New Year's Greetings from Chairman (January 2022)
January 2022
I wish you a Happy New Year.
This is my second New Year as the Chairman of the Japan Fair Trade Commission (“JFTC”).
The Japanese economy is still in a difficult situation due to the effects of COVID-19, but the Government has formulated economic measures to resume socioeconomic activities coexisting with COVID-19 and to launch a “New Form of Capitalism” in order to realize a “virtuous cycle of growth and distribution”, which will orient the economy onto autonomously growing.
I believe that the key to “growth” lies in strengthening competition policy creating a competitive environment that will generate powerful innovations to pave the way for a post-COVID-19 future. This year, the JFTC will fulfill the mission to ensure a free and fair market environment in order to promote innovation and the sound growth of the Japanese economy, and I would appreciate it if you could kindly give us your continued support for the JFTC’s activities.
The JFTC performs the two of its most important missions: (1) ensuring competition through strict enforcement of the Antimonopoly Act, and (2) improving competitive environments through advocating for the competition, as the two wheels of a cart.
1. Strict and proper law enforcement
With the prolonged COVID-19 outbreak, the Japanese economy is in a difficult situation, and the business environment, in particular, for small and medium-sized enterprises (SMEs) is becoming even more difficult. Under these circumstances, the JFTC formulated the “Action Plan to Promote Fairness in Transactions with SMEs, etc.” in September last year (revised in November) to prevent unfair distortions to SMEs caused by the increase in the minimum wage and the sharp rise in crude oil prices. The JFTC is, thereby, working to strengthen the supervisory framework for subcontracts. Additionally, in December last year, along with the Cabinet Secretariat and other related ministries and agencies, the JFTC compiled the “Package of Measures to Facilitate Shift with a view to Creating Value through Partnership”. In this manner, the JFTC will take prompt and strict actions against violations of the Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors for the sake of SMEs and freelancers, whilst cooperating with other related ministries and agencies. Furthermore, with regard to the violations of the Antimonopoly Act, the JFTC will make further efforts to take strict measures against unreasonable restraint of trade such as price cartels that have a significant impact on people's lives, and also to address unfair trade practices such as abuse of a superior bargaining position from the perspective of ensuring fair trade for SMEs.
In relation to the digital economy, we announced the Investigation on the suspected violation of the Antimonopoly Act by Apple Inc. in September last year and the Investigation on the suspected violation of the Antimonopoly Act by Rakuten Group, Inc. in December last year. With regard to competition concerns in the fast-changing digital markets, it is important to promptly restore the situation where competition is impeded, and the JFTC will continue to proactively enforce the Antimonopoly Act in a flexible manner according to the case, taking into consideration the digital markets environment and the actual trading conditions in Japan.
2. Strengthening competition policy (competition advocacy)
The JFTC is actively engaged in advocacy activities to improve the competitive environment in response to new economic and social trends such as the digitization of the economy and the diversification of working styles, thereby contributing to the improvement of corporate compliance with competition laws and to the review of policies, regulations and systems of other government agencies.
The Government as a whole, led by the Headquarters for Digital Market Competition in the Cabinet, has been working on the development of rules for the digital markets, and the Act on Improving Transparency and Fairness of Specified Digital Platforms was enacted in February last year as a complementary regulation to the Antimonopoly Act.
The JFTC held the “Study Group on Competition Policy in Digital Markets” and published the “Report on Algorithms/AI and Competition Policy” in March last year. In addition, in June last year, the “Study Group on Competition Policy for Data Markets” held under the Competition Policy Research Center of the JFTC published a report that presents the direction and issues based on the idea that promoting the open distribution and utilization of data is desirable from the perspective of competition policy.
Additionally, the JFTC is currently conducting a survey on cloud services and mobile operating systems.
The Government as a whole has established a framework to consider the development of rules for the digital market and the promotion of the utilization of data, and based on the knowledge and insights gained from these surveys, the JFTC will proactively participate in and contribute to this framework.
In June last year, the JFTC published a survey report on the mobile phone market. As a result of the survey, the JFTC found some conditions that can be problematic under the Antimonopoly Act. In the light of these conditions, the JFTC requested the three Mobile Network Operators to conduct voluntary inspections and make improvements, and received the reports on the improvements in October last year.
Furthermore, the JFTC is also working on developing guidelines for investment on startups, and conducting surveys of the transactions in credit cards, software development, etc. The JFTC will continue to improve the competitive environment whilst quickly grasping the changes in the economy and society.
3. Promoting international collaboration
In recent years, there have been increasing demands for cooperation and collaboration among competition authorities across the world in both law enforcement and competition policy; for instance, in dealing with international cartels, mergers and acquisitions, and anticompetitive activities of digital platform operators.
In relation to the digital markets, in particular, G7 Summit Communiqué, agreed in the United Kingdom in June last year, included a call for “Deepening cooperation on Digital Competition”. In response to this, at the end of November last year, “Enforcers Summit”, in which the heads of the G7 competition authorities, etc. participated, was held. In the digital markets where large-scale digital platform operators are creating an overwhelming competitive advantage and strengthening their market dominance, Not only the JFTC but also other competition authorities all over the world are becoming quite active in both enforcing competition laws and developing new regulatory systems. It was very meaningful for the heads of G7 competition authorities, etc. to meet, exchange views directly, share issues and confirm collaboration under these circumstances.
The Government's Council of New Form of Capitalism Realization will continue to discuss growth and distribution strategies, but I believe that the roles of the JFTC, that is, to proactively promote competition policy in order to promote free and fair competition, will remain unchanged. In order to be able to demonstrate such roles utmost, the JFTC will systematically reinforce the structure and enforcement power of the General Secretariat by improving its expertise and expanding its organization and personnel.
Finally, I would like to conclude my New Year's greetings by asking for your continued understanding and support for the JFTC’s efforts and by wishing you all good health and prosperity amidst the continuing concerns on COVID-19.
