Japan: Competition Litigation Comparative Guide

1 Legal framework

1.1 Which laws regulate competition in your jurisdiction?

• The Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (Act No 54 of 1947, as amended) (‘Anti-monopoly Act'); and
• Supplemental laws relating to competition, including:
• • the Act against Delay in Payment of Subcontract Proceeds, Etc to Subcontractors (Act No 120 of 1956, as amended); and
  • the Act against Unjustifiable Premiums and Misleading Representations (Act No 134 of 1962, as amended).

The Anti-monopoly Act aims to achieve its goals by prohibiting:

• unreasonable restraint of trade;
• private monopolisation;
• unfair trade practices; and
• business combinations whose effects may be substantially to restrain competition.

The Japan Fair Trade Commission (JFTC), which is the sole governmental agency in charge of implementing and enforcing the Anti-monopoly Act, publishes various guidelines from time to time to clarify the interpretation and application of the act.

1.2 Which authorities are responsible for enforcing the competition legislation? What is their general approach to enforcement?

The JFTC is the sole governmental authority in charge of implementing and enforcing the Anti-monopoly Act in Japan.

The JFTC primarily sanctions cases of unreasonable restraint of trade and has been sanctioning an increasing number of price cartels (as opposed to instances of bid rigging, which were generally more prevalent in the past). It follows a basic policy of conducting quick and effective case investigations, and actively and stringently pursues price cartels, bid-rigging and price-fixing cases that have a significant social impact, as well as abuse of superior bargaining positions and dumping cases which primarily affect small and medium-sized enterprises.

In merger filing cases, the JFTC is receptive to informal discussions (or pre-filing consultations) with potential notifying parties on how to make entries on the notification form, upon request or upon the voluntary submission of relevant materials prior to formal filings.

2 Private claims

2.1 What types of private claim may be brought for breach of competition law in your jurisdiction?

In Japan, private claims that may be brought for breach of competition law are, in principle, claims for compensation of damages arising from breach of competition law.

Moreover, pursuant to Article 24 of the Anti-monopoly Act, which was introduced by a 2001 amendment, a private plaintiff may, in addition to seeking damages, seek an injunction against certain unfair trade practices to demand the suspension or prevention of such practices. The Japan Fair Trade Commission (JFTC) has designated under the authority of the Anti-monopoly Act certain types of unfair trade practices, such as:

• discriminatory consideration;
• unjust low-price sales;
• tie-in sales;
• restriction of resale price;
• refusal to trade;
• trading on restrictive terms (including restriction of sales territories); and
• discriminatory treatment on trade terms.

Of these, private plaintiffs most commonly establish injunctions based on:

• discriminatory consideration;
• unjust low-price sales; and
• restriction of sales territories.

Furthermore, where a director of a company allows the company to engage in unreasonable restraint of trade or overlooks such anti-competitive practices, the Supreme Court has ruled that the shareholders of the company may file a derivative action against the director claiming damage incurred by the company.

2.2 What is the legal basis for bringing a claim for breach of competition law?

As mentioned in question 2.1, claims that may be brought by private parties for breach of competition law are primarily damages claims, which are governed by the Civil Code (Act No 89 of 1896, as amended).

A victim of anti-competitive acts can establish a damages claim based on general tort theory under Article 709 of the Civil Code, which states that anyone that violates a third party's right must compensate for damage resulting from such wrongdoing. This is interpreted to cover anti-competitive acts.

In addition, Article 703 of the Civil Code provides that a victim of anti-competitive acts is entitled to claim for unjust enrichment that the defendant gained through its anti-competitive acts.

On the other hand, the Anti-monopoly Act provides a supplementary way for private plaintiffs to bring anti-competitive claims. Specifically, Article 25 of the Anti-monopoly Act provides that parties that have monopolised or engaged in a cartel or other unfair trade practices are liable to compensate those injured by those practices (‘Article 25 claim'). Notably, although an Article 25 claim can only be made when the defendant is subject to a final and binding JFTC order, such claim comes with the benefit of a relaxed burden of proof on the part of the plaintiff (ie, intention or negligence on the part of the defendant need not be established), as further explained in question 6.3. Further, Article 24 of the Anti-monopoly Act enables a private plaintiff to seek injunction against certain unfair trade practices, as mentioned in question 2.1.

