• Kyodo


A draft report by Japan’s antitrust watchdog panel, which is looking into alleged unfair practice in contract agreements in the entertainment and sports industries, may be welcome news for celebrities and athletes encountering difficulties when they want to transfer.

An outline of the draft report by the Fair Trade Commission panel says that excessive restrictions placed during transfer negotiations on artists with exclusive arrangements with entertainment agencies and athletes violate the antitrust law. Putting unilateral restraints on freelancers’ contracts with other companies is also an antitrust violation.

It is the first time for the long-entrenched customary practice to be recognized as an antitrust violation.

With a spate of reports regarding contract woes putting artists and athletes at a disadvantage, and growing concerns over their human rights, the panel hopes to give them appropriate safeguards. In some cases, popular celebrities lose their jobs or see their activities restricted once they leave their agencies.

The antitrust law bans concluding contracts made with unfair conditions and with the other party in a predominant position, but there has so far been no case of labor contract dispute recognized as an antitrust violation.

The panel said in the report that there is no need to revise the law, and that an unfair labor contract can be subject to the existing law.

The report cited several examples of possible violations, including sports teams’ prior arrangements not to poach each other’s athletes and the case of an entertainment agency not complying with negotiations on revising a contract.

The panel also took into account how entertainment agencies and sports teams have invested in their artists and athletes. It proposed that the agencies and teams could fix the problem by introducing a system in which the transfer recipient organization will pay a transfer contract fee to the former employer.

For Japan’s rugby top league, there is a one-year restriction on athletes playing for their new team in official matches unless there is consent from his former team. Prodded by the commission, the league is considering shortening the period of the restriction in fiscal 2018 at the earliest.

A final report will be released by spring, after the commission holds the panel’s final meeting in February.

But entertainment agencies which have heavily invested in their artists are protesting the panel’s move to hamper what has long been accepted as a norm in show business.

A stark example was the all-male pop idol group SMAP. A reported rift between members who wanted to leave and those that wished to stay eventually led to one of the country’s best loved groups disbanding earlier this year. The development drew mixed reactions over their agency’s handling of the issue.

Another example was Rena Nonen, a budding young Japanese actress who gained fame from “Amachan” — a morning drama series made by public broadcaster NHK. She left her agency to go independent, but her activities were drastically reduced.

The difficulties with entertainment contracts that have come to light, though, are just the tip of the iceberg.

“Most of the cases are not made public out of fear they would lose their jobs,” a panel member said.

Contract woes date back several decades. In the 1960s, an agreement among five film companies banning the poaching of their exclusive actors was close to being investigated as an antitrust violation case. But the case was not pursued further as the agreement fizzled out.

The draft system in Japanese professional baseball, which puts unfair restrictions on the selection of individuals, has also long been a problem.

The commission made a public statement in the 1970s that this system does not constitute a transaction under the antitrust law. No cases of antitrust violations have since been developed. With its statement, the commission shut the door to building criminal cases regarding the draft system, according to experts.

The commission’s latest move to address the practice has displeased entertainment agencies, who are mindful of the time, money and effort they spend grooming unheard-of newcomers into stars.

“Must we make a legal issue out of this?” an official with a major entertainment agency countered.

Shinya Ouchi, a Kobe University graduate school professor on labor law, pointed out that those working in the entertainment industry and freelancers are in “weak positions” as they rely on a certain employers or contract parties.

In Japan, there are more than 10 million freelancers working through contracts in entertainment, sports and other sectors.

“Some kind of regulations to protect their rights is needed but there is no silver bullet for this,” Ouchi said.

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