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Anti-Competitive Practices

(1) The Enforcement of Competition Policy

Competition policy in Japan has been strengthened steadilywith the aim of active implementation along with deregulation. Atthe recent revision of the Deregulation Action Program, theCabinet decided a number of measures in this regard such as:strengthening of the Japan Fair Trade Commission (JFTC) throughthe bolstering of the JFTC's organization and the number ofpersonnel including the reorganization of the current ExecutiveOffice (jimu-kyoku) into the General Secretariat (jimu-sokyoku)during FY1996; enhancement of the enforcement abilities of theAnti-Monopoly Act and taking rigorous and active measures,including criminal accusations, against violations of the Act;and the abolition by the end of FY1998 of 33 Anti-Monopoly Actexemption systems under individual laws.

Revisions to the Anti-Monopoly Act which comprehensivelystrengthen the organization of the JFTC are currently beingsubmitted to the Diet, and the JFTC's personnel in theinvestigation departments have also been increased by more than100 people since 1988, to 236 people by the end of FY1996.Furthermore, measures against Anti-Monopoly Act violationsinclude: criminal sanctions aimed toward punishment; formaldecisions, which are administrative actions ordering the violatorto cease and desist the violations; and surcharge payment orders,which are administrative measures in which profit made by acartel is seized. Therefore, the Government of Japan believesthat there are sufficient deterrents against violations of theAnti-Monopoly Act.

As can be seen from the above, the measures and enforcementscontained in the Anti-Monopoly Act are in no way inferior tointernational standards.

Moreover, each incident should be processed appropriatelyaccording to the facts in the individual case. Therefore, it isnot appropriate for the NTE to comment on the number of cases orspecific sentencing of a crime.

After the publication of the policy statement regardingcriminal accusations in June 1990, the JFTC has made accusationsagainst 33 people in 21 companies in a total of three cases. Inthe last fiscal year, the surcharge payment orders assessedtotaled 6.45 billion yen (US$68.58 million). Incidentally, thefines sentenced in anti-trust violations in the United States inFY1995 were US$41.43 million.

(2) Guidelines Concerning Distribution Systems and Business Practices

The JFTC deals severely with violations of the Anti-MonopolyAct, based on the points outlined in the Anti-Monopoly ActGuidelines Concerning Distribution Systems and Business Practicesissued in 1991. During FY1995, the JFTC ordered that measures betaken to eliminate resale price maintenance (RPM) conducted bythe Japan's largest cosmetics manufacturer, as well as orderingthat measures be taken to eliminate unfair trade practicesinvolving other cases of RPM or obstruction of parallel imports,based on the points outlined in the Guidelines.

The four business areas mentioned in the NTE were found tohave no factual basis involving violations of the Anti-MonopolyAct. However, from the viewpoint of competition policies, certainindications were made by the JFTC. As a result of the follow-upsurveys, it was found that all of the relevant businesses weretaking a sincere approach to improving their business practicesaccording to the indications made by the JFTC.

The JFTC expects relevant businesses to continue to sincerelymake efforts to improve their trade practices.

(3) Restrictions on Exports and Imports

The JFTC has long since actively enforced the Anti-MonopolyAct against its violations which could lead to pricedifferentials between Japanese and overseas markets. In FY1995,the JFTC ordered that measures be taken to eliminate restrictionson the import of chemicals from Taiwan to Japan and other actionswhich obstructed imports.

Furthermore, since its establishment, the Task Force onImport Restrictions and Internal-External Price Gaps has taken anactive approach to gathering relevant information. Examples inFY1995 were cases such as a price cartel of automobile fuel gaslargely dependent on imports, and the obstruction of parallelimports of porcelain tableware. In the future, it is expectedthat recommendations and other formal actions will be made basedon the activities of the Task Force. The JFTC intends to continueto make full use of the Task Force in order to actively eliminateany violations of the Anti-Monopoly Act in these areas.

As such, allegations that the Task Force is not beingutilized are without any factual foundation.

(4) Restrictions on Holding Companies

Regarding restrictions on holding companies, in accordancewith the recently revised Deregulation Action Program, a reviewwill be conducted and appropriate measures will be taken to liftthe ban on holding companies to the extent compatible with theantimonopoly policy. In light of the need to take appropriatemeasures, consideration is currently underway among the threeparties of the ruling coalition. Therefore, it is not expectedthat a future revision of the relevant laws "could lead to astrengthening of Japan's keiretsu groups and an increasein the barriers faced by U.S. and other foreign firms inJapan."

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