3 Parties

3.1 Who has standing to bring a claim for breach of competition law?

Companies or individuals that have directly or indirectly suffered damage due to breach of competition law may file a civil claim before a Japanese court, provided that such claim has the requisite nexus with Japan. The nexus required to bring a private action in Japan is that the anti-competitive act or agreement by the defendant has had a certain impact on the Japanese market.

3.2 Can a claim for breach of competition law be brought against parties outside the jurisdiction?

For private competition claims, in principle, the Code of Civil Procedure (Act No 109 of 1996, as amended) stipulates that a tort action may be filed with a court that has jurisdiction over the place where the tort took place (Article 5, paragraph 9). This suggests that a private claim for breach of competition law may be brought against parties outside Japan before a Japanese court, as long as the Japanese court has jurisdiction over the place where the foreign parties' anti-competitive acts took place.

On the other hand, the Japan Fair Trade Commission's (JFTC) jurisdiction over parties outside Japan was confirmed in a Japanese Supreme Court decision of 12 December 2017 concerning a price cartel case involving manufacturers/distributors of television cathode-ray tubes. The Supreme Court reasoned that, as the purposes of the Anti-monopoly Act include securing the interests of general consumers in Japan by promoting fair and free competition and facilitating the democratic and sound development of the national economy, it follows that where a cartel formed outside Japan infringes Japan's economic order of free market and competition, the JFTC has the authority to impose a cease and desist order or surcharge payment order on such cartel based on the Anti-monopoly Act. This means that a private plaintiff may bring an Article 25 claim to the extent that the JFTC issues a final and binding order permitted under this Supreme Court decision.

3.3 Can a claim for breach of competition law be brought against individuals, or only companies?

A claim for breach of competition law can be brought against both individuals and companies. As per question 2.1, shareholders of a company can also bring a damages claim against the management of the company by way of a derivative action.

4 Collective actions

4.1 Is it possible to bring a collective action for breach of competition law in your jurisdiction? If so, what is the applicable regime?

In Japan, collective actions or class actions are not available, including for claims for breach of competition law.

However, a group of plaintiffs can apply for joinder of claims or representative action under the Code of Civil Procedure, which follows the same procedure as in normal litigation. The system of joinder of claims in Japan is similar to that in many other countries; whereas a representative action is a system whereby a small number of representatives are explicitly designated by a larger number of parties to represent them in a proceeding.

On the other hand, in limited circumstances, qualified consumer organisations are authorised by the Act on Special Measures Concerning Civil Court Proceedings for the Collective Redress for Property Damage Incurred by Consumers (Act No 96 of 2013, as amended) to file group actions on behalf of individual consumers seeking compensation for damage under consumer contracts. Such group actions differ from the US class action and collective action system in that:

• the Japanese group action is only available to consumer organisations qualified by the government as plaintiffs (ie, individuals cannot be plaintiffs);
• the subject of the claims is limited to those arising from consumer contracts;
• it is an opt-in proceeding; and
• the judge may only decide on the company's liability and each consumer must file a separate proceeding to establish the amount of damages.

We are not aware of any published case in which such a group action has been utilised for private competition claims.

4.2 Do collective actions proceed on an ‘opt-in' or an ‘opt-out' basis?

As mentioned in question 4.1, collective actions are not available in Japan.

4.3 Do collective actions require certification? If so, what requirements must be met to obtain certification?

As mentioned in question 4.1, collective actions are not available in Japan.

5 Forum

5.1 In what forum(s) are claims for breach of competition law heard in your jurisdiction?

In general, a damages claim based on Articles 709 and 703 of the Civil Code should be brought in a competent district court pursuant to the general rules of jurisdiction under the Code of Civil Procedure (see question 6.5 for further explanations of these rules). Some exceptions to the general rules include the following:

• A summary court has jurisdiction over claims in which the amount of the subject matter of litigation does not exceed JPY 1.4 million (Article 24, Item 1 and Article 33, paragraph 1 and Item 1 of the Court Act (Act No 59 of 1947, as amended)); and
• For shareholder derivative actions, the district court with jurisdiction over the location of the head office of the company has exclusive jurisdiction (Article 848 of the Companies Act (Act No 86 of 2005, as amended)).

