3 LAW in JAPAN Japanese Antitrust Enforcement: Implications for United States Trade
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NORTHERN KENTUCKY LAW REVIEW Volume 18 Spring 1991 Number 3 LAW IN JAPAN Japanese Antitrust Enforcement: Implications for United States Trade ....................... John 0. Haley 335 The Koan of Law in Japan ............... Dan Rosen 367 "Substitute Prison:" A Hotbed for False Criminal Charges in Japan ............................. Toyoji Saito 399 Is the Door Half Open or Half Shut? Japan's Special Measures Law Concerning the Handling of Legal Business by Foreign Lawyers .................... 417 ARTICLES The European Dream Come True: What Will Become of American Business (Boeing) After EEC '92? ....... .................................. Ronald Griffin 431 Choosing the Proper Interest Rate in Bankruptcy Proceedings: Resolution of Special Issues in the Sixth, Eighth, and Ninth Circuits ....................... ........................ Thomas 0. Depperschmidt 457 Section 2 of the Kentucky Constitution: Where Did It Come From and What Does It mean? ............. ............................... John David Dyche 503 The Limitations of 30 U.S.C. S 902(f)(2) on Black Lung Law: From Sebben to Present ..... Michael O'Neill 525 NOTES Greeley v. Miami Valley Maintainance Contractors,Inc.: Has Ohio Gone Too Far in Creating a Public Policy Exception to the Employment at Will Doctrine? ... 543 Illinois v. Perkins: Miranda Defined in the Undercover Jail Plant Setting ............................... 561 JAPANESE ANTITRUST ENFORCEMENT: IMPLICATIONS FOR UNITED STATES TRADE John 0. Haley* I. INTRODUCTION On April 5, 1990 the Japanese Government released its interim report on the negotiations with the United States pursuant to the Bush Administration's 1989 Structural Impediments Initia- tive.' The Interim report contained much that the U.S. negotia- tors wished to hear. United States Trade Representative Carla Hills characterized it as "a good blueprint, sufficient to call a down payment."2 The Japanese indeed promised much that the United States had demanded. The principal category in the list of proposed Japanese actions was the strengthening of Japanese antitrust enforcement. Lax compliance with antitrust proscrip- tions in Japan was a major American concern in the negotiations. In response the Japanese Government agreed to increase staff support for the Japanese Fair Trade Commission ("JFTC"), Ja- pan's exclusive antitrust enforcement agency, as well as to take other actions designed to make penalties more effective and the disclosure of violations and informal measures more frequent. Each item reflected a shortcoming in Japanese antitrust en- forcement, at least as perceived from an American perspective. Lack of staff, restricted investigatory powers, weak sanctions, and reliance on relatively lenient and seldom publicly disclosed informal measures to cure exposed violations have long been noted by American observers as characteristic features of the Japanese enforcement process.8 The argument that these reforms * John 0. Haley is a Professor of Law and of East Asian Studies and the Director of the Asian Law Program at the University of Washington in Seattle, Washington. Mr. Haley is a graduate of Princeton University (A.B. 1964), Yale University School of Law (LL. B. 1969) and University of Washington Law School (LL.M. 1971). 1. For full texts of both the Japanese and United States government interim reports, see 7 INT'L TRADE REP. 527-41 (1990). 2. N.Y. Times, April 6, 1990, at 1, col.1. 3. See, e.g., Haley, Antitrust in Japan: Problems of Enforcement, CURRENT LEGAL ASPECTS OF DOING Bus. IN JAPAN & E. ASIA 121 (Haley ed., American Bar Association, 1978). 336 NORTHERN KENTUCKY LAW REVIEW [Vol. 18:335 were needed to ensure greater antitrust compliance in Japan - much less the premise that such compliance would in turn en- hance United States merchandise trade with Japan and improve access to Japanese consumer and industrial markets - rest, how- ever, on several quite debateable assumptions. These include the propositions that serious anticompetitive practices now exist in Japan, that these practices hinder new entry and access to Japanese markets by foreign firms, and that such practices can be controlled by more effective antitrust enforcement, not to mention the assumption that the limitations of Japanese antitrust enforcement can be corrected by strengthening penalties and enforcement capacity. My purpose in this article is to explore these premises in light of Japan's postwar experience with an- titrust controls and to offer an alternative view of the implications of enhanced Japanese antitrust