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Fair Trade Commission (Japan)
The Fair Trade Commission (Kōsei Torihiki Iinkai (公正取引委員会; FTC) is an independent statutory agency which enforces anti-competition law in Japan. The commission was originally created to enforce provisions of the Antimonopoly Act in 1947, but its regulatory scope has grown to include the Subcontract Act and Freelancer Act as well.
The commission pursues enforcement through a variety of means, including civil cases and voluntary changes by companies. The commission shares jurisdiction with the Japan Public Prosecutor’s Office for enforcement, with the commission handling civil affairs and referring criminal cases to the Prosecutor’s office. Much of the commission's work focuses on mergers and acquisitions, as well as anti-cartel enforcement.
The JFTC is composed of four commissioners and a chairman. The chair and commissioners are nominated by the Prime Minister of Japan and confirmed by the Japan Diet for a period of five years. The chair is required to resign at the age of 70. Day-to-day work is done by the General Secretariat's office, led by the Secretary General.
The Antimonopoly Act (Japan) was passed in 1947 by a post-war Japanese government at the behest of the Supreme Command Allied Powers. The JFTC, under Section VIII of the act, was empowered to enforce regulations related to private monopolization, unreasonable restraint of trade, unfair trade practices, monopolistic situations, and international company administrative affairs.
Although modeled after United States antitrust laws, the Antimonopoly Act in its original form was seen as too restrictive and rigid by Japanese businessmen. Many early JFTC actions were focused on cartels, or Zaibatsu, which owned 22.9% of total assets of Japanese stock market companies in 1945. As a result, subsequent revisions to the act in 1949 and 1953 reduced in scope what detractors saw as “non-Japanese” provisions, such as restrictions on horizontal and vertical growth, as well as cartel activities.
The JFTC was also tasked with enforcing the Subcontract Act when passed in 1956. The act was created to ensure that subcontractors would be paid in a timely manner by parent contractors. In addition, the act included clauses requiring protections, such as fair pricing and forced purchases, between parent contractors and subcontractors.
The JFTC would continue to be weakened in its ability to enforce anti-trust law through 1974, in what one journalist called a “history of humiliation.” Factors such as Japanese culture, history, worker immobility, lack of accountability, and overreach from the Ministry of International Trade and Industry (MITI) led to a lack of enforcement and action. This led to major price-fixing scandals in the 1960s and 1970s, including Japanese companies in manufacturing, chemicals, automobiles, and shipbuilding. Japan’s economy also flourished during this time, with gross domestic product rising from $47.42 billion in 1960 to $490.04 billion in 1974.
The last straw for the Japan Diet came from oil and trade companies during 1973. Price-fixing became so bad that basic necessities, like detergent and toilet paper, disappeared from stores due to intentionally withheld inventory. Oil companies collaborated to increase prices through the Petroleum Association of Japan. A subsequent action by the JFTC led to several recommendations breaking up the cartels and criminal referrals to the Prosecutor General. Executives indicted in the action were given suspended sentences of between four and ten months in prison, as well as fines ranging from 1.5 million to 2.5 million yen (roughly 3.4 million to 5.7 million yen in 2024).
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Fair Trade Commission (Japan)
The Fair Trade Commission (Kōsei Torihiki Iinkai (公正取引委員会; FTC) is an independent statutory agency which enforces anti-competition law in Japan. The commission was originally created to enforce provisions of the Antimonopoly Act in 1947, but its regulatory scope has grown to include the Subcontract Act and Freelancer Act as well.
The commission pursues enforcement through a variety of means, including civil cases and voluntary changes by companies. The commission shares jurisdiction with the Japan Public Prosecutor’s Office for enforcement, with the commission handling civil affairs and referring criminal cases to the Prosecutor’s office. Much of the commission's work focuses on mergers and acquisitions, as well as anti-cartel enforcement.
The JFTC is composed of four commissioners and a chairman. The chair and commissioners are nominated by the Prime Minister of Japan and confirmed by the Japan Diet for a period of five years. The chair is required to resign at the age of 70. Day-to-day work is done by the General Secretariat's office, led by the Secretary General.
The Antimonopoly Act (Japan) was passed in 1947 by a post-war Japanese government at the behest of the Supreme Command Allied Powers. The JFTC, under Section VIII of the act, was empowered to enforce regulations related to private monopolization, unreasonable restraint of trade, unfair trade practices, monopolistic situations, and international company administrative affairs.
Although modeled after United States antitrust laws, the Antimonopoly Act in its original form was seen as too restrictive and rigid by Japanese businessmen. Many early JFTC actions were focused on cartels, or Zaibatsu, which owned 22.9% of total assets of Japanese stock market companies in 1945. As a result, subsequent revisions to the act in 1949 and 1953 reduced in scope what detractors saw as “non-Japanese” provisions, such as restrictions on horizontal and vertical growth, as well as cartel activities.
The JFTC was also tasked with enforcing the Subcontract Act when passed in 1956. The act was created to ensure that subcontractors would be paid in a timely manner by parent contractors. In addition, the act included clauses requiring protections, such as fair pricing and forced purchases, between parent contractors and subcontractors.
The JFTC would continue to be weakened in its ability to enforce anti-trust law through 1974, in what one journalist called a “history of humiliation.” Factors such as Japanese culture, history, worker immobility, lack of accountability, and overreach from the Ministry of International Trade and Industry (MITI) led to a lack of enforcement and action. This led to major price-fixing scandals in the 1960s and 1970s, including Japanese companies in manufacturing, chemicals, automobiles, and shipbuilding. Japan’s economy also flourished during this time, with gross domestic product rising from $47.42 billion in 1960 to $490.04 billion in 1974.
The last straw for the Japan Diet came from oil and trade companies during 1973. Price-fixing became so bad that basic necessities, like detergent and toilet paper, disappeared from stores due to intentionally withheld inventory. Oil companies collaborated to increase prices through the Petroleum Association of Japan. A subsequent action by the JFTC led to several recommendations breaking up the cartels and criminal referrals to the Prosecutor General. Executives indicted in the action were given suspended sentences of between four and ten months in prison, as well as fines ranging from 1.5 million to 2.5 million yen (roughly 3.4 million to 5.7 million yen in 2024).