With regard to an Article 25 claim, the Tokyo District Court has exclusive jurisdiction; whereas an action for injunction under Article 24 of the Anti-monopoly Act can be filed with a local district court in a place where a high court is located (ie, Tokyo, Osaka, Nagoya, Hiroshima, Fukuoka, Sendai, Sapporo and Takamatsu).

6 Bringing a claim

6.1 What is the limitation period for claims for breach of competition law in your jurisdiction?

For claims brought under Articles 709 of the Civil Code, the statute of limitations is:

• three years from the time when the aggrieved party became aware of the damage and the identity of the defendant(s); or
• 20 years from the time of the tortious act, whichever is earlier (Article 724 of the Civil Code).

In practice, the damage and the defendant(s) usually become known to the aggrieved party when the relevant Japan Fair Trade Commission (JFTC) order is issued. On the other hand, for unjust enrichment claims brought under Article 703 of the Civil Code, the statute of limitations is:

• five years from the date on which the plaintiff became aware of the availability of the claim; or
• 10 years from the date on which the claim was objectively available, whichever is earlier.

For an Article 25 claim – which can only be brought after the relevant JFTC order becomes final and binding – the statute of limitations is three years from the date on which the relevant JFTC order becomes final and binding (Article 26(2) of the Anti-monopoly Act). A JFTC order becomes final and binding if:

• the violating enterprise(s) does not challenge it; or
• where such order is challenged in court, the court judgment over such appeal has become final.

The statute of limitations for both claims brought under Articles 709 of the Civil Code and Article 25 claims is tolled upon:

• the filing of a complaint with a court;
• the filing of an attachment or provisional remedies; or
• acknowledgement of the claim by the obligor(s).

6.2 What are the formal requirements for bringing a claim for breach of competition law?

The formal requirements to bring a claim for breach of competition law principally follow the requirements for bringing a general tort claim (see question 6.3), save that an Article 25 claim requires that the relevant JFTC order have become final and binding.

6.3 What are the procedural and substantive requirements for bringing a claim for breach of competition law?

There are no special requirements procedure-wise for bringing a damages claim due to breach of competition law compared to a general tort claim. As mentioned in question 6.1, however, an Article 25 claim may only be brought after the relevant JFTC order has become final and binding (Articles 25(1) and 26(1) of the Anti-monopoly Act).

As to substantive requirements, in order to claim damage based on Article 709 of the Civil Code, the plaintiff must prove that the alleged anti-competitive acts are ‘highly probable' by establishing:

• an infringement of its rights;
• damage;
• causation; and
• wilful misconduct or negligence.

In a derivative action, the wilful misconduct or negligence of the director must be proven to establish the director's liability. Further, a plaintiff claiming unjust enrichment under Article 703 of the Civil Code must prove that:

• the defendant obtained profits to the detriment of the plaintiff; and
• the transfer of profits from the plaintiff to the defendant had no legal cause.

When establishing an Article 25 claim, the plaintiff need not prove wilful misconduct or negligence, as this should be covered in the relevant JFTC order.

For a petition for injunction under Article 24 of the Anti-monopoly Act, the plaintiff must establish:

• the victim whose rights have been infringed upon or may be infringed upon by unfair trade practices;
• the existence of unfair trade practices;
• significant damage caused or a risk of the violation; and
• a substantial causal relationship between the violation and the aforementioned significant damage.

6.4 What are the implications if a public enforcement action in relation to the same behaviour is pending? Can a claim still be brought?

Claims based on Article 709 of the Civil Code can be brought and can proceed while a public enforcement action is pending. There is no statutory provision which enables the regulators to stay such claims. Even while the public enforcement action is spending, the court may issue a final judgment if it reaches the stage to do so. However, in practice, it is possible that private litigation proceedings may be stayed at the court's discretion if the court becomes cautious about a potential violation of the Anti-monopoly Act by the defendant(s).

In contrast, Article 25 claims may only be brought once the relevant JFTC order has become final and binding (as discussed in question 6.3). Thus, unless and until the relevant JFTC order becomes final and binding, no Article 25 claims may be brought.

6.5 How is jurisdiction over the claim determined?

Please see question 5.1 on the applicable forum for the competition claim.

Pursuant to the general rules of jurisdiction under the Code of Civil Procedure, a ‘competent district court' refers to the district court with jurisdiction over:

• the principal office or business office of a defendant company; or
• the location where the tort was committed or where the damage occurred (Article 5 of the Code of Civil Procedure).

