Message from Chair on the Reappointment (March 9, 2023)
March 9, 2023
The JFTC’s role to ensure fair and free competition secures a critical foundation for our country's economic growth, development and social vitality. In order to promote innovation and lead to the sustainable growth of the Japanese economy, as well as to achieve appropriate distribution of wealth through the market mechanism, I will continue to steadily fulfill my mission so as to contribute to ensuring a fair and free trading environment in various fields. In addition to "no growth without competition," which we have repeatedly stated, we can say that ”we will support a virtuous cycle of growth and distribution through competition policy”. Following this basic principle, I would like to serve as the Chair of the JFTC.
In particular, I would like to focus on five areas as follows:
First and foremost, strict and swift enforcement of the Antimonopoly Act (AMA) and the relevant laws.
Regarding violations of the AMA, it is fundamental to take strict action against unreasonable restraint of trade such as price cartel, etc., especially in areas that have a significant impact on people's lives and areas that are being liberalized due to deregulation. Recently, as a result of a criminal investigation, we filed a criminal accusation against six corporations and seven individuals with the Prosecutor General regarding a bid rigging case involving the outsourcing contracts of planning events, etc. for the Tokyo Olympic and Paralympic Games. We will continue to take strict and proactive action against violations of the AMA in areas that have a significant impact on people's lives.
Furthermore, it is above all important to quickly restore competition, especially in the rapidly changing digital market. Following close communication with the side of enterprises, we would like to swiftly enforce the law in a manner that suits the specific situation of cases, through active use of all available legal authorities and tools including the commitment procedure, etc., and strengthening the system of information gathering and analysis.
Regarding violations of the AMA, it is fundamental to take strict action against unreasonable restraint of trade such as price cartel, etc., especially in areas that have a significant impact on people's lives and areas that are being liberalized due to deregulation. Recently, as a result of a criminal investigation, we filed a criminal accusation against six corporations and seven individuals with the Prosecutor General regarding a bid rigging case involving the outsourcing contracts of planning events, etc. for the Tokyo Olympic and Paralympic Games. We will continue to take strict and proactive action against violations of the AMA in areas that have a significant impact on people's lives.
Furthermore, it is above all important to quickly restore competition, especially in the rapidly changing digital market. Following close communication with the side of enterprises, we would like to swiftly enforce the law in a manner that suits the specific situation of cases, through active use of all available legal authorities and tools including the commitment procedure, etc., and strengthening the system of information gathering and analysis.
Second, ensuring fair trading environment.
We believe it is important to take strict action against unfair trade practices such as abuse of superior bargaining position that cause undue disadvantages to small and medium-sized enterprises, unjust low price sales and violations of the Subcontract Act, and to implement measures to prevent such violations before they occur.
Based on the "Package of Measures for Facilitation of Passing on Rising Costs," which was formulated by the whole of the government at the end of 2021, the JFTC, in collaboration with the Small and Medium Enterprise Agency and the competent ministries, has been working on developing a trading environment in which small and medium sized enterprises and subcontractors can properly pass on increases in raw material prices, labor costs, energy costs, and other costs to prices, earn proper profits, and secure funds to raise wages. Since last year, we have taken measures on an unprecedented scale, including conducting emergency surveys and requesting business associations to conduct voluntary inspections. At the end of last year, we compiled the results of the emergency surveys and sent written reminders to 4,030 ordering companies as well as published the names of 13 companies that have been confirmed to have kept purchase prices unchanged without discussion about passing on the costs with a number of suppliers.
Following the publication of the survey results, at the beginning of the new year, three economic organizations, on the part of the ordering parties, requested their member companies to actively engage in price discussions with regard to the increase in costs and take measures to smoothly reflect the increase in transaction prices.
In addition, last week, we published the Action Plan to Promote Fairness in Transactions with SMEs, etc. for 2023. The JFTC will disseminate the importance of discussions on the part of purchasers to promote more proactive price pass-through, as well as continuously conduct surveys with a view to facilitating the pass-through. In addition, we intend to take more proactive and strict action against cases that violate the AMA and the Subcontracting Act.
Further, as the invoice system is scheduled to be introduced in October 2023, it is expected that business conditions with tax-exempt business providers will be reviewed in earnest by that time. To ensure that tax-exempt business providers are not subject to unfair disadvantages, the JFTC will work with relevant ministries and organizations to further disseminate Q & As that the JFTC prepared and published in January 2022, provide thorough consultation and strengthen to monitor the violative actions of the AMA and the Subcontract Act.
We believe it is important to take strict action against unfair trade practices such as abuse of superior bargaining position that cause undue disadvantages to small and medium-sized enterprises, unjust low price sales and violations of the Subcontract Act, and to implement measures to prevent such violations before they occur.
