2018 New Year Message from Chairman Sugimoto
1. In the beginning of the year, I would like to wish a happy new year along with all my respected colleagues.
The Japan Fair Trade Commission (JFTC) celebrated its 70th anniversary last July. At the same time, it is 70 years since the enforcement of the Antimonopoly Act (AMA) for which the JFTC serves as a competition authority.
During these 70 years, the economic environment surrounding corporate activities has changed drastically, starting from the economic recovery and high economic growth after the war to the emergence and burst of the bubble economy and changes in the demographic structure toward an aging population and low birth rates. The AMA has been enforced in light of changes in economic circumstances over these years. The JFTC considers it necessary to properly respond to increasingly accelerating changes in the economic environment while making the most of its 70-year history and experience, thereby further promoting a competition policy that will lead to innovation, consumer interests and economic growth..
2. One of the issues currently faced by a competition authority is the need to implement measures for ensuring fair and free competition amid the development of platform-type business being brought about by rapid progress in the digital economy.
At present, the collection and efficient use of data are recognized as more and more important in business activities. Last June, the Report of the Study Group on Data and Competition Policy was released to clarify preferable approaches to data issues from the standpoint of competition policy. The report points out that a large volume of data centers around certain enterprises, and that if such situation restricts competition and harms the interests of consumers, a prompt response would be required under the AMA. Furthermore, the report states that free services such as SNS may be subject to the AMA from the perspective that they constitute a "market." It would be necessary for the JFTC to promote competition policy in the data sector and enforce the AMA while taking into account the matters pointed out in the report.
3. Another issue is the need to make efforts to achieve global convergence of competition policies and promote cooperation with foreign authorities in enforcing competition law under circumstances where the globalization of economic activities has been making supply chains increasingly globalized and international mergers have been increasing.
The JFTC has built schemes to share information with foreign competition authorities under bilateral frameworks such as Antimonopoly Cooperation Agreements and Economic Partnership Agreements and under multilateral frameworks such as the OECD and ICN. Regarding cases of international mergers, the JFTC conducts reviews in collaboration with the authorities of the relevant countries. The JFTC employs internationally established examination means for all cases of mergers, including domestic cases such as mergers of regional banks. The JFTC will play a role of host authority for ICN Merger Workshop in Tokyo in November this year with the aim of strengthening cooperation and collaboration with foreign authorities in merger reviews and sharing awareness and discussing the common issues we face.
Last June, the JFTC conducted surveys on the status of transactions of liquefied natural gas (LNG) involving Japanese purchasers and publicized its approaches from the standpoint of competition policy with regard to three points, (i) destination restriction clause, (ii) profit sharing clause, and (iii) take or pay clause. Counterparties of agreements including these clauses are often foreign governmental organizations, but the JFTC expects these restrictive clauses to be revised upon renewing agreements based on this investigation report.
Additionally, the JFTC has been carrying out advocacy activities for developing countries that are intending to introduce or strengthen competition law through means such as providing competition authorities of those countries with training to acquire knowledge and dispatching JFTC staff to those countries. The JFTC will continue efforts to reinforce cooperation systems with foreign competition authorities through information exchange and technical assistance.
4. Last August, the JFTC launched a meeting of the Study Group on Human Resources and Competition Policy and announced its intention to arrange the theoretical basis for the necessity and validity of the application of the AMA to employers' competition for acquiring human resources. Some media coverage only focused on the issues in the world of entertainment or sport but the JFTC targets much broader fields. As mentioned above, the working environment has been changing with the emergence of diversified forms of employment including those not based on employment agreements, as progressing digitalization of the economy has made it easier to link companies and workers on the internet and an increasing number of companies no longer ensure lifetime employment. Given these changes, the JFTC aims to compile the idea on how to apply the AMA in such new labor markets.
5. The JFTC has also been addressing other various conventional issues in addition to the aforementioned new challenges. First is the strict enforcement of the AMA. It is the most important duty of the JFTC to show the society that the environment for fair and free competition is being ensured by taking countermeasures against anticompetitive acts. The JFTC is committed to fulfilling its roles as a competition authority and properly and strictly enforcing the AMA to ensure the maintenance of fair and free competition.
The JFTC also considers it important to address the issue of acts that cause an unfair disadvantage to SMEs. Strengthening SMEs' management capabilities and productivity enhancement will serve as the driving force for achieving further growth of the Japanese economy. The government of Japan positions measures for SMEs as one of its major policies, and the JFTC also participates in the Inter-Ministerial Meeting for Invigorating SMEs and Micro Businesses. Based on the discussions at the meeting, the JFTC will continue its efforts for positive enforcement of the Subcontract Act in order to improve transaction conditions for SMEs. The JFTC will also continuously endeavor to ensure the proper pass-on of consumption tax by taking countermeasures against acts to reject consumption tax pass-on.
6. This year as well, the JFTC will firmly fulfill its duty as a competition authority to ensure fair and free competition. In conclusion, I ask for your continued support and encouragement, and I wish your growth and good health throughout the year.
Kazuyuki Sugimoto
Chairman
Japan Fair Trade Commission