However, shareholder derivative actions are subject to the exclusive jurisdiction of the district court with jurisdiction over the location of the head office of the company. Whereas the Tokyo District Court has exclusive jurisdiction over an Article 25 claim, an action for injunction under Article 24 of the Anti-monopoly Act may be filed with a local district court at a place where a high court is located (ie, Tokyo, Osaka, Nagoya, Hiroshima, Fukuoka, Sendai, Sapporo and Takamatsu).

6.6 How is the applicable law determined?

For claims based on general tort theory, in principle, the applicable law will be that of the place where the result of the infringement of the Anti-monopoly Act occurred; while the law of the place where the infringement was committed will govern whether the occurrence of such infringement is ordinarily unforeseeable (Article 17 of the Act on General Rules for Application of Laws (Act No 78 of 2006, as amended)). As an exception, if it is clear that the claim is closely connected to another place, the law of such other place will apply to the claim (Article 20 of the Act on General Rules for Application of Laws).

6.7 Under what circumstances must security for costs be provided?

There is no requirement for security for costs in general for tort claims in Japan. However, if the plaintiff is not domiciled in Japan or does not have a business office or other office in Japan, the court may issue a ruling ordering the plaintiff to provide security for court costs upon a petition of the defendant (Article 75 of the Code of Civil Procedure).

6.8 Are interim remedies available in competition litigation? If so, how are they obtained?

As mentioned in questions 2.1 and 2.2, plaintiffs in competition litigation can seek injunctive relief from a civil court (Article 24 of the Anti-monopoly Act). However, since material damages must be proven, there have been few cases in which injunctive relief has actually been granted. There are no other interim remedies such as the deposit of the claim amount or a preliminary payment to the plaintiff in competition litigation.

7 Disclosure and privilege

7.1 What rules apply to disclosure in your jurisdiction? Do any exceptions apply?

There is no US-style extensive disclosure in Japan.

Under the Japanese legal system, a plaintiff or defendant may request the court to order the other party or a third party to produce certain documents (Articles 132-4 and 220 of the Code of Civil Procedure). If the court so orders, the party must comply and produce the documents. Although a disclosure order is utilised in certain cases, its scope is limited pursuant to Article 221 of the Code of Civil Procedure, which requires the petitioner for such document production to clearly identify:

• the title and substance of the document(s);
• the party in possession of the document(s);
• the facts to be proven by the document(s); and
• the grounds for the obligation to produce such document(s).

Article 80 of the Anti-monopoly Act, introduced by amendments to the act made in January 2010, states that a plaintiff seeking an injunction against anti-competitive acts under Article 24 of the Anti-monopoly Act may request that the court order the defendant to produce relevant evidence that assists in establishing the illegal activities.

Apart from judicial proceedings, it may also be possible under certain conditions for a private plaintiff to make a disclosure request relating to:

• civil case records stored by the relevant court or administrative office; and
• administrative documents used for investigations and possessed by the Japan Fair Trade Commission (JFTC).

7.2 What rules on third-party disclosure apply in your jurisdiction?

A third party may inspect and review the case record of a competition litigation at the court by filing a request with the court clerk (Article 91(1) of the Code of Civil Procedure). If the case record contains confidential information, such as trade secrets of a party to the litigation, that party may request the court to issue an order stating that only the parties to the litigation may request inspection or make copies of parts of the case record containing those trade secrets (Article 92(1)(ii) of the Code of Civil Procedure). If the court issues such an order, the confidential information will not be disclosed to third parties.

7.3 What rules on privilege apply in your jurisdiction?

There are no generally applicable rules in Japan regarding the protection of attorney-client privilege or attorney work product. Although a 2019 amendment to the Anti-monopoly Act introduced the protection of attorney-client privilege with respect to the JFTC's administrative investigation procedures for unreasonable restraint of trade, this does not apply to private antitrust claims before the Japanese civil courts.

In practice, however, in civil litigation, legal counsel (including in-house counsel) may refuse to testify before the court about confidential information or to submit a document describing facts learned while performing their job duties.