Based on the "Package of Measures for Facilitation of Passing on Rising Costs," which was formulated by the whole of the government at the end of 2021, the JFTC, in collaboration with the Small and Medium Enterprise Agency and the competent ministries, has been working on developing a trading environment in which small and medium sized enterprises and subcontractors can properly pass on increases in raw material prices, labor costs, energy costs, and other costs to prices, earn proper profits, and secure funds to raise wages. Since last year, we have taken measures on an unprecedented scale, including conducting emergency surveys and requesting business associations to conduct voluntary inspections. At the end of last year, we compiled the results of the emergency surveys and sent written reminders to 4,030 ordering companies as well as published the names of 13 companies that have been confirmed to have kept purchase prices unchanged without discussion about passing on the costs with a number of suppliers.
Following the publication of the survey results, at the beginning of the new year, three economic organizations, on the part of the ordering parties, requested their member companies to actively engage in price discussions with regard to the increase in costs and take measures to smoothly reflect the increase in transaction prices.
In addition, last week, we published the Action Plan to Promote Fairness in Transactions with SMEs, etc. for 2023. The JFTC will disseminate the importance of discussions on the part of purchasers to promote more proactive price pass-through, as well as continuously conduct surveys with a view to facilitating the pass-through. In addition, we intend to take more proactive and strict action against cases that violate the AMA and the Subcontracting Act.
Further, as the invoice system is scheduled to be introduced in October 2023, it is expected that business conditions with tax-exempt business providers will be reviewed in earnest by that time. To ensure that tax-exempt business providers are not subject to unfair disadvantages, the JFTC will work with relevant ministries and organizations to further disseminate Q & As that the JFTC prepared and published in January 2022, provide thorough consultation and strengthen to monitor the violative actions of the AMA and the Subcontract Act.
Third, creating a competitive environment, particularly active advocacy.
In June last year, we published a statement entitled "Proactive promotion of competition policy in response to socioeconomic changes such as digitalization: Linking and strengthening of advocacy and enforcement", and clarified our vision on how to increase the effectiveness of advocacy. We believe that it is important to develop a competitive environment and bring out innovation by precisely responding to changes in the economy and society, such as the development of the digital economy, efforts to realize a green society, or new ways of working.
With regard to the development of rules for the digital market, in February of this year, we released “Market Study Report on Mobile OS and Mobile App Distribution”. This report, on the premise that it is initially desirable for 2 operators, Apple and Google, to take voluntary measures to address issues arising from oligopolistic structures in the mobile OS market and other areas in terms of competition policy, clarifies the view that it is effective to secure the effectiveness of such measures through the development of rules through legislation to the extent necessary.
Currently, Headquarters for Digital Market Competition of the Cabinet Secretariat is working on the competition assessment of the mobile ecosystem, and the need for new rules will be discussed in light of the status of enforcement of the Transparency Act. The JFTC intends to actively participate in the future discussions based on the findings from the market study and other studies.
In addition, with regard to initiatives to realize a green society, we are currently working on the formulation of the new guidelines titled “Guidelines Concerning the Activities of Enterprises, etc. Toward the Realization of a Green Society under the Antimonopoly Act”.
Further, with regard to the labor markets or human resources markets, in March 2021, we formulated and published the “Guidelines for Creating a Safe Environment Where People can Work on a Freelance Basis” in collaboration with the relevant ministries such as the the Ministry of Health, Labour and Welfare and the Small and Medium Enterprise Agency, and clarified the views on the application of the AMA, the Subcontract Act, and labor-related laws and regulations. Then, at the end of last month, the Cabinet Secretariat submitted to the Diet a draft law on the improvements of transactions involving designated fiduciary services providers. If the law passes the Diet, the JFTC is expected to play a central role in law enforcement concerning the part of this proposed law stipulating the improvements of transactions, namely, the provision prohibiting certain conducts by outsourcing contractors that outsource work to freelancers in business-to-business transactions (BtoB), therefore, we hope to steadily make preparations for the role.
Additionally, today, we launched a meeting of the “Study Group on Innovation and Competition Policy”. As I have mentioned, in order to maintain the vitality of the Japanese economy, it is time to promote innovation and create new services and markets. We would like to contribute to this end from a standpoint of competition policy, so that we have decided to hold this study group based on our awareness of issues such as how to implement a competition assessment of the impact of corporate actions on innovation. From the perspective that competition assessment on the short-term impact on prices and supply alone may not adequately capture events related to innovation, and that it is important to closely monitor the impact on the long-term competitive environment, we decided to invite experts to systematically study the impact of corporate actions on innovation, based on economic knowledge and so on.
