behaviour (e.g., an operator's refusal to sell products that compete with its products, compelling platform users to use the operator's services, discriminatory and advantageous exhibition of the operator's products in search results, and unilateral disadvantageous changes in the terms and conditions of a contract with a user to the significant detriment to the user's business operations). Yet due to worries that this could hinder technological innovation, the Act ultimately did not contain these provisions.

iii Outlook

Scrutiny of digital markets is likely to continue in 2021. The JFTC created a new special unit for digital markets, the Office of Policy Planning and Research for Digital Markets, in April 2020. This team focuses on issues related to digital markets and conducts several market studies for this sector, including the online advertisement industry. The JFTC's Competition Policy Research Centre (CPRC) also established a study group on competition policy in digital markets in July 2020.13 In cooperation with the JFTC's Office of Policy Planning and Research for Digital Markets, the members of the study group have had several discussions and plan to publish their findings in a report in 2021.

Sectoral competition: market investigations and regulated industries

The JFTC conducts several market studies and publishes reports on digital markets, including online restaurant-review platforms and retail reward-point systems, as well as other sectors such as fintech in the banking sector and franchising business in the convenience stores sector.

i Significant cases

Market research related to digital markets

In March 2020, the JFTC published a market research report regarding online restaurant-review platforms. The JFTC conducted a questionnaire survey of platform operators, restaurants and customers; interviewed platform operators, restaurants and reservation management service providers; and scrutinised the transaction conditions surrounding restaurant-review sites by reviewing contracts between platform operators and restaurants as well as ranking policies. While the JFTC did not find any specific anticompetitive conduct, it indicated potential competition law issues regarding abuse of superior bargaining position, which online restaurant-review platform operators have against restaurants, as well as discriminatory treatment of trade terms.

In June 2020, a market research report regarding the retail reward-point system was published. Under the reward-point system, consumers may accumulate points by shopping at participating retailers and may use points at other shops. The JFTC has an interest in this system since the reward-point system functions as a platform that connects consumers with participating retailers. After surveying and interviewing reward service providers and retailers, the JFTC pointed out some potential competition law issues in the system regarding restrictive conditions, abuse of superior bargaining position, and unfair collection and use of data.

ii Trends, developments and strategies

The JFTC carefully scrutinises digital markets as mentioned above. The JFTC just finished market research on the digital advertising market and published its report on 17 February 2021. Meanwhile, the CPRC established a study group in November 2020 to discuss competition issues surrounding the data market, in addition to the study group for digital markets mentioned above.

iii Outlook

In addition to digital markets, the JFTC is monitoring other sectors and may conduct any survey or market research on these sectors if necessary.

Merger review

The number of merger filings at the JFTC has been relatively stable, with only a slight decrease compared to the immediately preceding year. From April 2019 to March 2020 (FY 2020), the JFTC accepted 310 notifications – of which 300 were cleared in Phase I (including 217 with early termination), nine were voluntarily withdrawn by the parties and one was brought into Phase II. In terms of the competitive landscape between the parties, 187 involved horizontal overlaps, 128 involved vertical relationships and 135 involved conglomerate business combinations.

Effective use of pre-notification consultation with the JFTC was key to the high Phase I clearance rate. Parties may benefit from informal discussions with the authority during the pre-notification phase, which often extends to substantive competition issues. Sometimes, the parties discuss and agree on remedies to obtain conditional clearance during Phase I.

The JFTC is also keen to employ economic analysis in complex cases. Out of 10 notable decisions published by the authority during FY 2020, two involved the use of economic analysis.

i Significant cases

Integration of Z Holdings Corporation and LINE Corporation14

In August 2020, the JFTC conditionally approved the business integration between Z Holdings Corporation (ZHD) and LINE Corporation (LINE).

ZHD is the parent of Yahoo Japan and belongs to the SoftBank group, while LINE belongs to the NAVER group, hence the transaction involved an integration between two major providers of digital platforms in Japan. Given the status of the parties as major digital platform providers, this case has particular relevance with the amended portion of the Merger Review Guidelines15 that provides key considerations for the authority's scrutiny of digital markets. The JFTC focused on the parties' horizontal overlaps in free online news distribution business, digital advertisement business and QR code payment business.

In relation to the free online news distribution business, the JFTC concluded that the parties' combined market share of 60–75 per cent would not result in substantive restriction of competition by considering various factors such as competitors in the same and neighbouring markets (including charged news distributors), ease of new entry, absence of switching costs and absence of concern that the news sources would act in a manner that forecloses the competitors.

The authority defined a number of sub-segments for the digital advertisement business, namely keyword-targeted advertisement, keyword-neutral advertisement and agency services. Despite the absence of reliable market share estimates, the JFTC concluded the absence of substantive restriction of competition on the grounds of the parties' difficulties to leverage the big data and indirect networking effect that arise from their position as digital platform providers.