The amended Anti-monopoly Act, which came into force in December 2020, introduced both a new leniency system and new provisions on JFTC investigations, providing that an accused enterprise may be entitled to limited attorney-client privilege in proceedings regarding unreasonable restraint of trade for the purpose of establishing a more efficient and flexible surcharge system. Under the new rules, an accused enterprise can request the JFTC to return certain types of attorney-client communications that are seized during a dawn raid; but the accused enterprise must specifically insist that the relevant documents not be subject to the submission order.

Communications with in-house counsel will also be entitled to the same limited attorney-client privilege, as long as it is clear that the in-house counsel conducts legal affairs independently from, and beyond the control of, his or her employer after the violation of the Anti-monopoly Act is uncovered.

8 Evidence

8.1 What types of evidence are permissible in your jurisdiction? Is expert evidence accepted?

In civil actions in Japan, in general, all forms of evidence – including documentary and testimonial evidence – are admissible. There are limited exceptions, such as evidence obtained through illegal activity, depending on the severity of the illegality.

Expert evidence – including expert reports and expert testimony – is admissible in competition litigation in Japan. In particular, in cases relating to a price-fixing cartel or bid rigging, parties will sometimes submit explanatory reports from privately retained experts to prove the amount of damage suffered.

8.2 What is the applicable standard of proof?

As with other types of civil litigation, including litigation based on tort claims, the party with the burden of proof must prove that the alleged facts are ‘highly probable' in competition damages claims.

8.3 On whom does the burden of proof rest?

As with tort cases in Japan in general, the plaintiff alleging the defendant's breach of competition law bears the burden of proof. For unjust enrichment claims, the burden of proof of damage is shifted to the defendant.

8.4 What defences are typically available in competition litigation?

In theory, a defendant in a private competition litigation may argue the following:

• There were no violations of the competition law;
• There was no wilful misconduct or negligence on the part of the defendant in carrying out any anti-competitive acts;
• Even if there were anti-competitive acts, there was no damage arising from such acts; and/or
• The causal relationship between the defendant's actions and the plaintiff's damage is insufficient.

In practice, however, ‘no damage' is a typical defence since, when there is a final and binding order of the Japan Fair Trade Commission concerning the same anti-competitive acts alleged in the private litigation, the first and second defences (above will be rendered unavailable. Please also see question 10.5.

While the concept of a passing-on defence per se has not been introduced into Japanese law, the passing-on value will theoretically be taken into account when calculating the amount of damages suffered by direct purchasers. If a defendant (ie, a cartelist) is successful in proving that some or all of the overcharges were passed on to downstream companies or consumers, the defendant may argue that the amount of damages should be reduced accordingly.

In addition, in cases of bid rigging at the initiative of public officers, the court allows the amount of damages to be reduced by taking into account the negligence of the public officers (Article 722 of the Civil Code).

9 Settlement

9.1 Can the proceedings be discontinued without a full trial? If so, how; and what are the implications?

In Japan, a plaintiff may withdraw a case during the course of the trial; and if the plaintiff chooses to do so, the case will be deemed to have never been brought and the plaintiff is principally not prohibited from bringing the same action again in the future (Article 262, paragraph 1 of the Code of Civil Procedure).

The Japanese courts will review whether a claim satisfies the procedural requirements provided under the law (including the standing of the plaintiff and the jurisdiction of the court). If a court finds any procedural issues, the plaintiff may cure such defect. If the plaintiff fails to do so, the court may enter a judgment to dismiss the action without prejudice (Article 140 of the Code of Civil Procedure). Also, the courts may issue a default judgment if the defendant fails to appear (Article 159, paragraph 3 and Article 244 of the Code of Civil Procedure).

In addition, the parties to a case can settle the case within or outside the court proceedings at any time during the proceedings. The courts also often explore the possibility of settlement between the parties at various stages of a trial, especially before the stage of witness examination. A judicial settlement has the same effect as a judgment that has become final and binding; it is not possible, in principle, to appeal a settlement that has become final and binding or to litigate again a dispute that has been resolved by settlement.

9.2 In the case of collective actions, is collective settlement possible? If so, how; and what are the implications?

As mentioned in question 4.1, collective actions are not available in Japan.

10 Court proceedings

10.1 Are court proceedings in your jurisdiction public or private? If the former, are any options available to the parties to keep the proceedings or related information confidential?

