Corporate Counsel - March 2010 (Sample Issue)

Expected effects of the amendment As seen above, many more acquisitions involving non-Japanese companies are likely to require prior filings with the JFTC, especially acquisitions involving large corporate groups that have a considerable amount of sales in Japan. It will obviously be very important to examine the necessity of potential filing requirements at an early stage of any planned acquisition in order to minimize the risk of unexpected delays in the transaction schedule.

Surcharge against exclusionary conduct and
some other unfair trade practices

Until the amendment was implemented, exclusionary conduct under “private monopolization” was not subject to surcharge under the AMA (which is a basic form of monetary penalty). For instance, no surcharges were imposed in connection with the Intel case in 2005, where Intel tried to exclude AMD and other competitors with a rebate scheme. Given that other major jurisdictions have imposed large monetary penalties for exclusionary conduct, as seen in the Microsoft case at the European Commission, the Japanese Diet decided to harmonize the AMA with this “international standard”. The amended AMA imposes a surcharge of 6% on three years of sales revenue in connection with any exclusionary conduct constituting private monopolization. Multinational companies with considerable market share in Japan should be aware of the risks of being subject to these newly introduced surcharges.

In addition to exclusionary conduct, surcharges have been introduced for some types of unfair trade practices, including boycotts and predatory pricing. Among other unfair conduct, abuse of dominant bargaining position is important because it is said to be a unique provision of the Japanese AMA.

REVIEW OF RECENT CASES IN JAPAN
Rapid increase in international cases
Until recently, the main focus of Japanese antitrust
enforcement has been on bid rigging cases, particu-
larly for government procurements. The JFTC is now
rapidly moving its attention to the international
arena. The JFTC was one of a few regulators that
took legal action against Qualcomm, a large technol-
ogy company in California. In cases involving both
Qualcomm and Microsoft, the JFTC regarded a
“NAP” (non assertion of patent) clause in licensing
agreements with Japanese electronics manufacturers
as being an anti-competitive provision. These two
cases show the JFTC’s strong interest in licensing
practices between Japanese companies and non-
Japanese technology companies.

Extraterritorial jurisdiction

When it comes to enforcement of the AMA against non-Japanese companies, extraterritorial jurisdiction often becomes an issue. As in many countries, the “effect doctrine” is the prevailing theory of extraterritorial jurisdiction in Japan. With this doctrine, the JFTC could apply the Japanese AMA to the extent that there is any anti-competitive effect in the Japanese market as a result of conduct by entity/entities outside Japan.

In the CRT case in 2009, where non-Japanese CRT manufacturers were accused of forming a cartel to maintain prices of CRTs sold to foreign subsidiaries of Japanese manufacturers of CRT televisions, the JFTC issued surcharge orders against non-Japanese companies for the first time. Although the orders have not become final, this case shows the JFTC’s attempt to expand its extraterritorial jurisdiction.

CONCLUSION

As seen above, the amended AMA and recent enforcement actions by the JFTC reflect significant changes in Japanese antitrust practice. The Japanese regulator now has a stronger interest in cross-board-er cases than ever. As a result, we can expect an increase in merger filings under the AMA as well as an increase in international enforcement cases. O