2025 New Year Message from Chair Furuya Kazuyuki
January 2025
I wish you a happy New Year. I sincerely look forward to your continued support and collaboration in the year ahead.
To sustain the growth of Japan’s economy and maintain social vitality amid long-term challenges such as a declining birthrate, an aging population, and overall population decline, it is essential to ensure fair and free competition. This will guarantee choices for enterprises and consumers while fostering active innovation to enhance added value.
The current state of Japan’s economy, as highlighted in the Comprehensive Economic Measures approved by the Cabinet in November 2024, stands at the crossroads of whether or not it can break free from its long history of a cost-cutting economy and shift to a “growth-oriented economy driven by wage increases and investment,” rather than falling back into deflation. Achieving sustained wage growth requires urgent efforts to enhance corporate productivity and increase added value. To this end, it is imperative to advance growth strategies centered on digital transformation (DX) and green transformation (GX).
In this context, the role of the Japan Fair Trade Commission (JFTC) should be to support the realization of a “virtuous cycle of growth and distribution” through competition policy by establishment a fair-trading environment where added value is distributed appropriately and to promote economic growth by ensuring fair and free competition based on the basic concept of “ No competition, no growth”.
1 Strict and Agile Law Enforcement
The basic mission of the JFTC is strict and agile enforcement of the Antimonopoly Act (AMA) and other acts. With respect to violations of the AMA, we will take strict measures against price cartels and other unreasonable restraint of trade, especially in fields that have a significant impact on people’s lives. Also, from the perspective of ensuring fair trade for small and medium-sized enterprises (SMEs), we will engage in strict and active law enforcement against unfair trade practices such as abuse of a superior bargaining position and violations of the Subcontract Act. In law enforcement, in addition to cease and desist orders and surcharge payment orders, we will use a variety of methods to quickly and effectively restore competition, including commitment procedures, especially in the digital field where technologies change rapidly.With regard to the commitment procedure, approximately six years have passed since its introduction. Based on past enforcement cases, a review of its operation was conducted last year, focusing primarily on measures to ensure implementation of commitments.
In the digital field, in April last year, the JFTC approved a commitment plan concerning a case where Google had restricted the provision of search engine and other technologies to Yahoo. For the ongoing case related to Google’s pre-installation practices and the investigation initiated last November regarding Amazon’s marketplace, the JFTC is actively utilizing opinions and information from market participants.
In the logistics field, which is facing the so-called “2024 Problem,” the JFTC has approved a commitment plan and issued a warning regarding actions suspected of violating the Logistics Special Designations.
Furthermore, regarding violations of the Subcontract Act, such as price reductions, unfair price cutting, and unjust requests for the provision of economic benefits, the JFTC issued 13 recommendations in FY2023, the highest number in the past decade. In the current fiscal year, 11 recommendations had already been issued by December, demonstrating the JFTC’s proactive approach to law enforcement.
In addition to issuing orders and recommendations for such violations, the JFTC is actively working to improve trade practices across entire industries and supply chains by making requests to relevant industry associations and other stakeholders. For example, in the cartel case involving non-life insurance companies in October last year, the JFTC issued a cease and desist order and simultaneously compiled key points related to the AMA concerning co-insurance. The JFTC then requested the Financial Services Agency and the General Insurance Association of Japan to ensure thorough dissemination of these points within the industry.
2. Fair Transactions to Facilitate Price Pass-Through
To achieve sustainable and structural wage increases, including for SMEs, it is essential to ensure smooth price pass-through of rising costs, such as labor expenses, through fair transactions alongside improvements in labor productivity.
Last year, we conducted a special study to follow up on the “the Guidelines on Price Negotiation for Appropriate Pass-thorough of Labor Cost,” which were published in November 2023. We also worked to ensure widespread awareness of the guidelines. This year, we will continue to strengthen our efforts by closely collaborating with relevant ministries and agencies to further promote awareness of the guidelines. In addition, we will take strict action against cases of abuse of superior bargaining position and violations of the Subcontract Act.
To establish the appropriate pass-through of costs across the entire supply chain as a new business practice, we have been collaborating with the Small and Medium Enterprise Agency since last year to hold the “Study Group on Business Transactions.” This initiative has involved gathering opinions from stakeholders and conducting thorough discussions, including on revisions to the Subcontract Act. In December 2024, we compiled the study’s findings, and based on these results, we plan to submit a bill for the amendment of the Subcontract Act to the Diet at the earliest opportunity.
3 Strengthening Competition Policy
The JFTC is actively working to enhance the competitive environment by addressing new rules, revising existing regulations and systems, and promoting improved compliance with competition laws among enterprises. These efforts are driven by economic and societal changes, such as advancements in the digital economy and the diversification of work styles.In the digital field, the Mobile Software Competition Act was enacted and promulgated in June last year. This new law introduces so-called “ex-ante regulations” by prohibiting practices that are categorically deemed violations of the AMA for designated providers offering essential software for smartphone use, such as operating systems (OS) and app stores. The aim is to establish a competitive environment swiftly and effectively. These measures are expected to promote new market entries, enhance user options, and improve convenience, all while ensuring security.
At the end of last year, a Cabinet Order was promulgated and enforced, setting a criterion of an average of over 40 million users for each specified software to designate providers that provide specific software. Moving forward, preparations will be made for the full enforcement of the Act by the end of this year, including the development of Cabinet Orders, Japan Fair Trade Commission rules and guidelines.
To ensure the effective implementation of this new Act, the JFTC’s organizational structure will be strengthened in both quality and capacity. This includes the establishment of a new Director General for Digital and International Affairs.
Regarding the promotion of GX, we revised the Green Guidelines in April last year based on discussions with the business community and other stakeholders. The revision further clarified the AMA’s approach to cooperative actions between enterprises aimed at achieving decarbonization. We will continue to support corporate GX initiatives from the position of competition policy.
With respect to the diversification of work styles, the “Act on Ensuring Proper Transactions Involving Specified Entrusted Business Operators” came into effect in November last year. We will continue efforts to raise awareness through public outreach activities and conduct focused investigations in industries with a high number of problematic cases. These actions aim to ensure fair transactions involving freelancers through prompt and appropriate enforcement of the Act.
4. Promoting International Collaboration
As the digital economy evolves, the activities of Big Tech platform operators are expanding across borders and globally. To address competitive concerns in digital markets, such as business combinations and anti-competitive conducts, there has been a greater need for collaboration and cooperation with foreign competition authorities in both law enforcement and competition policy.At the G7 Competition Authorities and Policymakers’ Summit held in Rome last year, there was significant interest from member countries in the impact of rapidly expanding and evolving generative AI on competition. “Digital Competition Communiqué”, a joint statement adopted by the G7 competition authorities and policymakers emphasized the critical importance of maintaining open, fair, and contestable markets to fully harness the innovations enabled by AI.
The JFTC launched the market study on generative AI in October last year. Recognizing both the competition-enhancing potential of innovations driven by generative AI and the potential competitive risks it poses, the JFTC aims to stay abreast of the rapidly evolving market by conducting timely and comprehensive assessments.
As we turn the page from last year, a historic election year often described as turbulent, we have entered a new year marked by unpredictable and uncertain international circumstances. Even in this era of turmoil and shifting dynamics, the mission of the JFTC—to ensure fair and free competition—remains unwavering. We are determined to continue fulfilling our role diligently, striving to address the challenges facing Japan’s economic and social landscape, and to make steady progress toward their resolution.
I kindly seek your continued understanding and support for the JFTC. With my heartfelt wishes for your health and prosperity, I conclude my New Year’s greetings. (Tentative translation)