Generally, court proceedings in Japan are conducted publicly and any pleadings or evidence submitted at the proceeding will be available for public perusal, save in exceptional cases where the court unanimously decides publicity to be detrimental to public order or morals. In practice, however, civil courts may frequently introduce preparatory proceedings to clarify and ascertain the material issues and evidence of the case and such proceedings are generally closed to the public.

To protect confidential information during court proceedings, as mentioned in question 7.2, a court can prevent a third party from reading or copying sections of litigation records that contain trade secrets, private information or confidential information if a party presents prima facie evidence that it is entitled to such protection (Article 92 of the Code of Civil Procedure).

To protect trade secrets, the court may also order the parties (including their attorneys and employees):

• not to use the trade secrets of the counterparty provided in the course of the court procedures for purposes other than the litigation; and
• not to disclose the trade secrets to a third party (Article 81 of the Anti-monopoly Act).

Criminal sanctions may be imposed for a violation of the duty of confidentiality.

10.2 How do the court proceedings unfold in your jurisdiction?

For claims brought based on general tort theory, the plaintiff files an action by submitting a written complaint to the court and, in response, the named defendant submits a written answer.

The court designates dates for oral proceedings during which the parties exchange their arguments with written submissions and offer relevant evidence. As stated in question 10.1, the court may set preparatory proceedings to identify the material issues and related documents. The court has wide discretion regarding the types of evidence to be admitted and assessment of the admitted evidence, and conducts fact-finding entirely at its discretion (Article 247 of the Code of Civil Procedure).

Where legal and factual issues have been fully identified, the court conducts an examination of witnesses. The court also has discretion to decide the case without the examination of witnesses.

Unlike trials in the United States, there is no discovery or jury trial system and therefore the judge renders the final decision in a case.

10.3 What is the typical timeframe for proceedings?

Actions brought in a district court typically take one to two years to resolve, through either a definitive judgment or settlement. Actions appealed to a high court typically take another six months to a year to resolve. Please also see question 12.1.

10.4 What rules apply to the joinder of third parties?

If more than one person has inflicted damage on others by their joint tortious acts, each will be jointly and severally liable for compensation for such damage (Article 719(1) of the Civil Code).

A defendant that has paid some or all of the damages to a plaintiff can seek indemnification from the co-defendants in or out of court. For the defendant to assert those claims, the amount paid by the defendant to a plaintiff must exceed the amount for which the defendant is liable. The claim for indemnification from the co-defendants will be brought in separate proceedings from the principal claim and is normally pursued after a judgment or settlement of the principal claim.

10.5 To what extent do the decisions of national or foreign competition authorities influence the court's decision?

In principle, a civil court is not legally bound by any decision of the Japan Fair Trade Commission (JFTC) regarding the misconduct of a defendant. However, in practice, if a JFTC order has become final and binding, it is generally considered that the findings in the JFTC order create a rebuttable presumption of a breach of competition law on the part of the defendant. It is generally difficult to overturn such presumption, although the court will examine other evidence and determine the existence of the breach based on its own findings.

In addition, where such a JFTC order exists, a plaintiff can make an Article 25 Claim in a related private litigation, in which the plaintiff need not prove the existence of wilful misconduct or negligence on the part of the defendant in respect of the relevant violation of the Anti-monopoly Act, given that such wilful misconduct or negligence will already have been determined in the relevant JFTC order. In such a case, pursuant to Article 84 of the Anti-monopoly Act, a court may refer to the JFTC order for the amount of damages incurred by the plaintiff due to the defendant's anti-competitive acts.

As a matter of practice, even decisions of foreign regulators could be taken into account by the Japanese court hearing the private competition case to some extent in determining whether the Anti-monopoly Act was violated – particularly where the facts and evidence are common to both the foreign case and the Japanese case.

11 Remedies

11.1 What remedies are available in competition litigation in your jurisdiction?

Monetary damages corresponding to the damage that the aggrieved party actually suffered are available remedies. It is also possible to seek an injunction under certain limited conditions (see question 6.8).

11.2 Are punitive damages awarded in your jurisdiction?

No.

11.3 Will the courts consider any fines imposed by the competition authorities in deciding on the quantum of damages? What other factors will it consider in this regard?

No.

The courts do not take into account the fines imposed by the Japan Fair Trade Commission (JFTC). Fines (ie, administrative surcharges) imposed by the JFTC are calculated as a percentage of the violator's turnover from the related product(s) during the relevant period. Fines paid by violators are contributed to the Ministry of Finance and are not distributed to private parties injured by the violator's anti-competitive acts.

