Business

Japan FTC warns of possible illegal points programs

The Fair Trade Commission has said some actions taken by loyalty point program operators may constitute antitrust law violations.

In some cases, program operators disadvantaged participating stores that sought to adopt other point programs, the FTC said, announcing the results of its first-ever survey on loyalty point programs.

The commission will seek to encourage competition and boost consumer benefits by preventing loyalty point program operators from putting pressure on participating stores.

Japan has many loyalty point programs, including big ones such as Culture Convenience Club Co.'s T-Point program and NTT Docomo Inc.'s d Point program.

The survey, conducted between March last year and this month, covered four major point program operators, about 2,000 participating stores and 10,000 consumers. Valid responses were given by 21 percent of the stores.

The survey found that 72 percent of consumers used at least one loyalty point program and that 82 percent of the responding stores had only adopted one such program.

At issue are so-called prior approval clauses in contracts between operators and some participating stores, which require stores to gain approval of operators beforehand if they introduce any other loyalty point program.

Many stores have given up adopting other programs due to the time needed for negotiations for prior approval.

Such a clause is not problematic in itself, but it may violate the antimonopoly law if it prevents competitors from entering the market, the FTC said.

Loyalty point program operators with a large number of members tend to have more participating stores, making it hard for other programs to perform well.

Consumers may suffer disadvantages from limited choices if major operators form an oligopoly.

The FTC is trying to encourage competition in the field.

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