March 1/2005
Japan Fair Trade Commission
The Fair Trade Commission today issued a warning to the Yatsushiro District Agricultural Cooperative (hereinafter referred to as “JA Yatsushiro”) based on suspected violations of Item 11 of the list of Unfair Trade Practices (Dealing on Exclusive Terms) contained in Section 19 of the Antimonopoly Act, These suspected violations were found in an examination conducted on of JA Yatsushiro’s “Diversified Agriculture Promotion Facilities” core leasing business. In connection with this investigation, the Fair Trade Commission has made requests to the Kumamoto Prefectural Government and to the Kyushu Regional Agricultural Administration Office of the Ministry of Agriculture, Forestry and Fisheries.
1. Background
Diversified agriculture promotion facilities (or “DAPF”) are facilities established for plant and seedling cultivation and other collectively beneficial functions such as pest control and the manufacture of high-quality compost. DAPF are constructed as part of a policy designed to bolster agriculture with the support of national subsidies with the aim of improving agricultural production infrastructure and securing local agricultural production bases. JA Yatsushiro leased these facilities to at least 3 farmers.
2. Summary of warning
The examination led to suspicions that JA Yatsushiro forced a production management association (formed by at least three lessee farmers so they could secure the leasehold of JA Yatsushiro DAPF) and others to:
a. to purchase fertilizers, agricultural chemicals and other production materials from JA Yatsushiro,
and
b. to ship crops to JA Yatsushiro,
as a prerequisite to obtaining the lease. These acts potentially reduce trade opportunities for competitors of JA Yatsushiro. The Fair Trade Commission has warned JA Yatsushiro to cease such acts and any similar acts as they may violate Item 11 of the list of Unfair Trade Practices in Article 19 of the Antimonopoly Act.
3. Requests made to other government bodies
(1) Request to Kumamoto Prefecture
Around May 2004, in response to inquires from municipalities in its jurisdiction, Kumamoto Prefecture (the “Prefecture”) expressed a view that the requiring participation in JA Yatsushiro collective sales as a prerequisite for leasing DAPF was an acceptable condition. This view was expressed in response to inquiries from a number of municipal authorities in Kumamoto prefecture which were concerned that JA Yatsushiro made participation in JA Yatsushiro’s collective sales of agricultural products a prerequisite to leasing space in DAPF. The Fair Trade Commission believes that if the Prefecture continues to instruct municipalities in accordance with this principle it would virtually have the same effect as the conduct in question that is the basis of the warning to JA Yatsushiro. The Fair Trade Commission has requested that the Prefecture no further give such instructions to any municipality in the future.
(2) A request to Kyushu Regional Agricultural Administration Office of the Ministry of Agriculture,
Forestry and Fisheries
The Fair Trade Commission has made a similar request to the Kyushu Regional Agricultural Administration Office of the Ministry of Agriculture, Forestry and Fisheries to refrain from giving prefectural governments within its jurisdiction any instructions which would tie participation in collective agricultural goods sales to the ability to leasing of DAPF. The Fair Trade Commission took this step as it learned that Kumamoto prefecture had consulted with the Kyushu Regional Agricultural Administration Office in connection with an approval of a DAPF project.
*Every announcement is tentative translation. Please refer to the original text written in Japanese.
