Japanese regulator slams brakes on antitrust penalty changes as lawmakers demand attorney-client concessions

17 January 2018 6:28pm
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10 January 2018. By Sachiko Sakamaki.

The Japan Fair Trade Commission has postponed a planned overhaul of the country's antitrust penalty system as part of an emerging bargain with ruling party politicians seeking to link those changes with the legalization of attorney-client confidentiality in the regulator's investigations.

The JFTC had been planning to submit a bill to amend the Antimonopoly Act by March, to be debated in the upcoming parliamentary session, which is expected to run from Jan. 22 to June 20. The aim was to grant the regulator some flexibility to determine the size of fines for leniency applicants based upon the extent to which they cooperated in investigations.

Akinori Yamada, the JFTC's secretary general, said the regulator had decided to postpone submission of the bill while the ruling Liberal Democratic Party’s competition policy research group holds discussions on attorney-client privilege.

“We’ve decided that there’s no choice but to forgo the submission of the Antimonopoly Act to the upcoming parliament session as the debates on the broad legal framework continue,” Yamada told a weekly press conference today, adding that a new timetable for submission was uncertain because it would depend on politicians’ discussions.

Yamada said, however, that the JFTC hadn’t given up on revising the penalty system, and would continue discussions with various groups.

The JFTC began reviewing the fines system by establishing an experts’ panel in February 2016, and had been preparing legal amendments since the panel proposed allowing it limited discretion on fines levied within the leniency program in April last year.

The proposed changes have topped the agenda of JFTC Chairman Kazuyuki Sugimoto, whose five-year term expires in early March.

In his new year’s address today, however, Sugimoto made no mention of amendments to the fines system, saying simply that the JFTC wanted to promote competition policy and enforcement among digital platform businesses and cooperate with other competition regulators. His remarks stood in sharp contrast to comments he made in his new year's address in 2017, in which he expressed his ambition to design a new penalty system.

The issue of due process in antitrust investigations has been a thorny matter for years, pitting the JFTC against Japan's business and legal communities. In this latest round of that ongoing tussle, ruling party politicians have sought to make the changes the JFTC has proposed conditional upon the enactment of reforms to investigation procedures.

Last month, the LDP’s competition policy research group called for the legalization of attorney-client confidentiality and improved company defense rights, such as allowing lawyers to be present during interviews with JFTC investigators, to offset the powers the regulator would be granted under the new fines system, although it nevertheless supports overhauling the penalty regime.

The party's competition research body is currently setting up a working group to look into the issue of attorney-client privilege.