Japan to expand antitrust leniency program, under which fines are slashed if firms play ball


The government will expand the Fair Trade Commission’s antitrust leniency program, mainly by reducing fines on violators depending on the degree of their cooperation, according to informed sources.

Meanwhile, penalties for violating the Antimonopoly Law will be strengthened.

The government hopes to adopt a bill to revise the law at a Cabinet meeting in early March and submit it to the current Diet session ending in June if the ruling bloc signs off on it.

Under the leniency program, introduced in 2006, companies are granted a reduction or exemption of fines if they report bid-rigging, cartels or other violations of the law.

At present, such measures are awarded to up to five companies per case in order of applications. The bill would call for removing this limit.

The legislation would also grant an additional cut of up to 40 percent in fines depending on how much applicants cooperate, such as by submitting evidence.

The first company to report an antitrust conspiracy would enjoy full exemption, as under the current program.

Fines would be reduced by up to 60 percent for the second company, against the current fixed level of 50 percent, and up to 50 percent for the third through fifth companies, against 30 percent.

The sixth company and onward, to which no leniency is provided at present, would enjoy a reduction of up to 45 percent.

Under the current program, the FTC accepts leniency applications from up to three companies after the start of investigations.

There would be no such limit in the envisioned program. Applicants would be eligible for a reduction of 25 to 30 percent.

The government hopes the bigger incentives will help the FTC find facts more speedily.

To toughen the penalties, the government plans to extend the maximum period of violations the FTC can count to calculate fines to 10 years from the current three years.

The FTC would be allowed to calculate fines based on estimated sales if it cannot obtain enough evidence. This rule would also apply to the abuse of a superior bargaining position.

Also planned is a rise in the rates of fines for retailers and wholesalers, which are far lower than that for manufacturers. For bid-rigging and cartels, 10 percent of sales would be the basis for calculating fines.

The bill won’t include a provision on the protection of communications between companies and their lawyers. But such a rule would be introduced through revisions to FTC and other regulations.

Of the materials seized in investigations into bid-rigging and cartels, documents containing advice from lawyers would be returned to companies, so consulting with lawyers would become easier.