Legislation and jurisdiction
Development of antitrust litigation
How would you summarize the evolution of private antitrust litigation in your jurisdiction?
In 1998, there was a sea change in the development of private antitrust litigation in Japan. Previously, there were almost no cases in Japan where plaintiffs seeking damages or injunction for harm caused by defendants’ anti-competitive acts were successful, although several such private lawsuits were filed. every year. However, the subsequent seminal case brought about a dramatic change in the way courts viewed and judged cases in the area of private antitrust litigation.
In this case, the defendants, who were manufacturers, were ordered to pay approximately USD 400,000 in damages, or 5% of the turnover generated by the sale of cartel-related products to the plaintiffs, who were private residents suing on behalf of a local authority that has been the victim of the anti-competitive act.
In the years since this case was tried, more than half of all private lawsuits for damages filed in the various courts of Japan have resulted in a judgment for damages in favor of the plaintiff, judgments in damages of up to 20% of the turnover of the products related to the agreement.
In March 2007, the Tokyo District Court ruled against three major Japanese corporations and ordered them to pay a total of 9.7 billion yen for damages suffered by the Tokyo Metropolitan Government as a result of acts illegal acts committed between 1994 and 1998; two of the three companies settled this case in the Tokyo High Court in April 2009, where they agreed to pay approximately 7.5 billion yen to the Tokyo Metropolitan Government. The Supreme Court also ordered five companies that engaged in cartel activities to pay a total of 5.5 billion yen for damages suffered by the local governments of Yokohama, Kobe and Fukuoka in April 2009.
In addition, in March 2011, the Tokyo District Court ordered a defendant to cease and desist from engaging in illegal activities that constituted “interference against a competitor” under the Unfair Trade Practices Act. Prohibition of Private Monopolization and Maintenance of Fair Trade (Law No. 54 of 1947, as amended (the Anti-Monopoly Law)). There has been a recent trend for publicly traded companies to seek damages resulting from anti-competitive acts in court, or outside tribunal, to avoid the potential risk of a shareholder initiating derivative litigation. Similarly, in recent years there has been an increase in derivative litigation against corporate directors guilty of cartel behavior seeking damages against the company if they chose not to seek leniency.
Are private antitrust actions prescribed by law? If not, on what basis are they possible? Is standing to sue limited to those directly affected or can indirect purchasers sue?
Yes. Private antitrust actions are statutorily prescribed under the Antimonopoly Act and are also possible under general tort law under the Civil Code. The right to bring an action is not limited to persons directly affected, but includes persons indirectly affected by the antimonopoly law and the civil code.
Furthermore, according to Article 24 of the Antimonopoly Law, introduced by a 2001 amendment to the law, a private plaintiff may, in addition to seeking damages, seek an injunction against certain “unfair trade practices”. The Anti-Monopoly Law provides for, and the Japan Fair Trade Commission (JFTC) has designated under the authority of the Anti-Monopoly Law, many unfair trade practices, such as exclusivity, price discrimination, sales at a loss, tied products, resale price maintenance, refusal to sell and negotiation under restrictive conditions. Of these, private plaintiffs most often sought injunctions for price discrimination, sales at a loss and division of sales territories. However, private plaintiffs have failed in many injunction cases.
If it is based on law, what is the relevant legislation and what are the competent courts and tribunals?
Articles 25 and 26 of the Antimonopoly Law relate to actions for damages resulting from anti-competitive acts. Section 25 provides that parties who have monopolized or engaged in collusion or other unfair trade practices are liable to compensate those harmed by such practices.
Article 709 of the Civil Code sets out the principles of general tort law, stipulating that those who violate the rights of others must repair the damage resulting from their acts. It is recognized that this includes anti-competitive acts, thus allowing the initiation of private antitrust actions. In addition, there is another legal action available to victims of anti-competitive acts under Article 703 of the Civil Code, which provides that victims have the right to claim unjust enrichment that offenders have obtained through anti-competitive acts.
