Detecting Cartels and Gathering Information for Investigations Hiroshi Nakazato Director of Information Analysis Office Investigation Bureau Japan Fair Trade Commission 2015 ICN Annual Conference, Sydney Cartel Working Group, Breakout Session 2 April 30, 2015

1. Complaint System 2. Protection for Complainants 3. Proactive Methods of Detecting Cartels 2

1. Complaint System 2. Protection for Complainants 3. Proactive Methods of Detecting Cartels 3

Good practice from Anti-Cartel Enforcement Manual Ⅰ Reactive Methods of Detecting Cartels “It is good practice for agencies to have a formal complaint system in place for receiving, handling and responding to complaints.” (Chapter4, Cartel Case Initiation p9) 4

Investigation Proceedings - Report of Violation by the Public - Detection of Violation by the JFTC’s own discretion - Leniency application - Dawn Raids (On-the-spot Inspections) - Orders to Report - Interviews of Suspects Investigation Decision of Measures - Cease and Desist Order - Surcharge Payment Order - Criminal Accusation 5 Beginning of Cases

The JFTC, upon receipt of such a report, shall make necessary investigations with respect to the case. (Sec.45(2)) Generally, the JFTC conducts supplementary research in these cases. Report of Violation by the Public 6

Legal requirements for filing a complaint do not exist. (anonymous oral reporting is also possible) Where any submitted report specifies facts in writing in accordance with the JFTC’s Rules, and when the JFTC decides to take, or not to take, appropriate measures with respect to the case referred to in the report, the JFTC shall promptly notify that effect to the person who made the report. (Sec.45(3) ) Next Slide: Requirements of the Rules Form of complaints 7

Sec.33(1) of Rules on Investigations of JFTC: A notice shall be given, where a report was made by a document stating the matters indicated as follows: (i) Name or title and address of a reporting person (ii) Name or title of a person who commits or has committed a violation (iii) Details of the activity, time, place and other facts of a violation 8

Number of Reports of Violation including Cartel Cases by the Public (Excluding Reports from Procurement Agencies) Number Of Reports Fiscal Year

1. Complaint System 2. Protection for Complainants 3. Proactive Methods of Detecting Cartels 10

11 Good practice from Anti-Cartel Enforcement Manual Ⅱ “Where possible, it may be necessary to protect the identity of a complainant throughout the lifetime of a case to avoid the possibility of reprisals ” (Chapter4, Cartel Case Initiation 3.2, p8)

Available Information from Complainants Competitor Employee Consumer Customer [Cartel Case] 1.Parties participating in the cartel agreement 2.Geographical region targeted by the price-fixing 3.Duration of implementation of the price-fixing [Bid-rigging Case] 1.Parties participating in the bid-rigging 2.Details of rules for selecting an expected bid winner 12

Keep Confidential and Anonymous The JFTC keeps all reports confidential, and treats the information in a full deliberate manner. Nevertheless, complainants often make reports anonymously. In order to share information and keep anonymity, the JFTC accepts complaints including the following tools: (1)Reporting by (2) Using the Electric Reporting System on the JFTC’s website 13

Confidentiality is guaranteed to Leniency Applicants The JFTC does not proactively disclose the identity of a leniency applicant or information concerning the applicant. However, in such cases where the leniency applicant request to disclose, the identity of them and the fact about the grant of leniency or reduction rate on surcharge, the JFTC will make them publish on the its own website. cf. general rules of tender system in Japan 14

Point of discussion In your agency, how is the identity of informants or whistleblowers protected from disclosure? Protected legally, or practically? If protected practically, what kinds of measures are taken concretely? In particular, under criminal procedures, how does your agency respond in cases where respondents require your agency to disclose information about informants or whistleblowers? 15

1. Complaint System 2. Protection for Complainants 3. Proactive Methods of Detecting Cartels 16

17 Good practice from Anti-Cartel Enforcement Manual Ⅲ ‐1 “It is good practice for agencies to use a variety of techniques and methods to detect cartels, including a mix of both reactive and proactive methods that will increase the opportunities for detecting cartels and help demonstrate a particular agency’s enforcement capacity.” (Chapter4, Cartel Case Initiation p7)

“It is good practice for agencies to develop good working relationships with … international counterparts and to have regular contact in order to promote cooperation and the sharing of information as far as permitted by applicable laws, treaties and/or cooperation agreements.” (Chapter4, Cartel Case Initiation p14) 18 Good practice from Anti-Cartel Enforcement Manual Ⅲ ‐2

Bilateral Antimonopoly Cooperation Agreement Canada (2005), EU (2003), USA (1999) Economic Partnership Agreements - EPA (competition chapter only) Australia (2014), Chile (2007), Vietnam (2008), Indonesia (2007), Thailand (2007), Singapore (2002)… MOU on Cooperation KFTC: Korea (2014), CADE: Brazil (2014), VCA: Vietnam (2013), DOJ: Philippines (2013) 19 Framework for International Cooperation (Japan)

Case against Marine Hose Manufacturers (2008) Case against Manufacturers of Cathode Ray Tubes for Televisions (2009) Case against Bearing Manufacturers (2013) Case against International Ocean Shipping Companies (2014) 20 International Cartel Case ( Japan )

Proposal for Establishing the ICN Framework for Promotion of Sharing Non-Confidential Information for Cartel Enforcement (1) 21 -Participating agencies register liaison officer(s) -Case team of agencies requests other participating agencies through liaison officer to provide information on specific cartel cases -Requested agency provides the requested information at its discretion

Proposal for Establishing the ICN Framework for Promotion of Sharing Non-Confidential Information for Cartel Enforcement (2) Merits of the framework -Participating agencies can seek information about investigation of other agencies earlier and more easily. -Younger and smaller agencies may receive support from experienced agencies which provide information about actual cases and experience actual enforcement cooperation. Expected effect Through the framework, CWG could foster “Pick up the phone relationship” for improved cooperation for effective cartel enforcement. 22

23 Point of discussion What kind of merits would international cooperation bring to your agency? How can we strengthen the international cooperation relationship? How can ICN help its member agencies to enhance their capacity to detect cartels?

Report of violation by the public and detection of violation by agency’s own authority are The methods of detecting cartels that will continue to work complementary with leniency programs. Especially, those methods could facilitate employees and customers to provide information, which leniency programs could not cover. 2. very important tools of detecting cartels for agencies with little experience. 24 Conclusion

If you have any questions or comments, please contact me via at