The Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, often called the Antimonopoly Act, is Japan's core competition-law statute. Companies, trade associations, investors, and M&A teams consult it when checking the statutory basis for cartel rules, monopolization, unfair trade practices, business-combination review, and Japan Fair Trade Commission procedures. This article covers selected core provisions of the Act and does not decide whether any particular transaction or business practice violates competition law.
Purpose, Business Operators, and Core Concepts
The Act starts with broad competition-policy language and then defines the conduct categories used in later prohibitions. Articles 1, 2, and 2-2 are the main provisions for understanding the statute's vocabulary.
Article 1 states the Act's purpose. It prohibits Private Monopolization, Unreasonable Restraint of Trade, and Unfair Trade Practices, prevents excessive concentration of business-controlling power, removes unjust restraints on business activities through combinations, agreements, and other methods, promotes fair and free competition, encourages business creativity, and protects general consumer interests while promoting democratic and sound development of the national economy.
Article 2(1) defines an Entrepreneur as a person who conducts commercial, industrial, financial, or other business. Article 2(2) defines a Trade Association as an association or federation of two or more Entrepreneurs whose main purpose is to promote common interests as Entrepreneurs, subject to exclusions stated there. Article 2 also defines Competition, Private Monopolization, Unreasonable Restraint of Trade, Monopolistic Situation, and Unfair Trade Practices.
Article 2(5) defines Private Monopolization as excluding or controlling other Entrepreneurs' business activities, alone or with others, in a way that substantially restrains competition in a particular field of trade contrary to public interest. Article 2(6) defines Unreasonable Restraint of Trade by reference to joint conduct such as price fixing, quantity restrictions, technology restrictions, product restrictions, facility restrictions, or customer restrictions that mutually restrain business activities and substantially restrain competition in a particular field of trade contrary to public interest.
Cartels, Monopolization, and Surcharge Orders
The Act's direct prohibitions are short, but the remedy and surcharge provisions are detailed. Articles 3, 6, 7, 7-2, 7-4, and 7-9 are important entry points for cartel and monopolization matters.
Article 3 prohibits an Entrepreneur from engaging in Private Monopolization or Unreasonable Restraint of Trade. Article 6 prohibits an Entrepreneur from entering into an international agreement or international contract containing matters that constitute Unreasonable Restraint of Trade or Unfair Trade Practices. Article 7 authorizes the Japan Fair Trade Commission, when there is a violation of Article 3 or Article 6, to order measures necessary to eliminate the violation, including cease-and-desist measures and transfer of part of a business.
Article 7-2 requires the Japan Fair Trade Commission to order payment of a surcharge in specified Private Monopolization and Unreasonable Restraint of Trade cases. The article calculates the surcharge by reference to sales or purchase amounts and other statutory factors, with detailed categories and exceptions. Article 7-4 contains leniency-related rules that may reduce or exempt surcharge amounts when an Entrepreneur reports facts or submits materials, subject to the article's timing and cooperation requirements.
Article 7-9 addresses surcharge orders for certain violations involving Unfair Trade Practices, including repeat or specified conduct categories. These provisions show why the Act must be read beyond the basic prohibition in Article 3: the legal consequences depend on the type of violation and the remedy or surcharge article that applies.
Unfair Trade Practices and Trade Associations
The Act separately regulates Unfair Trade Practices and conduct by Trade Associations. Articles 8, 19, 20, and 20-2 through 20-7 are the main provisions for conduct that may not involve a classic cartel.
Article 8 prohibits Trade Associations from engaging in listed conduct, including substantially restraining competition in a particular field of trade, entering international agreements or contracts with prohibited content, limiting the number of Entrepreneurs, unjustly restricting member functions or activities, and causing Entrepreneurs to employ Unfair Trade Practices. Article 8-4 allows the Japan Fair Trade Commission to order necessary measures when a Trade Association violates Article 8.
Article 19 prohibits an Entrepreneur from employing Unfair Trade Practices. Article 2(9) lists statutory categories, including concerted refusals to supply without justifiable grounds, discriminatory pricing that may make another Entrepreneur's business activities difficult, below-cost continuous supply that may make another Entrepreneur's business activities difficult, resale-price restraints, abuse of a superior bargaining position, and additional categories designated by the Japan Fair Trade Commission.
Article 20 authorizes the Japan Fair Trade Commission to order necessary measures when Article 19 is violated. Articles 20-2 through 20-7 then provide surcharge rules for specified Unfair Trade Practices, including certain concerted refusals to supply, discriminatory pricing, below-cost supply, resale-price restraints, and abuse of superior bargaining position, under the conditions stated in those provisions.
Business Combinations and M&A Filings
The Act contains business-combination rules for shareholdings, interlocking officers, mergers, company splits, joint share transfers, and business acquisitions. Articles 9, 10, 13, 14, 15, 15-2, 15-3, and 16 are the statutory starting points for M&A review.
Article 9 prohibits establishing a company or becoming a company where excessive concentration of business-controlling power is created, and it contains reporting obligations for specified companies. Article 10 restricts acquisition or holding of shares in another company where the effect may be to substantially restrain competition in a particular field of trade, and it requires prior notification for specified share acquisitions that meet statutory conditions.
Article 13 restricts officer interlocks where the effect may be to substantially restrain competition in a particular field of trade. Article 14 restricts company ownership of partnership interests and similar rights in specified cases. Article 15 restricts mergers where the effect may be to substantially restrain competition and requires prior notification for mergers that meet the statutory thresholds and categories.
Article 15-2 applies comparable rules to joint incorporation-type splits and absorption-type splits, Article 15-3 applies to joint share transfers, and Article 16 applies to business or fixed-asset acquisitions and leases that meet the statutory conditions. These provisions do not themselves provide an M&A clearance conclusion; they identify the legal hooks for competition-effect review and prior notification.
JFTC Investigation, Orders, and Court Review
The Japan Fair Trade Commission is the central enforcement body under the Act. Articles 27, 47, 49, 50, 52, 62, 77, and 85 show how investigations, orders, surcharge payment, and litigation fit together.
Article 27 establishes the Japan Fair Trade Commission under the Act for the Cabinet Office. Article 47 gives the Commission investigative powers in cases necessary for enforcing the Act, including ordering persons to appear, questioning persons, ordering reports or production of materials, and entering business offices or other places to inspect books and documents. Article 49 provides for Cease and Desist Orders, and Article 50 provides procedures before such orders, including notice of expected order contents and opportunity to submit opinions and evidence.
Article 52 requires procedures before surcharge payment orders. Article 62 states payment rules for surcharges, including the payment deadline after service of a surcharge payment order. Article 77 provides rules for actions seeking revocation of Commission decisions or orders. Article 85 gives the Tokyo District Court jurisdiction over specified cases, including actions concerning Commission orders, under the categories stated in that article.