There are three possible avenues for bringing an action for damages, the distinction between them being the burden of proof applicable to each. Section 26 of the Antimonopoly Act provides that the right to claim damages under Section 25 of the Act may not be asserted in court until a relevant order (such as an order to cease and to forbear) of the JFTC has become final and binding. (meaning that the judgment must also become final and binding if a defendant challenges the relevant order in court). However, where such an order exists, the plaintiff in related private litigation need not prove the existence of intent or negligence on the part of the defendant with respect to the breach of antimonopoly law, being given that such a determination has already been made in the JFTC’s prior decision.
In a Section 709 dispute, such a determination by the JFTC will not exist; therefore, the plaintiff must prove the existence of the defendant’s intent or negligence at trial. A plaintiff based on Article 703 of the Civil Code must also prove anticompetitive acts to present the fact that a defendant made profits without legal cause.
A private plaintiff may, in addition to seeking damages, seek an injunction against certain unfair trade practices (Article 24 of the Antimonopoly Law).
Decisions of the Tokyo District Court can only be appealed to the Tokyo High Court, and the decision of the Tokyo High Court can be appealed to the Supreme Court of Japan , like actions brought under general tort, although the trial court for general tort or unjust enrichment claims are not limited to the Tokyo District Court, and the decision of the district court may be appealed to the competent high court. High courts must accept an appeal of factual determinations and interpretations of law by the lower court. Although the Supreme Court rarely agrees to review the factual decisions of the lower court, it nevertheless has the discretion to do so, depending on the merits of the case. Injunctive litigation is initiated in district courts.
In what types of antitrust cases are private actions available? Is a finding of infringement by a competition authority necessary to bring a private antitrust action in your jurisdiction? What is the effect of a finding of infringement by a competition authority on national courts?
Compensation for damages caused due to all types of antitrust violations may be sought in private litigation. However, under section 24 of the Prohibition of Private Monopolization and Maintenance of Fair Trade Act (Act No. 54 of 1947, as amended (the Antimonopoly Act)), a private action to obtaining an injunction is limited only to trade practice claims by the defendant. A finding of infringement by the Japan Fair Trade Commission (JFTC) is not required to initiate a private antitrust action.
In principle, a civil court is not bound by any JFTC decision regarding a defendant’s fault. However, if a JFTC order has become final and binding, it is likely, in practice, that the facts determined by the JFTC will carry some weight in a private dispute.
In addition, where such an order exists, a plaintiff may assert the right to claim damages under Article 25 of the Antimonopoly Act, under which the plaintiff in a related private dispute need not prove the existence of intent or negligence on the part of the defendant in respect of the violation of the antimonopoly law, since such a determination has already been made in the previous decision of the JFTC. In this case, pursuant to Article 84 of the Antimonopoly Law, a court may refer to the JFTC for its opinion on the amount of damages suffered as a result of anti-competitive acts.
Without a final and binding order from the JFTC, a plaintiff seeking damages must choose Civil Code lawsuits, such as Section 709, and must prove intent or negligence. of the defendant in respect of the offense in question. That said, since the presumption of fact based on the JFTC’s findings can be accepted to some extent, in practice prior claims are mostly based on the JFTC’s findings of infringement.
In some serious cases, the JFTC files a complaint with prosecutors for criminal prosecution under Articles 74 and 96 of the Antimonopoly Law. A plaintiff in a private action may rely on the findings of criminal proceedings regarding the offense in question. Although a civil court is not bound by the findings of a criminal proceeding, it would be difficult for the defendant to refute the findings unless new and definitive evidence is presented in private litigation.
What connection with the jurisdiction is required to found a private action? To what extent can the parties influence the jurisdiction in which a claim will be heard?
With respect to actions in Japan as a whole, the nexus for bringing a private action is that the defendant’s anti-competitive act or agreement must have had some impact on the Japanese market. If the Japanese market has been affected by the act of conspiracy, conspiracy, etc., it is possible to file a lawsuit in a court in Japan. If a claim for damages is based on the Antimonopoly Law, it should be brought only in the Tokyo District Court, and if a claim is based on a general tort, it should be brought in a district court in accordance with the general rule of jurisdiction. under the laws of civil procedure. If a plaintiff wishes to sue for damages or unjust enrichment in a district court other than the Tokyo District Court, the plaintiff must choose a cause prescribed in the Civil Code.
Can private actions be brought against companies and individuals, including those in other jurisdictions?
Yes, provided that these actions have an impact on the Japanese market.