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JAPANESE APPROACHES TO EXTRATERRITORIALITY IN COMPETITION LAW

  • Marek Martyniszyn (a1)
Abstract
Abstract

Extraterritorial application of domestic competition law is an important feature of the current regulatory framework governing anticompetitive conduct. Japan was initially hesitant to apply its Antimonopoly Act in such a manner. However, over the last two decades there has been a significant shift in its approach. Japan has gradually embraced extraterritoriality and the Japan Fair Trade Commission has actively enforced competition law in a purely offshore context. This article investigates this evolution and considered the most recent and controversial cases in which Japan has applied its laws in a distinctive fashion.

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1 See Martyniszyn M, ‘Export Cartels: Is it Legal to Target Your Neighbour? Analysis in Light of Recent Case Law’ (2012) 15(1) JIEL 181 .

2 These are subjective and objective territoriality, passive personality, security and universality principles. Jennings RY, ‘Extraterritorial Jurisdiction and the United States Antitrust Laws’ (1957) 33 BYBIL 153 .

3 Oxman BH, ‘Jurisdiction of States’ in Wolfrum R (ed), The Max Planck Encyclopedia of Public International Law (online edn, OUP 2008) para 11.

4 France v Turkey, Ser A., No 10 (PCIJ 1927).

5 ibid 23.

6 United States v Aluminium Company of America (Alcoa), 148 F.2d 416 (2nd Cir 1945).

7 ibid 443.

8 See, for example, Jennings (n 2) 160.

9 See discussion in Part IV.

10 Some States went further and introduced legislation hindering US enforcement. See Martyniszyn M, ‘Legislation Blocking Antitrust Investigations and the September 2012 Russian Executive Order’ (2014) 37(1) World Competition 103 .

11 15 U.S.C.A. section 6a.

12 Hartford Fire Insurance Co. v California, 509 U.S. 764, 796 (1993).

13 See discussion in Martyniszyn M, ‘On Extraterritoriality and the Gazprom Case’ (2015) 36(7) ECLR 291 .

14 Per Art 98(2) of the German Competition Law [1957] BGBI 1081.

15 Art 2 of the Antimonopoly Law.

16 European Commission, 64/233/CEE, Decision on an Application for Negative Clearance submitted under art 2 of Council Regulation No 17, V/A-00061- Grosfillex/Fillistorf, OJ L58, 915–916 (1969).

17 Joined Cases 89, 104, 114, 116, 117 and 125 to 129/85, A. Ahlström Osakeyhtiö and others v Commission [1988] ECR 5193.

18 ibid, para 16.

19 Lange DGF and Sandage JB, ‘The Wood Pulp Decision and its Implications for the Scope of EC Competition Law’ (1989) 26 CMLRev 159 .

20 Case T-102/96, Gencor Ltd v Commission, [1999] ECR II-753, para 90.

21 Case T-286/09, Intel Corp v Commission, paras 302–307.

22 Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, Act No 54 of 14 April 1947.

23 Matsushita M, International Trade and Competition Law in Japan (OUP 1993) 7686 .

24 See discussion in Matsushita M, ‘The Antimonopoly Act of Japan and International Transactions’ (1970) 14 JapAnnInt'lL 89 .

25 Article 6 was adopted from the Imperial Ordinance No 33 promulgated in January 1946, which required persons who were participating in any international cartels to notify the authorities and also to withdraw from such agreements. It also prohibited entering into any such arrangements. The Ordinance was promulgated in response to a Memorandum on Dissolution of Holding Companies issued in November 1945 by the Supreme Commander for the Allied Powers. See Ohara Y, ‘International Application of the Japanese Antimonopoly Act’ (1986) 10(3) Swiss Review of International Competition Law 89 .

26 For example, art 2 of the Japanese Penal Code provides a list of crimes in relation to which the Code applies even though they were committed outside the territory of Japan. See Penal Code, Act No 45 of 1907.

27 Art 98(2) provides that ‘(t)he treaties concluded by Japan and established laws of nations shall be faithfully observed’.

28 Yazawa M, ‘Interim Report by the Committee on the Extraterritorial Effects of Trade Regulation’ (1965) 9 JapAnnInt'lL 176 .

29 ibid 177.

