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Leniency and Obtaining Evidence Hiroshi Nakazato Investigation Bureau

Leniency and Obtaining Evidence Hiroshi Nakazato Investigation Bureau Fair Trade Commission of Japan hiroshi_nakazato@jftc.go.jp April 6 th 2006 OECD-KOREA Regional Center for Competition. Introduction. Detection of Cartel Administrative Measures against Cartel.

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Leniency and Obtaining Evidence Hiroshi Nakazato Investigation Bureau

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  1. Leniency and Obtaining Evidence Hiroshi Nakazato Investigation Bureau Fair Trade Commission of Japan hiroshi_nakazato@jftc.go.jp April 6th 2006 OECD-KOREA Regional Center for Competition

  2. Introduction • Detection of Cartel • Administrative Measures against Cartel Amendment of the Antimonopoly Act Investigation procedure • Increase of Surcharge Introduction of leniency program

  3. Investigation Proceedings • Beginning of Cases • Report of Violation by the Public • Detection of Violation by the JFTC • Report of Violation by the Applicants of Leniency Program • Investigation • Dawn Raids (On-the-Spot Inspection) • Orders to Report • Interviews of Suspects • Decision of Measures

  4. Elimination Measures Against Cartel • Cease and Desist Order • Surcharge Payment Order • Criminal Accusation

  5. Surcharge Payment Order • Introduced in 1977 • Amendment in 2005 • Increased Rate from 6% to 10% • Repeated Offender: Increased by 50% (15%) • Extension of the scope of surcharge to purchasing cartel and private monopolization through controlling the business activities of the other firms

  6. Leniency Program as Useful Tool • A leniency program has been introduced in many jurisdictions, which uncovers hard core cartels that would otherwise go undetected. • A leniency program has been successful and is one of the most useful tools to detect hard core cartels.

  7. Basic Framework of Japanese Leniency Program (1) • Introduction of a Leniency Program • A leniency program was introduced by Amendment of the Antimonopoly Act in April 2005 (the Amended Act came into effect on Jan. 4 2006) . • Immunity from or reduction in surcharge payment shall be applied to enterprises that meet statutory conditions (enterprises committing cartel provide information to the JFTC). • For 1st applicant, the JFTC has a policy of not to file a criminal accusation against the company to the Public Prosecutors Office • The company acting as the leader in the cartel can be applied to the leniency program.

  8. Basic Framework of Japanese Leniency Program (2) • Continued... • The Total number of enterprises that may be appllied to the leniency program is no more than 3. • 1st applicant before initiation of investigation • →total immunity • 2nd applicant before initiation of investigation • →50% deduction • 3rd applicant before initiation of investigation • →30% deduction • An applicant after initiation of investigation • →30% deduction

  9. Point of Procedure Regarding a Leniency Program • Anonymous Prior Consultation • Submission of Reports by Facsimile. 81-3-3581-5599 (must be written in Japanese) • Priority of the First Party (Marker)

  10. Creation of Clear Contact Point • Transparency and Consistency for Applicants • Easy to Track and Record the Database of the Past Applications Applicants have to contact tothe Leniency Officer throughout proceedings.

  11. Before the Start of Investigation The JFTC Applicant Prior Consultation Phase Awareness of possible offence Availability of marker Marker Phase Send Form I by the Facsimile Guaranteed marker position Submission Phase Send Form II and Evidential Materials & Documents Must be in 15 business days A part of information could be orally

  12. After the Start of Investigation The JFTC Applicant Prior Consultation Phase Awareness of possible offence Availability of leniency Form III Submission Phase Send Form III by the Facsimile Guaranteed marker position Evidence Submission Phase Send Evidential Materials & Documents • Must be in 20 business days since start of the investigation • A part of information could be orally

  13. Cooperation of the Applicants • No General Clause for Full and Faithful Cooperation for Applicants • Partial Cooperation • Confidentiality to the Third Parties • Additional Evidential Materials and Report to the JFTC

  14. Confidentiality (1) • Full disclosure of corporate information to the public will be great disincentive for applicants – the Vitamin Case in the U.S. (2002) • Strict Confidentiality throughout the Investigation Proceedings • After closing of the case; the JFTC will disclose the name of applicants and the fact if applicants agree.

  15. Confidentiality (2) • In the hearing procedures, the JFTC will not disclose the evidential materials and reports received from applicants throughout leniency proceedings. • In the Japanese civil damage litigation, the JFTC will not disclose those materials to the plaintiffs . • The JFTC introduced oral application to respond to the fear of the great risk of the discovery in the U.S..

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