May 16, 2025
Japan Fair Trade Commission
Small and Medium Enterprise Agency
Today, the plenary session of the House of Councilors passed and enacted the “Bill to amend the Subcontract Act and the Act on the Promotion of Subcontracting Small and Medium-sized Enterprises”. This Bill, which was submitted to the National Diet on 11 March this year, aims to ensure appropriate price shifting and proper transactions between businesses based on an equal client-contractor relationship.
1 Status of Diet Deliberations
217th Session of the Diet
April
11, 2025 House of
Representatives Plenary
Session Bill
overview, inquiries
April
11, 2025 House of
Representatives Committee
on Economy and Industry Bill
overview
April
16, 2025 House of
Representatives Committee
on Economy and Industry Inquiries
April
18, 2025 House of
Representatives Committee
on Economy and Industry Inquiries,
vote
April
24, 2025 House of
Representatives Plenary
Session Vote
May
9, 2025 House of Councilors Plenary
Session Bill
overview, inquiries
May
13, 2025 House of Councilors Committee
on Economy and Industry Bill
overview, inquiries
May
15, 2025 House of Councilors Committee
on Economy and Industry Inquiries,
vote
May
16, 2025 House of Councilors Plenary
Session Vote
2 Outline of the Act（See the attachments for details）
Amendments of Regulations (Subcontract Act)
(1) Prohibition on Determination of Price without Proper Negotiation [Addressing Fixed-Price Transactions]
The Act prohibits unilateral price determination in the covered transaction without responding to price negotiations or providing necessary explanations or information during the negotiations.
(2) Prohibition of Payment by Promissory Notes, etc.
The Act prohibits payment by promissory notes in the covered transactions. It also prohibits payment methods that make it difficult to receive the full amount of the purchase price by the payment date.
(As a result of the prohibition of promissory note payment, regulations on promissory notes that are difficult to discount have been abolished.)
(3) Inclusion of Transport Consignment in the Scope [Addressing Logistics Issues]
Consignment of transport necessary for the delivery of the object of manufacture, sale, etc. is included in the scope of the Act.
(4) Additional Employee Criteria [Additional Applicable Criteria]
The scope of regulation and protection is expanded with new criteria of 300 employees (100 employees for outsourced services, etc.).
(5) Strengthening Extensive Enforcement
New provisions have been established regarding guidance and advice from relevant administrative agencies, mutual information sharing, etc.
(6) Other necessary amendments have been made.
Enhancement of Promotion (Act on the Promotion of Subcontracting SMEs)
(1) Support for Collaborative Efforts by Multi-Level Operators
Provisions have been added to allow approval and support for business promotion plans created by businesses operating at two or more levels of a supply chain.
(2) Expanded Scope
The consignment of transport necessary for the delivery of the object of manufacture, sale, etc. is included in the scope of the Act. Cases involving differences in the number of employees between legal entities are also included.
(3) Strengthening Cooperation with Local Governments
New provisions have been established regarding; the responsibility of national and local governments for taking measures to promote businesses throughout Japan in cooperation with each other; and tied collaboration of relevant agencies including information sharing, etc.
(4) Strengthened Enforcement by Competent Ministers
New provisions have been established to urge improvement by presenting more specific measures to business operators who have not improved despite guidance and advice by the competent minister.
Regarding terminology, “subcontractors” is revised to “small and medium-sized entrusted business operators”, “main subcontracting business operators” to “entrusting business operators”, etc. Also, regarding the official title of the Acts, “Act Against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors” is revised to “Act Against Delay in Payment of Fees, etc. to Small and Medium-sized Entrusted Business Operators in Manufacturing and Other Specified Fields”, and ‘Act on Promotion of Subcontracting Small and Medium-sized Enterprises” is revised to “Act on Promotion of Entrusted Small and Medium-sized Enterprises”.
3 Effective Date
The Act will come into force on January 1, 2026.
*However, certain provisions shall come into force on the date of promulgation of this Act.
* This announcement is a tentative translation. Please refer to the original text written in Japanese.
