Concentrated Power: The Paradox of Antitrust in Japan

Concentrated Power: The Paradox of Antitrust in Japan

Description

In his essay about the Antimonopoly Law in the 1963 edition of Law in Japan, Yoshio Kanazawa observed that enforcement of Japan’s Antimonopoly Act “is anemic today” and, although the act could be resuscitated, “there is, of course, no immediate prospect of this happening.” Kanazawa pointed to the “negative attitude toward the underlying philosophy” of the law exhibited by recently appointed commissioners of the Fair Trade Commission (JFTC), to the many exemptions from the Antimonopoly Act that had followed its adoption in 1947, and to the growth of what has come to be called administrative guidance by the ministries, particularly the Ministry of International Trade and Industry (MITI). He concluded by wondering whether the Antimonopoly Act “serves a useful function in the social and economic environment of Japan.” Although he hoped that the JFTC would “revitalize itself and assume a positive role in the administration of the law,” he also thought that the Antimonopoly Act should be better fit to its “social environment” so that it would “permit restrictive practices when they demonstrably benefit the Japanese economy or society as a whole.” Kanazawa’s account of antitrust in Japan was written only sixteen years after the enactment of the Antimonopoly Act. We write some forty years after Kanazawa, fifty-five years after the statute’s enactment. Much has changed in that time. There have been substantial legislative changes in the act, strengthening its provisions rather than narrowing them. There has been substantial scholarly attention paid to the act, both in Japan and elsewhere, exploring the importance and effect of antitrust enforcement in Japan. The policies behind the act have even come to be embraced by government policy makers. In the late 1980s and early 1990s increased antitrust enforcement was seen as important in Japan and elsewhere as a way of curing United States–Japan trade problems and opening Japan’s markets. In the early 2000s antitrust enforcement has come to be seen in Japan as a way to improve the operation of a sluggish and overregulated economy. Even the prime minister has pronounced on the importance of strong antitrust enforcement. And yet, doubts remain about antitrust in Japan, similar to the doubts expressed by Kanazawa. These doubts are not addressed to the utility of antitrust in today’s economy in Japan. They are more addressed to the perceived lack of antitrust enforcement by the JFTC. As one commissioner expressed it, the JFTC is often viewed as “a watch dog that does not bite.” Indeed, the very acknowledgment that the JFTC needs to be strengthened is an indication that it is perceived as too weak to be an effective enforcer of the antitrust laws. The actual record of antitrust enforcement in Japan is, of course, more complicated than can be expressed in a political catchphrase. Unlike the record when Kanazawa wrote, enforcement has turned out to be not quite anemic, nor has the JFTC been without bite. Nevertheless, it would also be difficult to characterize the commission’s enforcement record as robust. There are many reasons for the relatively weak performance of the commission over time, including Japan’s often negative view of the utility of antitrust as economic policy and the position of the JFTC in relation to other government ministries. One area that has been overlooked as an explanation for weak antitrust enforcement in Japan, however, is the very concentration of enforcement authority in the JFTC. The Antimonopoly Act follows the model of concentrating enforcement in an apparently powerful single administrative government agency and, as a result, only a small number of private litigants invoke antitrust protections. This concentration, we believe, has actually led to weaker antitrust enforcement than might otherwise have occurred in Japan. It is, we think, the paradox of antitrust in Japan. Our chapter proceeds as follows. We begin with a description of Japan’s antitrust enforcement system, with a particular focus on the current position and activities of the JFTC. We then compare that to the antitrust enforcement system that has evolved in the United States. Our review of the U.S. system is not so much to detail that system as to provide the contrast of a system where enforcement is much more deconcentrated and enforcers operate in a networked environment rather than a hierarchical one. We conclude with three suggestions for opening up antitrust enforcement in Japan: increase the networking of the JFTC and other ministries with regard to competition matters, strengthen the support structure for private litigation, and have the JFTC participate fully in the growing internationalization of antitrust enforcement.

Source Publication

Law In Japan: A Turning Point

Source Editors/Authors

Daniel H. Foote

Publication Date

2007

Concentrated Power: The Paradox of Antitrust in Japan

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