enforcement for United States trade with Japan. II. ANTITRUST IN JAPAN: THE POSTWAR EXPERIENCE A. From False Premises The history of American demands for effective antitrust law in Japan has been one of false premises. United States policy makers have historically and at present overestimated both Jap- anese propensity for private anticompetitive behavior and the efficacy of legal controls. From the initial imposition of antitrust legislation by Occupation authorities on a recalcitrant Japanese government in 1947,4a set of largely unsubstantiated assumptions regarding the extent and effect of anticompetitive behavior of 4. The official history of U.S. policy on antitrust legislation in Occupied Japan is summarized in SUPREME COMMANDER FOR THE ALLIED POWERS [SCAP] GENERAL HEAD- QUARTERS, HISTORY OF THE NON-MILITARY ACTIVITIES OF THE OCCUPATION OF JAPAN, Monograph 24: Elimination of Zaibatsu Control, 1945-June 1950; Monograph 25: Decon- centration of Economic Power, 1945-December 1950; Monograph 26: Promotion of Fair Trade Practices, 1945-October 1951 (Microfilm, 1952). Other authoritative accounts include, in Japanese, DOKUSEN KINSHI SEISAKU NIJUNENSHI (Twenty-year history of antitrust policy) 42-52 (JFTC, 1968) [hereinafter TWENTY YEAR HISTORY], and, in English, T. BISSON, ZAIBATSU DISSOLUTION IN JAPAN 180-200 (1954). An English translation of the original 1947 statute is reprinted with a brief historical summary in Salwin, Japanese Anti-trust Legislation, 32 MINN. L. REV. 588, 592-605 (1948). For further historical summary, see J. HALEY & M. MATSUSHITA, JAPANESE ANTITRUST LAW: COMMENTARY AND CASES 1-42 (1987) (available at University of Washington School of Law). 1990] JAPANESE ANTITRUST ENFORCEMENT 337 major Japanese enterprises and the effectiveness of regulatory controls has guided American policy. The American military occupiers of Japan in defeat viewed the experience of prewar Japan in effect as an Asian variation of the European fascist experience.5 Japan's impetus to aggres- sion and war was explained in part by an alleged alliance of convenience between the military and Japan's Industrial com- bines.6 In order to restore-some would say, to create-an insti- tutional environment in which democratic process could take root, both the military and industrial establishments had to be dis- mantled. The result was a policy dominated by the twin goals of demilitarization and zaibatsu dissolution.7 Like the proscription against maintenance of a military establishment in article 9 of the postwar constitution,8 the 1947 Antimonopoly and Fair Trade Law9 was intended as a means to preclude the resurgence of the zaibatsu and their perceived anticompetitive evils.1 Hindsight permits a more objective view of the predisposition of the Allied reformers. Although many still share their percep- tions of Japan, little if any objective evidence supports the conclusion that Germany or other European models fit prewar 5. See E. HADLEY, ANTITRUST IN JAPAN 6-12 (1970). Hadley reports a comment to her by a former War Department officer responsible in part for drafting the Joint Chiefs of Staff Basic Directive of November 1, 1945, JCS 1880, for United States occupation policy in Japan, to the effect that attempts to take a "fresh approach" to Japan were overruled by superiors who insisted that the directive follow the policies adopted in the Basic Directive on Germany (JCS 1067). Id. at 8-9. 6. HADLEY, Supra, note 5, at 9. As Hadley notes, Japanese desk officers rejected such views in light of the political conflict between military and business interests during the interwar period. Officers in the economic division, however, held the view that eventually guided United States policy. See, e.g., E. PAULEY, REPORT ON JAPANESE REPARATIONS TO THE PRESIDENT OF THE UNITED STATES, NOVEMBER. 1945 TO APRIL, 1946, 39 (1946). 7. See Joint Chiefs of Staff Basic Directive of November 1, 1945 (JCS 1380). 8. Constitution of Japan (Nihon koku kenp6) article 9 provides: Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes. In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized. KENPO (Constitution) art. IX, (Japan). 9. Shiteki dokusen no kinshi oyobi k~sei torihiki no kakuho ni kansuru hritsu (Law concerning the prohibition of private monopoly and the preservation of fair trade), Law No. 54 of 1947 [hereinafter AMFTL]. 10. HADLEY, supra, note 5. at 120-21. 338 NORTHERN KENTUCKY LAW REVIEW [Vol. 18:335 Japan.11 There is no evidence, for example, that the zaibatsu widely engaged in collusive activities or that prior to the mid 1930's and wartime mobilization, Japan's economy was effectively cartelized.12 Until then, as a major purchaser of most cartelized