30 In this vein Ohara (n 25) 21.

31 JFTC decision, 10 KTS 51 (1959). See also Yazawa (n 28) 176.

32 Yazawa M, ‘Interim Report by the Committee on the Extraterritorial Effects of Trade Regulation’ (1966) 10 JapAnnInt'lL 103 ; Yazawa M, ‘Interim Report by the Committee on the Extraterritorial Effects of Trade Regulation’ (1968) 12 JapAnnInt'lL 72 .

33 Ohara (n 25) 23, 37–8.

34 ‘Dumping Regulations and Competition Policy, Extraterritorial Application of the Antimonopoly Act: Report of the Study Group of the Antimonopoly Act on External Affairs Issues (Summary)’ FTC/Japan views, No 9 (July 1990) 27.

35 Kameoka E, Competition Law and Policy in Japan and the EU (Edward Elgar 2014) 193 .

36 JFTC Decision of 12 January 1970, 16 KTS 138.

37 Decision of the Tokyo High Court, 19 May 1971; upheld on appeal—Decision of the Supreme Court, 20 June 1976, Supreme Court Civil Cases Reporter, vol 29, 1976, 1592ff.

38 Matsushita talks about the decision having ‘some indirect extraterritorial effect’. Matsushita (n 24) 15.

39 Department of Justice, Antitrust Enforcement Guidelines for International Operations (1988), 55 Antitrust & Trade Reg. Rep. (BNA) No 1391.

40 US Department of Justice, ‘Justice Department Will Challenge Foreign Restraints on U.S. Exports under Antitrust Laws’ (3 April 1992) at <https:// www.justice.gov/archive/atr/public/press_releases/1992/211137.htm>.

41 See the Comment of the Government of Japan on the 1994 Draft Guidelines quoted in T Kojima, International Conflicts over the Extraterritorial Application of Competition Law in a Borderless Economy Weatherheard Center for International Affairs at Harvard University, Fellows’ Papers 2001–2002 at <http://www.wcfia.harvard.edu/fellows/papers/2001-02/>.

42 Amicus briefs are submissions by entities who are not a party to a lawsuit, but who petition the court because they have a strong interest in the subject matter of the case. BA Garner et al. (eds), Black’ s Law Dictionary (9th edn, West Group 2009) 98.

43 For analysis of, see Martyniszyn M, ‘Foreign States’ Amicus Curiae Participation in U.S. Antitrust Cases’ (2016) 61(4) Antitrust Bulletin 611 .

44 Matsushita Electric Industrial Co. v Zenith Radio Corp., 475 U.S. 574 (1986); U.S. v Nippon Paper Industries Co., 109 F.3d 1 (1st Cir 1997); F. Hoffmann-La Roche Ltd v Empagran SA, 542 U.S. 155 (2004); In re Monosodium Glutamate Antitrust Litigation, 477 F.3d 535 (8th Cir 2007); Goss Intern. Corp. v Man Roland Druckmaschinen AG, 491 F.3d 355 (8th Cir 2007); In re TFT-LCD (Flat Panel) Antitrust Litigation, 2011 WL 723571 (N.D. California 2011); Motorola Mobility LLC v AU Optronics Corp., 775 F.3d 816 (7th Cir 2015).

45 In two cases Japanese amicus interventions dealt with non-jurisdictional issues.

46 Matsushita (n 44).

47 Motion for Leave to File Brief Amicus Curiae and Brief for the Government of Japan as Amicus Curiae in Support of Petitioners, Matsushita Electric Industrial Co. v Zenith Radio Corp., 1985 WL 669664, 6 (U.S. 1985).

48 Nippon Paper (n 44).

49 Brief of Amicus Curiae the Government of Japan, U.S. v Nippon Paper Industries Co., 1996 WL 33659179, 12 (1st Cir 1996).

50 Brief for the Government of Japan as Amicus Curiae in Support of Petitioners, F. Hoffmann-La Roche Ltd v Empagran SA, 2004 WL 226390 (U.S. 2004).

51 Brief of the Federal Republic of Germany, United Kingdom of Great Britain and Northern Ireland, Japan, the Swiss Confederation, and the Kingdom of the Netherlands as Amici Curiae in Support of Defendants-Appellees in F. Hoffmann-La Roche Ltd v Empagran SA, 2005 WL 3873712 (C.A.D.C. 2005).

