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Antimonopoly Law reform amendment falls short of the mark

by Yoshio Nakamura

A proposed amendment to the Antimonopoly Law was submitted to the Diet on Oct. 15 — as promised by the ruling Liberal Democratic Party.

However, the proposal does not represent a fundamental overhaul of the law.

The business community wants to see the dual imposition of surcharges and criminal penalties scrapped. We also would like a review of the Fair Trade Commission’s investigation and hearing procedures.

Instead, the proposed amendment focuses on raising the surcharge rate to 10 percent (for a maximum of three years) on major corporations and introducing a leniency program.

When the upper limit of criminal penalties on Antimonopoly Law offenders was raised from 100 million yen to 500 million yen in 2002, the Diet adopted a supplementary resolution calling for a “prompt review of the overall punitive mechanism on Antimonopoly Law violations, including surcharge, criminal penalties and the investigative powers of the Fair Trade Commission.”

But the proposed amendment is far from a fundamental overhaul of the law, and there are serious concerns over how the proposed amendment would be implemented.

In an earlier column (the Aug. 23 issue) I pointed out some of the problems involved in the FTC’s procedures for implementing the Antimonopoly Law. Unless the FTC itself reflects on the serious nature of these problems, it won’t win public support for the proposed amendment.

The business community is not opposed to revising the Antimonopoly Law. Rather, we have long demanded a truly fundamental overhaul of the law. We believe that if the surcharge is to be raised and the FTC’s power is to increase, the FTC itself must be reformed and become a quasi-judicial institution that will implement the Antimonopoly Law in a more fair manner and impose penalties in proportion to the nature and seriousness of the suspected offense.

The amendment carries a supplementary provision that would require the Cabinet Office to discuss a fundamental overhaul of the law and review the penalties as well as FTC investigation and hearing procedures within two years after the revised law takes effect. The matters cited in the provision are all essential to the law’s overhaul and should be implemented as quickly as possible. We should not have to wait for the mandatory review process.

We want the Diet, when it begins deliberations on the proposed amendment, to set a clear direction for additional reforms. Specifically, we call for unifying the penalties for Antimonopoly Law violations to the surcharge system, or introduction of a system under which violators would face either a surcharge or a criminal penalty — but not both.

The amount of surcharge must increase or decrease in proportion to the seriousness of the offense.

Furthermore, the FTC’s section that plays the role of judge in the hearing process should be separated from the commission’s organization and actively hire legal professionals for the job, thereby securing independence for the hearing procedure.