In June last year, we published a statement entitled "Proactive promotion of competition policy in response to socioeconomic changes such as digitalization: Linking and strengthening of advocacy and enforcement", and clarified our vision on how to increase the effectiveness of advocacy. We believe that it is important to develop a competitive environment and bring out innovation by precisely responding to changes in the economy and society, such as the development of the digital economy, efforts to realize a green society, or new ways of working.
With regard to the development of rules for the digital market, in February of this year, we released “Market Study Report on Mobile OS and Mobile App Distribution”. This report, on the premise that it is initially desirable for 2 operators, Apple and Google, to take voluntary measures to address issues arising from oligopolistic structures in the mobile OS market and other areas in terms of competition policy, clarifies the view that it is effective to secure the effectiveness of such measures through the development of rules through legislation to the extent necessary.
Currently, Headquarters for Digital Market Competition of the Cabinet Secretariat is working on the competition assessment of the mobile ecosystem, and the need for new rules will be discussed in light of the status of enforcement of the Transparency Act. The JFTC intends to actively participate in the future discussions based on the findings from the market study and other studies.
In addition, with regard to initiatives to realize a green society, we are currently working on the formulation of the new guidelines titled “Guidelines Concerning the Activities of Enterprises, etc. Toward the Realization of a Green Society under the Antimonopoly Act”.
Further, with regard to the labor markets or human resources markets, in March 2021, we formulated and published the “Guidelines for Creating a Safe Environment Where People can Work on a Freelance Basis” in collaboration with the relevant ministries such as the the Ministry of Health, Labour and Welfare and the Small and Medium Enterprise Agency, and clarified the views on the application of the AMA, the Subcontract Act, and labor-related laws and regulations. Then, at the end of last month, the Cabinet Secretariat submitted to the Diet a draft law on the improvements of transactions involving designated fiduciary services providers. If the law passes the Diet, the JFTC is expected to play a central role in law enforcement concerning the part of this proposed law stipulating the improvements of transactions, namely, the provision prohibiting certain conducts by outsourcing contractors that outsource work to freelancers in business-to-business transactions (BtoB), therefore, we hope to steadily make preparations for the role.
Additionally, today, we launched a meeting of the “Study Group on Innovation and Competition Policy”. As I have mentioned, in order to maintain the vitality of the Japanese economy, it is time to promote innovation and create new services and markets. We would like to contribute to this end from a standpoint of competition policy, so that we have decided to hold this study group based on our awareness of issues such as how to implement a competition assessment of the impact of corporate actions on innovation. From the perspective that competition assessment on the short-term impact on prices and supply alone may not adequately capture events related to innovation, and that it is important to closely monitor the impact on the long-term competitive environment, we decided to invite experts to systematically study the impact of corporate actions on innovation, based on economic knowledge and so on.
Fourth, strengthening international cooperation.
In recent years, there has been a remarkable increase of collaboration and cooperation with foreign competition authorities both in law enforcement and in competition policy, such as responses to international cartels, business combinations, and anti-competitive business activities of digital platform operators. Concerning the digital sector, in particular, the Summit attended by the top officials, etc. of the G7 competition authorities has been held since 2021, and I participated in the meeting of the Summit in Berlin last October.
Japan holds the G7 presidency this year. This fall, we hope to hold a Summit in Japan attended by the top officials, etc. of the G7 competition authorities and others to discuss key issues to further deepen international collaboration in the digital field.
In recent years, there has been a remarkable increase of collaboration and cooperation with foreign competition authorities both in law enforcement and in competition policy, such as responses to international cartels, business combinations, and anti-competitive business activities of digital platform operators. Concerning the digital sector, in particular, the Summit attended by the top officials, etc. of the G7 competition authorities has been held since 2021, and I participated in the meeting of the Summit in Berlin last October.
Japan holds the G7 presidency this year. This fall, we hope to hold a Summit in Japan attended by the top officials, etc. of the G7 competition authorities and others to discuss key issues to further deepen international collaboration in the digital field.
Finally, strengthening the structure and capabilities of the JFTC. In order to steadily implement the concrete measures I have mentioned so far and to accurately fulfill the expected role of the JFTC, it is necessary to strengthen the structure of it both in quality and in quantity. An emergency increase of 50 staff was realized at the end of last year and further increases are included in the FY 2023 budget proposal, the number of staff at the JFTC will exceed 920 in FY 2023, compared to 850 last year. I think it reflects high expectations and responsibility for us, so we will continue to work on improving the capabilities of our staff and securing highly specialized digital personnel, and so on, so that we can strengthen our organization not only in quantity but also in quality.
[Tentative translation]