In assessing the amount of damages in litigation concerning a cartel or bid rigging, the court typically determines the amount of damages by assessing the monetary difference between the actual price of the products or services and the anticipated price that would have existed were it not for the violation of the Anti-monopoly Act. Where the anticipated price cannot be ascertained, the judge has broad discretion in determining the amount based on Article 248 of the Code of Civil Procedure.

12 Appeals

12.1 Can the decision of the court or tribunal be appealed? If so, on what grounds and what is the process?

Actions based on general tort and unjust enrichment and actions seeking an injunction under Article 24 of the Anti-monopoly Act are brought in the competent district courts, whose decisions may be appealed to the relevant high courts and then to the Supreme Court.

On the other hand, an Article 25 claim brought before the Tokyo District Court may only be appealed to the Tokyo High Court, whose decision on appeal may be further appealed to the Supreme Court.

The grounds for an appeal to a high court are not explicitly set forth in the Code of Civil Procedure; but in practice, such grounds may be any error in the lower court's judgment in either finding of facts or application of law. An appeal to the Supreme Court can be made on the limited grounds that:

• the high court judgment violates the Constitution; or
• the proceedings in the lower court involved any of the material illegalities set forth in the Code of Civil Procedure.

13 Costs, fees and funding

13.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?

Besides attorneys' fees, there are certain court costs that may be incurred, including:

• filing fees;
• postal charges;
• transportation costs; and
• daily allowances for witnesses and fees for experts.

In principle, the winning party can recover its entire court costs from the losing party (Article 61 of the Code of Civil Procedure). The Japanese courts will not voluntarily order a losing party to pay the winning party's attorneys' fees, but plaintiffs can make a damages claim based on general tort theory taking into account a certain portion of their attorneys' fees as part of the damages.

13.2 Are contingency fees and similar arrangements permitted in your jurisdiction?

Contingency fees are permitted in Japan and most cases of private competition litigation are arranged on a contingency basis.

13.3 Is third-party funding permitted in your jurisdiction?

Yes, litigation in Japan may be funded by third parties.

14 Trends and predictions

14.1 How would you describe the current competition litigation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Private litigation for breach of competition law remains relatively limited in Japan and this trend is expected to continue. There are no proposed legislative reforms in the area of competition law.

A final and binding decision of the Japan Fair Trade Commission (JFTC) has a significant influence on a related competition claim in which a private plaintiff seeks damages due to a violation of competition law. In this context, as part of the recent amendments to the leniency system, a commitment procedure was effectively introduced into the Anti-monopoly Act in December 2018. This is similar to the commitment system under the EU regime and is aimed at promoting the voluntary resolution of suspected violations of the Anti-monopoly Act based on voluntary consent between the JFTC and the alleged enterprise.

If the JFTC decides to apply the commitment procedure for the resolution of certain alleged enterprises, it may not issue an infringement decision with respect to such undertaking. As at March 2022, the JFTC had applied the commitment procedure in 10 cases since its introduction in December 2018.

15 Tips and traps

15.1 What would be your recommendations to parties facing competition litigation in your jurisdiction and what potential pitfalls would you highlight?

For a company accused of, or being investigated for, serious violations of competition law, such as participation in a cartel, an application for the leniency programme may be a way to mitigate its exposure to potential fines. Since the implementation of the leniency programme in 2005, several amendments have been made to the programme. The latest amendment, which came into effect on 25 December 2020, provides for a reduction in administrative surcharges based on the timing and degree of cooperativeness with the Japan Fair Trade Commission (JFTC) in an investigation. The purpose of this amendment is to increase the incentives for companies to cooperate with JFTC investigations, helping the agency to efficiently and effectively uncover the facts of the cases and eliminate or deter violations of the Anti-monopoly Act.

Where a company applies for leniency to the JFTC, it must disclose to the JFTC information relating to the case. This information on the case may be disclosed to potential private plaintiffs, as mentioned in question 7.1. However, if a company voluntarily provides information to the JFTC in exchange for a reduction in surcharges, it may theoretically help private plaintiffs in a subsequent private litigation that try to prove the anti-competitive acts, thereby increasing the company's potential exposure to civil litigation.

Yuki Nishino contributed to this Guide.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.