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Antimonopoly Law of Japan--Relating to International Business Transactions Mitsuo Matsushita

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Antimonopoly Law of Japan--Relating to International Business Transactions Mitsuo Matsushita Case Western Reserve Journal of International Law Volume 4 | Issue 2 1972 Antimonopoly Law of Japan--Relating to International Business Transactions Mitsuo Matsushita James L. Hildebrand Follow this and additional works at: https://scholarlycommons.law.case.edu/jil Part of the International Law Commons Recommended Citation Mitsuo Matsushita and James L. Hildebrand, Antimonopoly Law of Japan--Relating to International Business Transactions, 4 Case W. Res. J. Int'l L. 124 (1972) Available at: https://scholarlycommons.law.case.edu/jil/vol4/iss2/3 This Article is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law Scholarly Commons. It has been accepted for inclusion in Case Western Reserve Journal of International Law by an authorized administrator of Case Western Reserve University School of Law Scholarly Commons. [Vol. 4: 124 Antimonopoly Law of Japan- Relating to International Business Transactions Mitsuo Matsushita and James L. Hildebrand HE ANTIMONOPOLY LAW of Japan' was enacted during the Allied Occupation in an effort to prevent the reversion to the prewar oligopolistic structure of Japanese industry in which cartels (zaibatsu-holding companies) regulated almost every major field of activity.2 Originally based on certain provisions of 8 THE AUTHORS: MITSuO MATSUSHITA the Sherman Act, the Clayton (B.A., Rikkyo (St. Paul's) University, Act,' and the Federal Trade Tulane University; Tokyo; M.A., Ph.D., 8 S.J.D. Tokyo University) is an Associate Commission Act, and on the Professor of Law at Sophia University, judicial interpretation of these Tokyo. JAMES L. HILDEBRAND (A.B., courts,6 the Hamilton College; J.D., Case Western acts by American Reserve University; S.J.D. candidate, Antimonopoly Law of Japan Harvard University) is a member of the categorically prohibited the use Ohio Bar and an associate of a Japanese- American law firm in Tokyo. of cartels for the restriction of production, the fixing of prices, and the allocation of markets and customers and also placed stringent restrictions on mergers, stockholdings, and holding of multiple directorships and officerships. 1 Law Concerning the Prohibition of Private Monoply and the Maintenance of Fair Trade of 1947, Law No. 54, translated in 2 EHS LAW BULLETIN SERIES, No. 2270, KA-KI (F. Nakane ed. 1968) [hereinafter cited as Antimonopoly Law]. See also 3 OECD, GUIDE TO LEGISLATION ON RESTRICTIVE BUSINESS PRACTICES (1969). 2 For English language commentaries on the Antimonopoly Law of Japan, see E. HADLEY, ANTITRUST IN JAPAN (1970); H. IgoRI, ANTIMONOPOLY LEGISLATION IN JAPAN (1969); Kanazawa, The Regulation of Corporate Enterprise: The Law of Unfair Competition and the Control of Monopoly Power, in LAW IN JAPAN: THE LEGAL ORDER IN A CHANGING SOCIETY 480 (A. von Mehren ed. 1963); Matsushita & Lee, Antimonopoly Regulation of Marketing, in JAPAN'S MARKET AND FOREIGN BUSINESS 159 (R. Ballon ed. 1971); TRADE BULLETIN CORPORATION, JAPAN'S ANTIMONOPOLY POLICY IN LEGISLATION AND PRACTICAL PERSPECTIVE (Tokyo 1968); Ariga & Reike, The Antimonopoly Law of Japan and Its Enforcement, 39 WASH. L. REv. 437 (1964); Ashino, Experimenting with Antitrust Law in Japan, 3 JAPANESE ANNUAL INT'L L. 31 (1959); Matsushita, The Antimonopoly Act of Japan and International Transactions, 14 JAPANESE ANNUAL INT'L L. 1 (1970); Swada & Brown, American-Japanese Antitrust Law, 2 INT'L L. BULLETIN 13 (No. 2 1963); Yamamura, The Development of Antimonopoly Policy in Japan: The Erosion of Japanese 1972] ANTIMONOPOLY LAW OF JAPAN The Antimonopoly Law has been amended numerous times,7 and during the last 24 years the general trend has been to create excep- tions to the Law. During the 1960's its enforcement was anemic. However, there is growing evidence that the text of the statute and the decisions implementing it in the past are being revitalized and that the Antimonopoly Law is becoming one of the important legal instruments to cope with various domestic as well as international economic problems facing Japan today.8 It appears that the Anti- monopoly Law may become one of a few remaining legal devices of regulation to be stringently imposed by the Japanese Government on international business transactions.' The purpose of this article is to provide a general introduction to the Antimonopoly Law of Japan, to describe its general structure and the enforcement agencies related thereto, and to clarify certain aspects of the Antimonopoly Law which are relevant to Japan- United States business transactions, including the licensing of pat- Antimonopoly Policy, 1947-1967, 2 STUDIES IN LAW AND ECONOMIC DEVELOPMENT 1 (May 1967). 3 Ch. 647, 26 Stat. 209 (1890), as amended, 15 U S. C. §§ 1-7 (1970). 4 Ch. 323, 38 Stat. 730 (1914), as amended, 15 U. S. C. §§ 12-27 (1970). 5 Ch. 311, 38 Stat. 717 (1919), as amended, 15 U. S. C. §§ 41-51 (1970). 