The JFTC focused the multi-sided nature of the QR code payment services: one that is customer-facing and another that is merchant-facing, as well as the indirect networking effect between them. Parties' combined market share of 60–75 per cent as well as their recent growth (which may not fully appear on the value-based market shares) could not be fully mitigated by the limited competitive pressures from competitors, potential new entrants, neighbour markets such as credit cards and other cashless payment services. The JFTC could not eliminate the possibility that the parties may enjoy market power depending on their usage of data and the development of the market, hence sought for the remedies to terminate their exclusivity terms with merchants and to periodically report the parties' pricing, usage of data and the market circumstances for the next three years.

The authority's in-depth review was primarily conducted during the pre-notification consultation that lasted approximately eight months and that resulted in the conditional clearance within Phase I.

Acquisition of BASF Colours and Effects Japan Ltd by DIC Corporation16

In December 2020, the JFTC conditionally approved DIC Corporation's acquisition of BASF Colours and Effects Japan Ltd upon Phase II review.

By reference to various factors including economic analysis, the authority defined separate product markets for each colour index of organic pigments, while the relevant geographical market was considered worldwide. Particular focus was given to the three overlapping segments, where the parties have combined market share of 20–40 per cent. The oligopolistic nature of the markets as well as the high-quality requirement for automobile use increased concerns.

Remedies were structured to address the multiple merger filings, including the one with the European Commission, which included the divestment of DIC's pigment business in South Carolina, United States, as well as the appointment of a monitoring trustee.

Acquisition of Fitbit by Google17

In January 2021, the JFTC closed its own investigation against Google LLC's acquisition of Fitbit, Inc. The transaction did not meet the mandatory filing thresholds but the authority initiated the scrutiny since the transaction is valued in excess of ¥40 billion and likely affects domestic customers. This is the first published case where the JFTC applied the value-based threshold for an investigation it initiated.

The JFTC focused on the parties' vertical relationships concerning operating system for smart phones and wristwatch-type wearable devices, healthcare database, as well as the conglomerate effect that may arise from the use of healthcare database for the benefit of Google's digital ads.

In line with the commitments proposed to the European Commission, the parties undertook, for a period of 10 years, (1) non-discriminatory supply of operating system for smart phones and healthcare database; (2) segregation of the parties' healthcare database from Google's other datasets as well as restriction on the use of such database for Google's digital ads; and (3) biannual reports to the JFTC via a monitoring trustee. Subject to these remedies, the JFTC concluded that the transaction would not substantially restrain competition in the relevant markets.

ii Trends, developments and strategies

Covid-19 and merger control

As with authorities in many other jurisdictions, the JFTC has adopted partial remote working under the current situations. As related measures, the JFTC abolished the seal requirement in December 2020 and started accepting formal submission of notification by email in February 2021.

Exemption for regional banks and bus operators

With Japan's population decline and other economic circumstances as the context, M&As are considered important and effective survival options for regional players. Yet their relatively high market shares in specific regions may subject transactions to the JFTC's in-depth review.

To facilitate momentum, temporary legislation took effect in November 2020 to exempt mergers and joint operations between regional banks and bus operators from the merger control regulation, on the conditions that (1) the parties would be unable to survive without the proposed merger or joint operation; and (2) there is no concern that the parties would unreasonably increase prices or otherwise cause disadvantages to customers.

The competent regulatory authority and the JFTC will jointly review the eligibility for the exemption, and monitor the parties' behaviour following the transaction. The exemption will last for 10 years from the effective date.

iii Outlook

Similarly to other areas of enforcement, the JFTC will likely be keen to carefully monitor and review M&As that involve digital markets under the amended Merger Review Guidelines and Merger Review Procedure Policies.18


Chairman Kazuyuki Furuya intends to continue the former chairman's focus on rigorous enforcement of the AMA and promoting competition policy meeting the economic and social environments. Under Chairman Furuya's leadership, it is expected that the focus on cartel enforcements, merger control enforcements and enforcements in digital markets will continue in 2021. In the area of cartel enforcements, it is worth noting how the new leniency regimes and attorney–client privilege will be applied in actual cases going forward. As for digital markets, the implementation of the Digital Platform Transaction Transparency Act and future competition policy focusing on the importance of data from the JFTC – another priority for the Chairman – should draw attention.


1 Junya Ae is a partner, Michio Suzuki and Ryo Yamaguchi are senior associates and Lisa Nagao is an associate at Baker & McKenzie (Gaikokuho Joint Enterprise).

2 See the JFTC press release of 22 December 2020 (

3 'The Fair Trade Commission's Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Antimonopoly Violations', the JFTC, revised 16 December 2020, p. 1.

4 Under the amended AMA, appeal suits pertaining to cease-and-desist orders and surcharge orders are subject to the exclusive jurisdiction of the Tokyo District Court. See the JFTC press release of 9 December 2013 (

5 See the JFTC press release of 9 December 2020 (

15 Guidelines to Application of the Antimonopoly Act Concerning Review of Business Combination, JFTC, published on 17 December 2019. See

18 Policies Concerning Procedures of Review of Business Combination, JFTC, published on 17 December 2019. See

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