June 5, 2024
Japan Fair Trade Commission
(Start of the Special Study on Efforts to Facilitate Smooth Price Pass-Through in FY 2024)
Today, I would like to talk about the start of the special study on efforts to facilitate smooth price pass-through in FY 2024 (2024 Special Study).
In order to further promote fair trade practices, the Japan Fair Trade Commission (JFTC) has initiated 2024 Special Study, starting on May 30th of this year. This follows similar initiatives in fiscal years 2022 and 2023, aiming to create a transaction environment that allows for appropriate price pass-through reflecting rising costs.
2024 Special Study based on the results of the 2023 Special Study, aims to understand the status of price pass-through in transactions between enterprises. It will follow up on the implementation of the Guidelines for Price Negotiations to Appropriately Pass Through Labor Cost and track efforts to facilitate smooth price pass-through by the 10 enterprises that were publicly named in the 2023 Special Study.
2024 Special Study will cover the one-year period from June 1, 2023, to May 31, 2024. We will send out questionnaires on the 7th of this week to over 110,000 enterprises, including the 8,175 enterprises who received a letter of warnings in 2023 Special Study.
As part of strengthening measures related to the pass-through of labor costs, we will focus on sending questionnaires to industries identified in the 2023 Special Study as needing particular attention due to a high proportion of labor costs in their total costs and a low pass-through rate of labor costs. These industries include road freight transport, information services, building maintenance, and security services.
For this 2024 Special Study, even enterprises that do not receive a questionnaire can respond through a dedicated page on the JFTC’s website. We encourage various enterprises to provide a wide range of information, especially regarding the pass-through of increased labor costs.
Going forward, we will use the results of the questionnaire survey and other assessments to conduct on-site inspections. These inspections will focus on cases where there is suspicion of blocking the pass-through of labor costs by maintaining transaction prices without negotiation or by failing to act on the labor cost guidelines. If we identify any problematic behaviors, we will take necessary actions, such as sending warning letters that specify specific concerns. Furthermore, we will compile the study results by the end of 2024 and review the implementation status of the labor cost guidelines.
Additionally, based on the results of the 2024 Special Study, we will conduct individual investigations on enterprises that were frequently named by contractors as having maintained transaction prices, significantly impacting business activities. This will be done in accordance with the “policy on the disclosure of enterprise names following the results of the study on facilitation of transferring higher costs,” published in November, 2023. In some cases, we may disclose the names of these enterprises.
Furthermore, on May 27, 2024, the JFTC revised the Guidelines for the Subcontract Act. These revisions aim to clarify how underpayment, or buying on unfair terms or methods, should be interpreted and addressed under the Act, taking into account the labor cost guidelines and other factors. With these updated standards and the explanations provided in the Antimonopoly Act Q&A on price pass-through, we will enforce the laws more strictly. This includes taking stronger action in cases where we suspect that cost increases, such as higher labor costs, are not being passed through properly.
（Tentative translation）
Today, I would like to talk about the start of the special study on efforts to facilitate smooth price pass-through in FY 2024 (2024 Special Study).
In order to further promote fair trade practices, the Japan Fair Trade Commission (JFTC) has initiated 2024 Special Study, starting on May 30th of this year. This follows similar initiatives in fiscal years 2022 and 2023, aiming to create a transaction environment that allows for appropriate price pass-through reflecting rising costs.
2024 Special Study based on the results of the 2023 Special Study, aims to understand the status of price pass-through in transactions between enterprises. It will follow up on the implementation of the Guidelines for Price Negotiations to Appropriately Pass Through Labor Cost and track efforts to facilitate smooth price pass-through by the 10 enterprises that were publicly named in the 2023 Special Study.
2024 Special Study will cover the one-year period from June 1, 2023, to May 31, 2024. We will send out questionnaires on the 7th of this week to over 110,000 enterprises, including the 8,175 enterprises who received a letter of warnings in 2023 Special Study.
As part of strengthening measures related to the pass-through of labor costs, we will focus on sending questionnaires to industries identified in the 2023 Special Study as needing particular attention due to a high proportion of labor costs in their total costs and a low pass-through rate of labor costs. These industries include road freight transport, information services, building maintenance, and security services.
For this 2024 Special Study, even enterprises that do not receive a questionnaire can respond through a dedicated page on the JFTC’s website. We encourage various enterprises to provide a wide range of information, especially regarding the pass-through of increased labor costs.
Going forward, we will use the results of the questionnaire survey and other assessments to conduct on-site inspections. These inspections will focus on cases where there is suspicion of blocking the pass-through of labor costs by maintaining transaction prices without negotiation or by failing to act on the labor cost guidelines. If we identify any problematic behaviors, we will take necessary actions, such as sending warning letters that specify specific concerns. Furthermore, we will compile the study results by the end of 2024 and review the implementation status of the labor cost guidelines.
Additionally, based on the results of the 2024 Special Study, we will conduct individual investigations on enterprises that were frequently named by contractors as having maintained transaction prices, significantly impacting business activities. This will be done in accordance with the “policy on the disclosure of enterprise names following the results of the study on facilitation of transferring higher costs,” published in November, 2023. In some cases, we may disclose the names of these enterprises.
Furthermore, on May 27, 2024, the JFTC revised the Guidelines for the Subcontract Act. These revisions aim to clarify how underpayment, or buying on unfair terms or methods, should be interpreted and addressed under the Act, taking into account the labor cost guidelines and other factors. With these updated standards and the explanations provided in the Antimonopoly Act Q&A on price pass-through, we will enforce the laws more strictly. This includes taking stronger action in cases where we suspect that cost increases, such as higher labor costs, are not being passed through properly.
（Tentative translation）
