The JFTC’s Efforts for Enhancing Accountability and Communication Toshiko Igarashi Senior Planning Officer, International Affairs Division Japan Fair Trade Commission March 11, 2016 Gaborone, Botswana Presentation at ICN Agency Effectiveness Workshop 2016

Outline Accountability and Communication : General Framework Accountability and Communications to Various Stakeholders Goal of Communication Communication Strategy JFTC’s Efforts for Accountability and Communication to Stakeholders To Achieve Effective Enforcement To Prevent Anti-competitive Regulation To Build a Competition Culture Accountability and Communication in the Investigative Process ICN Guidance on Investigative Process and JFTC’s Efforts

Accountability and Communication - General Framework 3 3

Accountability and Communication - General Framework Accountability “There are different types of accountability, including formal accountability to a political body exercising oversight (Parliament, government), or more general accountability to all stakeholders, especially consumers.”(Summary report on ICN Seminar on Competition Agency Effectiveness, January 2009) Different types of accountability Formal accountability to a oversight body General accountability to all stakeholders Communication There can be no accountability without communication. Communication considerations must be part of strategic planning. Goal Strategy (Who, what, whom and how to communicate)

Accountability and Independence Formal Accountability and Communication Accountability and Independence Article 28 of the AMA : The chairman and commissioners of the Fair Trade Commission exercise their authority independently. Report to the Parliament Article 44 (1) of the AMA: The Fair Trade Commission shall report annually to the Diet, through the Prime Minister, on the enforcement of this Act. Policy Evaluation Based on Government Policy Evaluation Act (2002) Each Government Ministry and Agency Needs to Conduct its Own Self-Evaluation

Accountability and Communication to Various Stakeholders 6 6

Purpose Goal of Communication To prevent For Effective Enforcement Communication to All Stakeholders Goal of Communication For Effective Enforcement To prevent Anti-competitive legislation/ regulations Purpose For a Competition Culture/ a Common Understanding of the Value of Competition

Communication Strategy Communication to All Stakeholders Communication Strategy Who, What, Whom, and How to Communicate Strategy for each Goal Targets (Whom) Methods (How) Subject (Who) Companies Courts Lawyers Other government agencies Legislators Individual consumers Consumer groups Media Press release Forums, seminars Consultation Pamphlet, leaflet Guidelines Lessons Study Groups Proposal Email newsletter Website Agency heads Director All employees (including case handler)

Goal (1) : To achieve effective enforcement JFTC’s Efforts for Accountability and Communication to Stakeholders (1) Goal (1) : To achieve effective enforcement Target: Companies, Lawyers, Judges, and Prosecutors Media Methods: ・ Publish individual antitrust cases in which competition authorities took measures ・ Draft and publish guidelines ・ Antimonopoly Policy Cooperation Committee ・ Hold regional forums with representatives of local communities ・ Forum with regional chambers of commerce and industry ・ Respond to preliminary consultation of businesses ・ Dispatch employees to seminars or conferences ・ Utilize the website and pamphlets, etc. 9 9

Publish Rules and Guidelines as well as decisions. Publication of Rules and Guidelines, etc, Publish Rules and Guidelines as well as decisions. Public Consultation Procedure in revising a rule or guidelines. In addition to the provisions of the AMA, the JFTC publishes various rules and guidelines. When the JFTC intends to establish or revise a rule or guidelines, it conducts a public comment procedure on the draft. (Based on Administrative Procedure Act) The JFTC publishes a press release when it takes a legal measure or issues a warning and, regarding a caution and a closure of a case, also when it considers the case should be made public from the viewpoint of competition policy.

Press releases and press conferences Exchange Opinions with Private Sector, etc Press releases and press conferences Press Conference by the Secretary General (Every Wednesday) Press Release (318 times during FY 2014) Antimonopoly Policy Cooperation Committee System Established in FY1999 to promote the understanding of competition policy and to implement policies in line with the reality of the economy and society of the region concerned. The JFTC delegates membership to experts from academics, businesses, consumer organizations, etc. (approximately 150 members across the country) to hear opinions and requests about the enforcement of the AMA, etc. and the implementation of competition policy and other activities of the JFTC. Other frameworks for exchanging opinions Hosting Advisory Panels on Antimonopoly Policy (3 times during FY2014) Meetings with other local experts by the heads of local branches, etc. (91 times during FY 2014) The JFTC occasionally holds meetings with trade associations and bar associations in order to exchange opinions.

