Non-Discretionary Administrative Sanctions under the AMA in Japan Takujiro Kono Senior Investigator, Investigation Bureau Japan Fair Trade Commission ICN CWG SG1 3rd call series Tuesday, 10 February

Public Prosecutors Office Dual Sanctioning System under the AMA Hardcore Cartel Administrative procedure or Criminal procedure ? ･Indirect compulsory investigation ･Aiming at administrative measures(cease and desist order & surcharge payment order) Criminal procedure ･Compulsory investigation with court permit ･Aiming at criminal accusation <Policy Statement> The JFTC will actively accuse･･･ ･　Vicious and serious cases which have a significant adverse impact on the public ･　Repeat offenders But the first leniency applicant　would not be accused. Worthy of Accusation After criminal Accusation Criminal　 Accusation Administrative Measures ・Surcharge payment order ・Cease and desist order -PPO can’t indict without JFTC’s accusation -Consultation between JFTC and PPO ・Criminal penalty Companies Indictment Public Prosecutors Office (PPO) Individuals

Characteristics of Non-Discretionary Administrative Sanctions Non-Discretionary Administrative Surcharges (by JFTC) Criminal Fines (by Court) JFTC’s Surcharge Payment Order (to companies only) JFTC MUST order: except for (1) The 1st leniency applicant, (2)Small amounts (3)Statute of limitation (5 years). Automatically calculated: AFFECTED SALES(*) during the period multiplied by FIXED RATE(**) (*) Affected Sales must be calculated exactly (Accumulation of historical sales data during the period of Max 3 years) (**) Basic Rate:10% Recidivism, Leading Role:15% Early termination:8% Retail Business:3% Wholesale Business:2%, etc. (***) Half of criminal fines is deducted Court’s Criminal Judgment (to companies and individuals) DISCRETIONARY FACTORS: Accusation Phase(JFTC’s discretion under policy statement (see previous page)) Indictment Phase(PPO’s discretion) Judgment Phase(the court’s discretion(*)) (*)Elements considered in past judgments Size of the company Organized violation Impact on the public Leading role Amount of unfair/private profit Degree of cooperation with investigation Social sanction Reason for involvement in violation Statement of self-review Having a criminal record etc.

Administrative Cease and Desist Order (by JFTC) JFTC’s Cease and Desist Order (to companies only) JFTC MAY order to Cease and desist the conducts, and/or Take any OTHER MEASURES NECESSARY to eliminate cartel DISCRETIONARY FACTORS: Whether or not to order To which companies Elements considered in past administrative cases (JFTC can order to past violation, if necessary, within 5 years of statute of limitations.) Long history of cartel offence Cartel ended not because of their own decision but because merely of being investigated by competition authorities Other elements concerning possibility of repeating the violation Contents of order For Example, Make employees thoroughly informed about guidelines on compliance with the AMA Resolution of Board of Directors on confirmation that cartel had been terminated Personnel changes (Specific individuals transferred from certain sales functions) etc.

Comparison of Administrative Surcharges and Criminal Fines in Real Cases Administrative Surcharges (approx.) Criminal Penalties (fines and imprisonment) Industrial and Automotive Bearings (Cartel: 2012) Two companies: 509 million to 7.2 billion in Japanese Yen Corporate fines: JPY 180 million to 380 million Imprisonments: 1year to 1year and 2months (suspended sentence) *as of Oct. 2014, one company and two individuals in trial Galvanized Steel Sheets (Cartel: 2009) Three companies: JPY 3.7 billion to 6.3 billion JPY 160 million to 180 million Imprisonments: 10months to 1year (suspended sentence) Steel Bridge Construction (Bid Rigging: 2006-2008) 44 companies: JPY 4 million to 854 million JPY 160 million to 640 million Imprisonments: 1year to 2year and 6months (suspended sentence) Since surcharges are calculated automatically, the amount of surcharges can be far larger than that of fines.

No Discretion in JFTC Surcharge Q: Is it possible to abstain from Imposing surcharges? A: JFTC has no discretion to abstain from impose surcharges. Q: What is the basis for the calculation? Are indirect sales counted/considered to prevent under-deterrence? A: Surcharges are calculated from the cartelized sales amounts during the period of violation (Max 3 years) multiplied by calculation rates. Indirect sales are out of the basis of the calculation. Q: Is it possible to reduce surcharges, depending on the degree of cooperation? A: JFTC has no discretion to take into account the degree of cooperation of company in setting surcharges. Under the leniency program, fixed rate reduction is available for leniency applicants who meet the conditions of the program; but JFTC has no discretion to evaluate the degree of cooperation and the value of evidence submitted in the leniency program. Q: Is it possible to reduce surcharges, depending on sanctions already imposed by another agency to prevent over-deterrence? A: JFTC is not allowed to take into account sanctions imposed by another agency, except for corporate criminal fines imposed by domestic court decisions.

Thank you for your attention !