6See generally M. HANDLER, CASES ON TRADE REGULATION 84-185 (3d ed. 1960). 7 Law No. 91 of 1947; Law No. 195 of 1947; Law No. 207 of 1948; Law No. 268 of 1948; Law No. 103 of 1949; Law No. 134 of 1949; Law No. 214 of 1949; Law No. 192 of 1951; Law No. 211 of 1951; Cabinet Order No. 261 of 1951; Law No. 257 of 1952; Law No. 268 of 1952; Law No. 259 of 1953; Law No. 127 of 1954; Law No. 120 of 1956; Law No. 134 of 1956; Law No. 142 of 1957; Law No. 187 of 1957; Law No. 129 of 1959; Law No. 111 of 1961; Law No. 134 of 1962; Law No. 140 of 1962; Law No. 152 of 1962; Law No. 161 of 1962; Law No. 53 of 1963; Law No. 12 of 1964; Law No. 152 of 1964; Law No. 143 of 1965; Law No. 25 of 1966; Law No. 111 of 1966; Law No. 31 of 1967; Law No. 33 of 1969. 8 In the area of international business transactions, it can be foreseen that the Anti- monopoly Law will play an increasingly important role especially due. to the fact that other regulatory devices (e.g., currency and investment controls) are gradually being relaxed in line with the Japanese Government's avowed progress in the area of liberali- zation of trade and investment. See Chase Manhattan Bank, Japan, 18 WORLD BUS, 33, 34 (special ed. 1970). Here it was observed that "[t]he slowly evolving policy of liberalizing foreign direct investment in Japan has spurred mergers in those sectors into which foreign capital will be allowed." Id. at 33. See also N.Y. Times, Mar. 26, 1971, at 1, col. 5. 9 One commentator has observed that: "There are also indications that the Japanese Anti-monopoly Law, which is based largely on the American antitrust laws and which has not been applied particularly strenuously in the past, may be applied with increasing vigor to increase its effectiveness as a device for controlling the activities of foreign in- vestors in Japan." Calhun & Brumder, Japanese Laws Relating to Foreign Investment in Japan, in PRIVATE INVESTORS ABROAD - PROBLEMS AND SOLUTIONS IN INTER- NATIONAL BUSINESS IN 1971, 24-25 (1971). CASE W. RES. J. INT'L L. [Vol. 4: 124 ents and technology, the acquisition and control of Japanese busi- ness enterprises, and the utilization of distribution agreements. I. THE ANTIMONOPOLY LAW OF JAPAN A. Major Regulations under the Law Regulation under the Japanese Antimonopoly Law may be classi- fied into the following three basic categories: (1) prohibition of private monopolization, (2) prohibition of unreasonable restraints of trade, and (3) prohibition of unfair business practices. Supple- mental rules regulate other types of more specific activities, such as mergers, acquisition and holding of stocks and assets, activities of trade associations, false advertising, and others. However, the above mentioned three types of regulation are the most basic ones. The definition of "private monopolization" (shitekidokusen) is given in Article 2(5) of the Law as "such business activities by which any entrepreneur, individually or by combination, conspiracy, or any other manner with other entrepreneurs, excludes or controls the business activities of other entrepreneurs, thereby causing, con- trary to the public interest, a substantial restraint of competition in any particular field of trade.""' Under this provision, monopoliza- tion by one entrepreneur is carried out either through the "exclu- sion" or the "control" of other entrepreneurs. "Exclusion" means such activities by an entrepreneur as price discrimination, dumping, imposition of harsh restrictions upon distributors and dealers (such as unreasonable exclusive dealing arrangements and other restrictive covenants, thereby eliminating competitors or other entrepreneurs from certain markets. "Control of other enterprises" means such activities as acquiring the business, the assets, or the shares of one or more other entrepreneurs, thereby dominating the market and eliminating competition." Such monopolization is prohibited by Article 3 of the Law. 10 See note 1 supra. The prohibition of monopolization under this Article is roughly equivalent to that set forth under Section 2 of the Sherman Act which provides that: "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misde- meanor . ."As delineated in the cases which have arisen under Section 2, it is "mo- nopolization" and not "monopoly," which has been placed under the ban. See REPORT OF THE UNITED STATES ATTORNEY GENERAL'S NATIONAL COMMITTEE TO STUDY ANTrrRusT LAws 43-64 (1955). 11 These activities are also subject to regulation with regard to the acquisition of stocks, mergers, etc., as discussed later in this article. See text accompanying notes 1972] ANTIMONOPOLY LAW OF JAPAN "Unreasonable restraint of trade or cartel" (futona torihiki- seigen) is defined in Article 2(6) of the Law as such business activities by which any entrepreneur, by contract, agreement, or any other form, in conjunction with other entrepen- eurs, mutually restricts their business activities to fix, maintain, or enhance prices, or to limit production, technology, products, facil- ities, another party to trade, etc., or executes such activities, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.
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