|Nippon Keidanren Press Release|
|Date : September 5, 2003|
|To : Business organization journalists|
In the case of the illegal activities of price and quantity cartels and bid-rigging, the Antimonopoly Law, as its enforcement systems, imposes elimination measures, criminal penalties, and surcharges in a cumulative manner. The law also stipulates strict liability in the case of demands for damages.
As economic penalties on companies for forming illegal cartels, in the European Union a fine of less than one million euros or less than 10% of sales is levied as an administrative measure, and in the case of a dispute, a judgment is handed down by the court. In the United States the case is investigated as a criminal incident, and a fine of less than $10 million is stipulated if there is judged to have been an illegality. The Antimonopoly Law of Japan, which stipulates both surcharges as an administrative measure and criminal penalties, is abnormal even by international standards.
Since being introduced through a revision of the law in 1977, surcharges have consistently been explained "as an administrative measure ordering the payment to the national treasury of economic profits by cartels". "Unlike criminal penalties, such discretion as the principle of assessment of culpability is not allowed, and the discretionary power of whether the Fair Trade Commission orders the payment of a surcharge or not is not recognized". (See Toyoki Watanabe [director, Executive Office, Fair Trade Commission], ed., Shin dokusen kinshi ho no jitsumu [The New Antimonopoly Law in Practice], 1981, Shoji Homu Kenkyukai, and other works.)
In other words, surcharges impose economic disadvantages in the same way as criminal penalties. But the understanding has been that since surcharges are no more than an administrative measure to mechanically confiscate the illegal profits of cartels, even if surcharges and criminal penalties are imposed in the same case, this does not represent a violation of Article 39 of the Constitution, which prohibits double jeopardy. The same thinking was maintained at the time of the amendment of the calculation rate in the 1991 revision.
In the case of criminal penalties, criminal proceedings only begin when the Fair Trade Commission files a charge with the public prosecutor general. The Fair Trade Commission announced "The Policy of the Fair Trade Commission Relating to Criminal Charges of Violation of the Antimonopoly Law" in 1990, in which it clarified its policy of actively bringing charges demanding criminal punishment against companies and businesses that repeatedly engage in malicious and serious cases and illegal behavior that is thought to exert a wide-ranging impact on national life. Furthermore, in a revision of the Antimonopoly Law in 2002, the upper limit on penalties was raised from ¥100 million to ¥500 million.
Nippon Keidanren for some time now has been calling for a drastic revision of the whole enforcement systems, citing the problem of the cumulative penalties for violations of the Antimonopoly Law. (See, for example, Nippon Keidanren's comment on the report of the Antimonopoly Law Study Group, November 29, 2001.) In the Diet also, at the time of the revision of the Antimonopoly Law in 2002 and again at the time of the transfer of the Fair Trade Commission to the Cabinet Office in 2003, Nippon Keidanren issued supplementary resolutions calling for a drastic revision of the enfoecement systems for illegal acts to be studied.
In response, since October of last year the Study Group on Antimonopoly Act (chaired by Kenichi Miyazawa, professor emeritus of Hitotsubashi University) has taken up the issue of the surcharge system and is studying the introduction of an additional system and a leniency system, by which the surcharge would be reduced or exempted in cases where the cartel parties themselves submitted evidence to the Fair Trade Commission and cooperated in the investigations and surveys.
In this situation, the Committee on Economic Law of Nippon Keidanren has put together the attached paper on "Revision of the Antimonopoly Act enforcement systems," which clarifies the organization's opinions concerning the modality of surcharges, the modality of investigation and hearing procedures befitting the Fair Trade Commission as a quasi-judicial body, and the strengthening of its legal pawer and capabilities.
The importance of the Antimonopoly Law, the fundamental law of a market economy, is increasing. Amid reports about repeated offenses by some companies, the establishment of legal, personnel, and organizational arrangements to analyze and eliminate the causes and to facilitate the strict and proper enforcement of the Antimonopoly Law is an urgent issue.
We appreciate the fact that the Fair Trade Commission has commenced study of a revision of the enforcement systems, and we hope for results. Until now, however, the Study Group on the Antimonopoly Act have focused on the introduction of an additional system and exemption system for surcharges, and the enforcement systems as a whole has not been reviewed. If this situation continues in this way, there is a danger that the inconsistency and lack of transparency in the enforcement systems will actually increase and that the qualitative and quantitative strengthening of the Fair Trade Commission's organizational setup and revision of its power and responsibilities will be delayed.
The thinking of Nippon Keidanren concerning the enforcement systems is as follows.
In order to eradicate cases of violation of the Antimonopoly Law, it is necessary to adopt countermeasures from a comprehensive viewpoint after considering the systemic and social elements of illegal acts. Also, it is necessary to make an overall assessment of the deterrent effect of penalties and punishments, which at present are carried out inconsistently and comprise not only criminal penalties and surcharges but also claims for damages from victims and so on, suspension of designation by the administrative authorities, suspension of subsidies, the collection of breach-of-contract charges, and so forth, and as a whole to introduce fines that are in balance with the actual natures of the each illegal act.
The introduction of systems of addition and exemption(or reduction) while maintaining the legal character of surcharges as the divestiture of illegal profit would be difficult and could give rise to constitutional problems involving double jeopardy and the balance between crime and punishment.*
* The report of the Antimonopoly Law Study Group of the Fair Trade Commission (October 2001) concludes, "It would be difficult to introduce an exemption system while maintaining the nondiscretionary character of the current surcharge system. . . . As long as the state collects the economic profits generated by cartels, the introduction of an exemption or reduction system that would mean not collecting illegal profits that essentially should be collected would raise problems in terms of the purpose of the current system of surcharges."
Regarding the form of economic penalties on companies, after making adjustments with criminal penalties and ensuring due process, a wide-ranging study should be conducted, including, for example, whether to switch in the future to EU-style fines or to go with criminal penalties only.
On-the-spot inspections by the Fair Trade Commission, which are administrative investigation on voluntary basis, give the general public the mistaken impression of being an investigation and confiscation of materials based on a warrant issued by a court. They also pose problems in terms of due process. In order to ensure the rights of the public, efforts should be made to spread awareness of the limitations on the authority of on-the-spot inspections, and notification should be clearly given of the scope of authority at the start of an administrative investigation.
In addition, because the evidence-gathering capabilities and capacity of the Fair Trade Commission are inadequate, criminal charges are not being made against malicious and serious cases. Therefore, it is necessary to realize the qualitative establishment and strengthening of the investigation capabilities of the Fair Trade Commission.
Judgment by the Fair Trade Commission is a substitute for the usual court of first trial. Also, the finding of fact binds the court in a suit to quash decision through "the principle of substantial evidence". In the judgment, however, staff of the Executive Office of the Fair Trade Commission serve as both examiners, the equivalent of judges, and investigators, the equivalent of prosecutors. There are neither qualifications nor obligatory training for these posts, and few people who serve in them have judicial qualifications. This is an inadequate situation for a quasi-judicial organization.
As the direction of immediate reform, the personnel firewall between examiners and investigators should be strengthened, and as far as possible persons with judicial qualifications should serve in these posts.
It is also necessary to evaluate the punitive effects of measures other than those stipulated in the Antimonopoly Law, such as the suspension of designation, and to design punitive measures accordingly. Also, the Fair Trade Commission should endeavor to persuade related organizations that after the settlement of a judgment the suspension of designation should be limited to the market in which the violation occurred.