Target: Legislative body, Executive body (central and local) Media JFTC’s Efforts for Accountability and Communication to Stakeholders (2) Goal (2): To prevent the introduction of anti-competitive legislation or regulations by other government bodies Target: Legislative body, Executive body (central and local) Media Methods: ・ Preliminary coordination of revising business laws and regulations ・ Preliminary coordination with administrative bodies ・ Expert advice with regard to regulated sectors and exemptions of antimonopoly law (hold a study group, publish a report, etc.), etc. 12 12

Policy Recommendation Tools of Communication with Regulators Policy Recommendation Sector Study Expert Council Coordination Legislative Coordination Administrative Coordination Cooperation Sending Lecturers Creating Joint Guidelines Supports for Competition Assessments, etc 13 13

・ Hosting consumer seminars JFTC’s Efforts for Accountability and Communication to Stakeholders (3) Goal (3): to build a competition culture and a common understanding of the value of competition Target: Consumers Media Methods: ・ Hosting consumer seminars ・ Hosting the event called “JFTC for One Day” ・ Producing contents for general consumers and children concerning the Antimonopoly Act ・ Publish email newsletters, utilize social media (twitter, facebook) ・ Delegate monitors from consumers. ・ Hosting lectures on the AMA for students 14 14

Hosting consumer seminars The JFTC hosts "Consumer Seminars" for general consumers to explain the AMA and the activities of the JFTC. Theme: Relation between our lives and the AMA What are the merits for consumers in terms of competition? Simulation Games – Competition in a virtual electric shopping mall 23 times during FY2015 (Apr.-Sep.) 15

Booth for the consultation Hosting “JFTC for One Day” The JFTC hosts “Japan Fair Trade Commission for One Day”, which is an event to promote the PR activities and consultation of the Antimonopoly Act and the Subcontract Act. One day and one place! The events are held in cities that do not have central and local JFTC offices. Consumer seminar *Content (Example) *Lecture on the Antimonopoly Act for businesses *Lecture on the Subcontract Act for businesses *Consumer seminars *Lecture on the Antimonopoly Act for students *Booth for the consultation *Booth for the display One Day and One Place! Booth for display 16 Booth for the consultation

Lectures on the AMA No. of Seminars on the AMA held in FY2014 69 18 61 (Schools) (Persons) No. of Seminars on the AMA held in FY2014 Secondary school High school University Total No .of schools where seminars were held 69 18 61 148 No. of classes 229 85 62 376 No .of attendants 7,739 3,015 4,533 15,287 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2009 FY2010 FY2011 FY2008 FY2012 FY2013 FY2014 Secondary school High school University Total

Producing contents for general consumers and children Producing contents for general consumers and children concerning the Antimonopoly Act and posting on the JFTC website Content for general consumers (Japanese and also available in English) http://www.jftc.go.jp/en/ippan/index.html The JFTC explains the necessity of competition, an outline of the AMA and the role of the JFTC, addressing the following questions such as “Why can we buy a good quality product at a low price”, “If such a thing happens, will our lives be exposed to risk ”, “Let’s issue an Yellow card against a violation of rules by enterprises”, and “What kind of cases are examples to follow?”. 18

Producing contents for general consumers and children Content for children (Japanese and also available in English) http://www.jftc.go.jp/en/kids/index.html A mascot character called “Dokkin”, a boy named “Koh” and a girl named “Sei” play in an animation for children titled “Teach me, Dokkin”. It teaches the necessity of competition and the role of the JFTC by explaining anticompetitive conduct such as price-fixing cartels, private monopolization, resale price maintenance, and so on. In the animation, we use familiar examples such as “Why did the price of wine go up?”, “Why can’t we buy cards for games we want?”, and “Why is a price of a certain brand name handbag so high?” 19