52 ibid 6.

53 In re Monosodium Glutamate (n 44).

54 Motorola Mobility (n 44).

55 Brief of the Ministry of Economy, Trade and Industry of Japan as Amicus Curiae in Support of Defendants’ Motion for Reconsideration, Motorola Mobility LLC v AU Optronics Corp., 2013 WL 7098182 (N. D. Ill. 2013).

56 Brief of the Ministry of Economy, Trade and Industry of Japan as Amicus Curiae in Support of Defendants’ Motion for Reconsideration, Motorola Mobility LLC v AU Optronics Corp., 2014 WL 5422011, 3 (7th Cir. 2014).

57 ibid 1.

58 See (nn 84–89) and accompanying text.

59 Dumping Regulations and Competition Policy, Extraterritorial Application of the Antimonopoly Act: Report of the Study Group (n 34). For discussion see Tamura J, ‘US Extraterritorial Application of Antitrust Law to Japanese Keiretsu’ (1992) 25 NYUJInt'lLaw&Pol 393–6.

60 See, for example, OECD, Working Party No 3 on Co-operation and Enforcement: Roundtable on Cartel Jurisdiction Issues, including the Effects Doctrine: Japan, DAF/COMP/WP3/WD(2008)88 (21 October 2008) 5–7.

61 Dumping Regulations and Competition Policy, Extraterritorial Application of the Antimonopoly Act: Report of the Study Group (n 34) 27.

62 In this vein also Matsushita, who served as a member of the Group. See Matsushita M, ‘Application of the Japanese Antimonopoly Law to International Transactions’ in Bronckers M and Quick R (eds), New Directions in International Economic Law: Essays in Honour of John H. Jackson (Kluwer Law International 2000) 563–4.

63 See (nn 17–19) and accompanying text.

64 Dumping Regulations and Competition Policy, Extraterritorial Application of the Antimonopoly Act: Report of the Study Group (n 34) 29–30.

65 JFTC Decision of 8 August 1998, 45 Shinketsushu 148.

66 Kameoka (n 35) 194.

67 For discussion see Yamaguchi K, ‘Extra-Territorial Application of Japanese Anti-Monopoly Law to Pure Non-Japanese M&As’ (1999) 5(4) IntTLR 100 .

68 JFTC, Press Release (18 October 1999).

69 JFTC, The Proposed Acquisition of the Stock of Guidant Corporation by Johnson & Johnson (9 December 2005) at <http://www.jftc.go.jp/en/pressreleases/yearly_2005/dec/2005_dec_9.html>.

70 Ohkubo N and Shishido Z, ‘Cooperation, Comity, and Competition Policy: Japan’ in Guzman AT (ed), Cooperation, Comity, and Competition Policy (OUP 2011) 88–9.

71 JFTC, Press Release regarding the proposed transaction between Rio Tinto and BHP Billiton (18 October 2010) at <http://www.jftc.go.jp/houdou/pressrelease/h22/oct/10101802.html>. Compare A Goto, ‘Cross-Border Merger Control in Japan’ (OECD Global Forum on Competition, 17 February 2011) at <http://www.jftc.go.jp/en/policy_enforcement/speeches/2011/110217.files/Cross_border_merger_control_in_Japan.pdf>.

72 See (nn 59–63) and accompanying text.

73 See (n 65) and accompanying text.

74 See (n 33) and accompanying text.

75 Per art 70-8(1)(iii) the JFTC may do so ‘if, after the lapse of six months from the date on which a competent foreign government agency was commissioned to make service … documents certifying that service was made are not received’.

76 See (nn 70–71) and accompanying text.

77 Per art 70-7 of the Antimonopoly Act referring to art 108 of the Code of the Civil Procedure.

78 Ohkubo and Shishido (n 70) 93.

79 For analysis of the challenges related to accessing foreign-based evidence in competition law enforcement see Martyniszyn M, ‘Inter-Agency Evidence Sharing in Competition Law Enforcement’ (2015) 19(1) International Journal of Evidence and Proof 11 .

