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Message from Chairman(January 2016)

2016 New Year Message from Chairman Sugimoto

1. I would first like to kick off the new year for the Japan Fair Trade Commission (JFTC), wishing a happy new year with all my respected colleagues. It has passed nearly three years since I assumed the chairmanship of the JFTC. Now it is honored that the Japanese economy is shifting from recovery to sustainable growth, and the idea of “No competition, no economic growth” holds. As the guardian of the market, the JFTC plays an important role of eliminating anticompetitive acts that would harm economic growth and consumer benefits. Responding to the change of the economy and society, we are also determined to fulfill our mission this year, which is to make sure the market force works freely and fairly by keeping it competitive.

2. In the economy and society today, accompanied by globalization, the progress of the digital economy and regulation reforms, new business models are being launched one after another all over the world and business transactions are also being transformed.
Under these circumstances, I found two issues to focus on for competition policy at the moment. The first one is how to cope with the globalization in which supply chain, transactions of goods and services, and merger and acquisitions are taking place across borders. The second is how to put competition policy into effect in order to promote innovations. The relation between intellectual property rights and competition is one of the big issues. Moreover, it also matters how we apply competition policy to the change in business models as ICT and digitalization of the economy accelerate.

3. Regarding the first issue, that is, the globalization in markets, supply chain, and business activities, the JFTC intends to fulfill the mission while proceeding cooperation and information sharing with foreign authorities in case investigations and merger reviews. We are going to push cooperation further ahead and expand frameworks, such as cooperation agreements, economic partnership agreements and memorandums, which will be a good base to deal with this issue. Furthermore, we also put weight on multilateral frameworks, such as OECD (Organization for Economic Cooperation and Development) and ICN (International Competition Network) and keep playing an active role in those frameworks.
 The agreement in principle on the Trans Pacific Partnership (TPP) meant a lot for Japan last year. The TPP agreement would extend the market to the Trans Pacific Areas and create the environment that generates large economic values through fair and free competition in that market. Amid the expansion of trade and regional integration, the role of competition policy is becoming more and more crucial. In fact, the TPP agreement sets up the rules on competition policy and requires member countries to cooperate in enforcement of competition laws. The JFTC is going to play its role in promoting fair and free competition in the market of this area, collaborating with competition authorities of other member countries. We are also proceeding in making necessary amendment of legislation in order to make sure the TPP agreement will smoothly take effect in Japan. Furthermore, we will start to think about how the surcharge system should develop including the idea of discretionary surcharge system.

4. Secondly, we will make efforts to enforce the Antimonopoly Act and promote a competitive environment, responding to the successive changes in the economy and society. To be more specific, we will proactively crack down on not only harmful cartels and bid riggings but also on anticompetitive unilateral conducts that may block innovations by excluding new entrants based on abuse of dominant power. Regarding merger reviews, we are going to look into cases, taking expansion of business and change of the market accordingly. As for intellectual property rights, we drafted the partial amendment of the “Guideline for the Use of Intellectual Property under the Antimonopoly Act” last July on matters related to FRAND-encumbered SEPs, such as a claim for an injunction by a FRAND-encumbered SEP holder and asked for public comments. We are going to make the final version public.

5. The revised Antimonopoly Act in effect last April abolished the JFTC’s hearing procedure and introduced a system in which any appeal against the JFTC’s order shall be subject to the Tokyo District Court. On top of that, the new procedure for hearing prior to issuing orders has been in place to enhance the due process and there is already a case dealt with this procedure. We also made public the final version of the “Guidelines on Administrative Investigation Procedures under the Antimonopoly Act” last December, paying a careful consideration to public comments received since last June. We are determined to continue strict enforcement of the Antimonopoly Act this year, listening to the voice asking for further due process.
The same is true for the Subcontract Act and the Act Concerning Special Measures for the Pass-on of the Consumption Tax. Enforcing these two acts, we will make efforts to promote fair trade and protect medium and small sized subcontractors from unfairly being exploited.

6. As a part of recommendations to review regulations and build a more competitive environment, we published the “Study Report on Childcare Sector” in June 2014 and made its advocacy activities last year. It is estimated that there would be great demand for sectors such as nursing care for elders; we are going to research and make recommendations on those sectors from the standpoint of competition policy. Regarding public support for revitalization, the “Study Group on Competition Policy and Public Support for Revitalization” was founded based on the decision of the Minister of State of the Cabinet Office. The Study Group made an interim report public, and given that, we are going to draft the guidelines on this matter.
It is also our task to make and revise guidelines that catch up with the changes in the economy and society in order to enhance predictability for enterprises and prevent them from breaking the antitrust laws. We are now reviewing the “Guidelines Concerning Distribution Systems and Business Practices” and its standards and conditions for the so-called “safe harbor.” We will learn the conclusion by the end of this coming March. In addition, we are also seeing the development of E-Commerce and will update the guidelines so that they are in line with the current distribution system, asking opinions from various stakeholders.

7. As already mentioned above, this year, the JFTC will make best efforts to fulfill its missions. Last but not least, as the New Year starts, I wish you all happiness and growth.


Kazuyuki Sugimoto
Chairman
Japan Fair Trade Commission



Japan Fair Trade Commission:

100-8987 1-1-1 Kasumigaseki, Chiyoda-ku, Tokyo,Japan
Tel: +81-3-3581-1998
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