Accountability and Communication in the Investigative Process - ICN Guidance on Investigative Process and the JFTC’s Efforts

ICN Guidance on Investigation Process (2015) Promote procedural fairness ICN Guidance on Investigation Process (2015) Fair and effective investigative process is essential to sound competition law enforcement. →Keeping legitimacy and public confidence Effective agency investigative tools Transparency Engagement during an investigation Protection of confidential information 21 21

Current Investigation Procedure of the JFTC Flowchart of the Investigation Procedures Current Investigation Procedure of the JFTC Cease and desist order Detection by JFTC Report from Public Submission base on Leniency Program Request by SMEs Agency Administrative investigation Hearing procedure at the JFTC Advance Notification Appeal Procedure at Tokyo District Court Surcharge payment order Compulsory investigation for criminal cases Criminal proceedings by the Public prosecutor Criminal accusation 22

ICN Guidance on Investigative Process Transparency and engagement during an investigation ICN Guidance on Investigative Process 2. Transparency during an investigation To the extent that it does not undermine the effectiveness of an investigation, agencies should notify parties as soon as feasible that an investigation has been opened, and identify its legal basis, the conduct under investigation, and where possible, the expected timing of the investigation. Notification of alleged facts at the on-the-spot inspection The investigator shall, when carrying out an on-the-spot inspection, make available the document stating “Title of the case”, “Main points of the alleged fact violating the provision of the Act” and “Applicable provisions of the Act” (“Notification on Suspected Violation”) for the concerned persons (Article 20 of the Investigation Rules). Opportunity to object to the measures taken during the investigation is also provided. (Article 22 (1) of the Investigation Rules) 23 23

2. Transparency during an investigation Transparency and engagement during an investigation ICN Guidance on Investigative Process 2. Transparency during an investigation During an investigation, agencies should inform parties of the basic facts and nature of evidence gathered, as well as the agency’s theories of competitive harm. At key points in the investigation, agencies should provide the parties with updates of the investigation’s scope, status, and any significant developments, such as changes to the competition concerns notified to the parties. 3. Engagement during an investigation Agencies should provide parties under investigation with opportunities to discuss the investigation with the agency. State of play meetings While there is no formal rule encouraging or discouraging the communication between the JFTC staff and the party under investigation, following an on-the-spot inspection, the JFTC investigation staff frequently approach the parties concerned and their employees to conduct interviews and to explain the contents of the request for information as necessary. 24 24

ICN Guidance on Investigative Process Transparency and engagement during an investigation ICN Guidance on Investigative Process 3. Engagement during an investigation (Third Party Engagement) Agencies should provide interested third parties with the opportunity to submit views to the agency during an investigation, and where appropriate, the opportunity to meet or discuss their views with the agency. The concerned parties (both targets of the investigation and third parties) or their designated lawyers may request the meetings with the JFTC, present their views and relevant materials/evidence to the JFTC for its consideration. 25 25

ICN Guidance on Investigative Process Transparency and engagement during an investigation ICN Guidance on Investigative Process 2. Transparency during an investigation After formal allegations of competition violations and presentation of legal arguments are made, parties should be provided with access to the evidence relied upon as the basis for the agency’s allegations and an effective opportunity to respond. Engagement during an investigation Parties under investigation should be given the opportunity to exercise their rights of defense and respond to agency concerns and evidence. Parties should be permitted to express views, present factual, legal, and economic evidence to the agency and make substantive submissions during the investigation. An agency’s communication of competitive concerns should be made in time for the parties to have an opportunity to respond to the concerns. New hearing of opinion procedure (since April 2015) 26 26