80 K Funahashi, ‘International Cooperation to Crack International Cartels: Japanese Successes and Failures’ (Cracking Cartels; International and Australian Developments Conference, Sydney, 24 November 2004) at <https://www.accc.gov.au/system/files/Session%204%20-%20Kazuyuki%20Funahashi.rtf>.

81 JFTC, A Recommendation to Producers of Modifiers that Conducted Price-hike Cartel Activity (11 December 2003) at <http://www.jftc.go.jp/en/pressreleases/yearly_2003/dec/2003_dec_11.files/2003-Dec-11.pdf>.

82 Art 7-2 of the Antimonopoly Act.

83 JFTC, Cease-and-Desist Order and Surcharge Payment Order against Marine Hose Manufacturers (22 February 2008) at <http://www.jftc.go.jp/en/pressreleases/yearly-2008/feb/individual_000147.files/2008-Feb-22.pdf>.

84 JFTC, Cease-and-Desist Order and Surcharge Payment Orders against Manufacturers of Cathode Ray Tubes for Televisions (7 October 2009) at <http://www.jftc.go.jp/en/pressreleases/yearly-2009/oct/individual-000037.html>; JFTC, Cease-and-Desist Order and Surcharge Payment Orders against Manufacturers of Cathode Ray Tubes for Televisions (follow-up report) (29 March 2010) at <http://www.jftc.go.jp/en/pressreleases/yearly-2010/mar/individual-000136.html>.

85 Takigawa T, ‘Putting Limits on Extra-Territorial Coverage of Competition Laws in the Age of Global Supply Chains: Comparison of the US and Japan’ in Matsushita M and Shoenbaum T (eds), Emerging Issues in Sustainable Development (Springer 2016) 245 .

86 JFTC, Decision against Five Companies including MT Picture Display Co Ltd—Price Cartel Case Involving Manufacturers/Distributors of Television Cathode-Ray Tubes (22 May 2015) at <http://www.jftc.go.jp/en/pressreleases/yearly-2015/May/150529.files/150529.pdf>.

87 In line with the 2002 Amendment to Antimonopoly Law (see nn 72–78 and the accompanying text), the JFTC attempted to serve process abroad through the Japanese consular staff in Korea and Malaysia. However, both States refused to grant the necessary permission and the JFTC moved to serve process by publication.

88 For discussion see Martyniszyn M, ‘How High (and Far) Can You Go? On Setting Fines in Cartel Cases Involving Vertically-Integrated Undertakings and Foreign Sales’ (2016) 37(3) ECLR 105 .

89 See (nn 54–57) and accompanying text.

90 See (nn 82–83) and accompanying text.

91 Takigawa (n 85).

92 JFTC, Decision against Five Companies including MT Picture Display Co Ltd (n 86).

93 Judgments delivered on 29 January, 14 April and 22 April 2016.

94 See also Shiraishi T, ‘Customer Location and the International Reach of National Competition Laws’ (2017) 59 Japanese Yearbook of International Law 202 .

95 In a similar vein Murakami, former director of the JFTC, quoted in Y Nagano, ‘Ruling in Japan CRT Cartel Case Draws Criticism – Analysis’ , PaRR (2 February 2016) at <https://app.parr-global.com/intelligence/view/1358737>.

96 T Nambu, ‘International Cartel Enforcement of the JFTC – Developments and Future’ (Beijing 2013) 3, at <http://www.americanbar.org/content/dam/aba/events/international_law/2013/09/china_inside_andout/CartelEnforcementJFTC.pptx>.

97 ‘Japan Antitrust Watchdog Eyes Fines for Foreign Cartel Members’ Nikkei Asian Review (22 July 2016) at <http://asia.nikkei.com/Politics-Economy/Policy-Politics/Japan-antitrust-watchdog-eyes-fines-for-foreign-cartel-members>.

The author thanks the Royal Irish Academy for the 2016 Charlemont Grant Award which enabled a research visit to Japan in June 2016. He thanks Professors Tomohiko Kobayashi (Otaru), Mitsuo Matsushita (Tokyo), Tamio Nakamura (Waseda) and Toshiaki Takigawa (Kansai) whose support during the visit and comments on a draft of this article were very helpful. Kathleen Aspin provided valuable research assistance in finalizing this submission. The author gratefully acknowledges the comments by the anonymous reviewers of the ICLQ.

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