NAMBU Toshiyuki 南部 利之 Deputy Secretary General for International Affairs

1. Leniency Program in Japan and its Success NAMBUToshiyuki 南部　利之 Deputy Secretary General for International Affairs Japan Fair Trade Commission (JFTC) September 17th , 2013, Beijing, China The view stated here is my own and does not necessarily reflect the view of the JFTC.

2. Advent and Spread of Leniency Programs in the world • US1978 ⇒　1993thoroughly revised • 1996EU • 1997Korea • 2000Canada, UK, Germany • 2001France, Ireland • 2002Netherlands ・・・・・　　　　　　 • 2006Japan • 2008 China 　　 ・・・・・ 2009further spread 2001 OECD Competition Commission Adopted “Report on Leniency Programs to Fight Hard Core Cartels” 2

3. Japanese Leniency program – transparent, certain and substantial - 1st Applicant Initiation of JFTC investigation 100% immunity Before After • Ｊｏｉｎｔ　Ａｐｐｌｉｃａｔｉｏｎ Upon certain conditions being met, two or more violators within the same company group will be permittedto jointly file an application for surcharge reduction or immunity. All the applicants will be assigned the same order of application 2nd Applicant Up to 3 Applicants 50% reduction 3rd to 5th Applicant 30% reduction 30% reduction 30% reduction • Criminal accusation NOT filed by JFTC (Applicant company and its individuals) Up to 5 applicants 3 3

4. Requirements for leniency application For immunity • The first applicant has to come forward before the initiation of the JFTC investigation For reduction • 2nd to 5th applicants have to come forward and make a report individually to the JFTC. • Maximum number of applications after the investigation begins: Three • For applications after the initiation of investigation, report is due the 20th day from the first day of the investigation. Both for immunity and reduction • Form No.1 (for pre-investigation) and Form No.3 (for post-investigation) must be transmitted only in facsimile 03-3581-5599 (+81-335815599 from overseas, but Japanese language only) • Applicants should not commit the relevant violation on and after the first day of the investigation. • Applicants should submit reports or materials responding to JFTC's additional requests. • Reports and documents submitted should not contain false information. • Applicants should not have coerced others to commit the infringement or blocked others from ceasing. • Applicants should not disclose the fact of application to the third parties without justifiable reasons.

5. Form No. 1: Written report to the JFTC ○ Summary of the Violating Act to be Reported * The written report shall be prepared in Japanese.

6. Experience of leniency applications in Japan • Number of applications after the introduction of the leniency program（Since Jan. 2006） • Number of the total cartel cases and leniency applied cases •  Leniency applications are important information sources of price-fixing cartels and bid riggings. ※The period of FY2005 is between Jan. 4 and Mar. 31 in 2006. ※In 2010, the program was revised to introduce joint application and to expand the number of applicants.

7. Characteristics of leniency program in Japan which make companies apply leniency in a positive manner • 1. Immunity or substantial reduction of surcharge • 2. First applicant to be precluded from criminal accusation • 3. Debarment period to be halved from public tendering • 4. No discretion for the JFTC concerning the applicable rates • 5. Easy acceptance of application and not heavy obligation for the leniency applicant to cooperate with the JFTC • 6. Not all applications are investigated • 7. No penalty plus program • 8. Infrequent private damage recovery lawsuit • 9. Shareholders lawsuits against directors concerned for damage recovery when they missed leniency application

8. Familiarity with the leniency program of the Japanese big companies • The first cartel case which was initiated by the leniency application • Surcharge payment order in September,2006 on the bid rigging for the construction of the tunnel ventilation facilities ordered by the Metropolitan highway public corporation • Mitsubishi Heavy Industry Cooperation was the first applicant before the start of the investigation and it enjoyed 100% immunity from surcharge. • Among four companied ordered surcharge payment, Ishikawajima-Harima Heavy Industry Cooperation (IHI) and Kawasaki Heavy Industry Cooperation were the second and the third leniency applicants after the start of the investigation and their surcharge payments were reduced 30%.

9. Support from the business side toward the leniency program and the improvement of corporate incentive for the application • Result of the survey on the corporate compliance conducted in 2010 by the research institute of WASEDA University • Among 448 listed companies, 84 % positively evaluated the leniency program compared to 11% criticized it. • Results of the JFTC’s survey on the status and issues of Corporate AMA Compliance in 2012 • Among 879 listed companies, 51% answered positively to the question; “Do you in tend to apply leniency when the involvement of your employees in the violating conducts become aware?” • In the previous surveys, the percentage of the positive answers to the same question has been increasing; 23.2% in 2006, 43.2% in 2008 and 49.8% in 2010.

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