New Hearing of Opinions Procedure New procedure Current procedure Investigation by JFTC Investigation by JFTC Notification by JFTC (expected content of order, etc.) Notification by JFTC (expected content of order, etc.) procedures prior to final administrative order Procedures prior to final administrative order Procedures for hearing of opinion (presided over by an officer designated by JFTC) Introduction of procedures prior to issuing final orders Introduction of the procedures for hearing presided over by an officer designated by JFTC ○ JFTC Explanation (expected content of order, fact-finding, evidence, etc.） Explanation by Investigators (expected content of order, fact finding, evidence, etc.) Opportunity for recipients to express opinions and offer evidence questions from recipient Presentation of opinions (oral/written) and offer of evidence by recipient Commission meeting Commission meeting Cease and desist order/ Surcharge payment order Cease and desist order/ surcharge payment order Appeal procedures Introduction of trial at the District Court Court JFTC Hearing procedure for administrative appeal Appeal procedures Tokyo District Court Appeal procedures The court Tokyo High Court Only Tokyo District Court has jurisdiction over the appeal suit pertaining to the cease and desist order/surcharge payment order as the court of first instance (ensuring expertise in the court). ○ Tokyo High Court Supreme Court Supreme Court Abolition of the substantial evidence rule and restriction on offering new evidence ○

Notification of the Hearing of Opinions Engagement During an Investigation Flowchart of the Hearing of Opinion Procedure (introduced from April 2015) Notification of the Hearing of Opinions 【Article 50 of the AMA, Art 9 of the Rules of the Hearing of Opinions (hereinafter referred to “Rules”)】 Major items to be notified: (1)Expected content of the Cease and Desist Order, (2)Facts found by the JFTC and the application of the laws and regulations, (3)Date and place of the hearing of opinions, (4)Titles of the evidence proving the facts found by the JFTC From 2Weeks to 1 Month Notification of the name of the Staff Member Presiding Over Hearing of Opinions (Art. 14 of the Rules) Inspection and copying of evidence (Art. 52 of the AMA, Art.12 and 13 of the Rules) Submission of Written Materials, etc. Prior to Date of Hearing (Art. 16 of the Rules) First date of hearing 【Art. 54 of the AMA】 Explanation by the investigator on the content of the draft cease and desist order and major evidence Questions from the party with the permission of the staff member presiding over hearing of opinions Oral Statements and submission of documents by the party ※If considered necessary to continue by the staff member presiding over hearing of opinions From 2Weeks To 1 Month Notification of Preparation of Record of Hearing of Opinions (Art. 58 of the AMA, Art. 21 of the Rules) Inspection of the Record of Hearing of Opinions (Art. 58 of the AMA, Art.22 of the Rules) Submission of Written Materials, etc. Prior to Date of Hearing (Art. 16 of the Rules) Second date of hearing (final） 【Art. 54 of the AMA】 Hearing of Opinions from the party, submission of evidence, etc. Notice of Preparation of Record / Report of Hearing of Opinions【Art. 58 of the AMA, Art. 21 of the Rules】 Inspection of Record / Report of Hearing of Opinions【Art. 58 of the AMA , Art. 22 of the Rules】 Cease and Desist Order 【Art. 60 of the AMA】 Resolution of the cease and resist order after careful consideration of the contents of the record / report of the hearing of opinions

Discussion on Investigation Procedures of the JFTC The Advisory Panel on Administrative Investigation Procedure under the AMA was established at the Cabinet Office in 2014 and compiled a report in December 2014. Topics for Discussion ○ Issues related to On-the-Spot Inspection ○ Attorney-Client Privilege ○ Issues related to Deposition, etc. The JFTC to draw up and make public guidelines, etc. regarding standard administrative investigation procedures for the JFTC’s investigation on alleged antitrust cases. “Guidelines on Administrative Investigation Procedures under the Antimonopoly Act” (published on December 25, 2015) In line with the formulation and publication of the Guidelines, the JFTC published reference material for companies and other parties about, the standard steps etc. in implementing the JFTC’s administrative investigation procedures for alleged antitrust cases. 29 29

(JFTC mascot character for kids) Thank you very much !! Please visit our English website at: 　　　　　　http://www.jftc.go.jp/en Disclaimer: the views expressed in this presentation is solely those of the speaker and do not necessarily reflect those of the agency that the speaker belongs to. All errors in this presentation are mine. 　　　Dokkin (JFTC mascot character for kids)