Japan Fair Trade Commission, business community square off over ban on lawyers during questioning

31 January 2017 9:56am

2 July 2015. By Takehiko Kumakura.

Amid accusations of heavy-handed investigation tactics and a lack of due process, the Japan Fair Trade Commission looks set to square off against the country’s business community over the contentious issue of allowing lawyers to be present during questioning of company officials. So far, the JFTC doesn’t appear to be budging from its ban.

The regulator insists that the questioning of individuals is normally conducted on the assumption that they willingly submit to the examination. However, the JFTC often fails to clarify that the questioning, which is conducted behind closed doors and often for prolonged hours, is supposed to be voluntary.

The issue was raised as far back as May 2009. At a parliamentary meeting convened to deliberate on antitrust regulations, Soichiro Sakuma, who at the time was a member of the competition committee of the powerful business lobby Keidanren, seized the opportunity to discuss what appeared to be unrelated to the subject at hand – the JFTC’s investigation procedures.

Sakuma said JFTC investigators posed their questions in such a way that they could file investigation reports based on a prewritten narrative. “The situation is such that [company executives] cannot adequately exercise their right to defend themselves,” he said, according to transcripts of the meeting. “This type of procedure shouldn’t be condoned.”

Six years later, the JFTC is making some conciliatory moves. The commission on June 30 released new investigation guidelines for public comment. The guidelines, however, failed to resolve the most critical issue raised by the business community – the presence of lawyers during questioning.

Japan’s business community is expected to react vehemently against the guidelines during the public consultation period, which ends July 29. Keidanren, which represents Mitsubishi Corp., Panasonic, Toyota Motor and many other powerful companies, has repeatedly asked the JFTC to allow lawyers when company executives are being questioned. The JFTC, however, has consistently refused, including in the new investigation guidelines. The issue is expected to figure prominently in Keidanren’s response to the JFTC, which will be released soon.

Under the guidelines, the JFTC would maintain its ban on the presence of lawyers, although they would be allowed during recess, on grounds that the accused may refuse to speak if they are accompanied by lawyers. The taking of notes during questioning would also be prohibited.

Questioning can be either voluntary or involuntary, but most of the examinations are conducted on a voluntary basis. For voluntary investigations, the JFTC would ensure that those being questioned are aware that they are not being forced to answer, according to the new guidelines.

Examiners shouldn’t use threats, coercion, or any other means that would call into question the voluntary nature of the investigation, the JFTC says. The JFTC would also seek the consent of those under investigation if the questioning lasts more than eight hours. Questioning should not last past midnight, unless there are “unavoidable situations,” the guidelines say, without elaborating on what those situations might be.

While making these and other concessions, the JFTC refutes various criticisms hurled at it by the business community.

Naohiko Komuro, senior planning officer of the JFTC’s Investigation Bureau, acknowledged that the JFTC wasn’t consistent when it comes to informing people of the voluntary nature of its questioning. However, he denied the accusation that the investigation reports follow prewritten scripts, saying that reports on bid rigging and other collusive practices often end up looking similar because they are based on testimony of people who provide separate but similar accounts.

As for the accusation that investigation methods are too high-handed, Komuro said such charges are vague and lack substance.

Critics disagree. Take, for example, an official at a taxi company in northern Japan. The official told MLex that the president of the company had been bed-ridden with an illness for some time when the JFTC investigated the company several years ago in a price cartel probe. JFTC investigators, ignoring the president’s medical condition and the pleas of company staffers, raided his home for an interrogation. “We were incensed” at the insensitivity, the official said.

In another case, an executive of a major corporation was forced to sit through questioning for about 12 hours until around 9 pm. There were two JFTC examiners assigned to the executive. When one of the examiners had to leave the room, the other stayed. As a result, the executive was never left alone. During lunch, one of the examiners stayed and watched over the executive, making it difficult for the executive to talk with lawyers on the phone, a person familiar with the JFTC’s investigation methods said. Also, the executive wasn’t given time for dinner.

The JFTC also disregards the schedule of corporate executives, forcing them to cancel their plans in order to submit to questioning, even though they supposedly submit to examinations voluntarily, the person said. They are called to the JFTC headquarters numerous times, and each time they are often asked to wait two or three hours before the session begins.

All this makes the JFTC a formidable institution. “Once they set their eyes on you, you are done,” said Itaru Uesaka, a certified administrative specialist, or gyosei shoshi, who works with corporate clients in western Japan on antitrust issues. “Their power is overwhelming.”

Joh Sung-Wook Interview