Cartel Enforcement in Japan

Some competition authorities around the world have been exploring new cartel theories, but the Japan Fair Trade Commission (JFTC) has appeared more careful in pushing boundaries in the same way as, for example, the European Commission’s (EC) recent cartel fines for sustainability and labour market infringements.

Cartels in Japan – at least those that are detected – are more “conservative” in terms of expanding the enforcement horizon. A recent “classic” cartel investigated by the JFTC involved price fixing and bid rigging among five large insurance companies, which were fined (administrative surcharge, or kachoukin) approximately JPY2 billion in 2024. Most recent cases have concerned more parochial issues: school dinners in Nagoya, agricultural co-operatives in Koichi, and flu shots in Saitama. Many of these local cartels seem to have arisen not from avarice but from ignorance of the permissible extent of co-operation with competitors.

These recent local cartel cases serve as a warning that no conduct is too small to escape investigation. Increased scrutiny of smaller and more local infringements is consistent with the recent trend of cartel enforcement by overseas authorities such as the EC and the US antitrust agencies.

Evolving theories of harm

The bulk of JFTC cartel cases claim that they concern typical cartel conduct – chiefly price fixing and bid rigging – but this may be misleading. Even where conduct does not fall squarely within one of these two categories, and should instead be described as market allocation or information exchange, for example, the JFTC still shoehorns it into one or the other. This can make the JFTC seem more orthodox than it really is. In reality, the JFTC is applying new theories of harm under “old” labels that can cause these developments to be overlooked.

The JFTC’s 2023 case against three power companies is a good example. In 2023, the JFTC fined Chugoku Electric, Chubu Electric and Kyushu Electric approximately JPY101 billion for price fixing and bid rigging (Kansai Electric was also involved but received immunity). Shortly before the alleged cartel, these former “regional” power grid companies had been deregulated by Japan’s Ministry of Economy, Trade and Industry (METI), allowing them to enter each other’s territory. In practice, they refrained from competing outside their former regions, leading to market/customer allocation. In other jurisdictions, this would be treated as an independent infringement in itself. The JFTC appears instead to have characterised it by the means through which it was achieved (price fixing and bid rigging), and calculated the surcharge on that basis. This may have been due to a procedural advantage, namely being able to capture a broader range of sales when calculating the surcharge. Unlike the EC, for example, which has broad discretion in setting fines, the JFTC is required to calculate precisely the sales relevant to an infringement.

That said, despite the appearance, the JFTC’s appetite to challenge less clear-cut theories of harm outside its comfort zone of price fixing and bid rigging, as well as its willingness to intervene in regulated industries (which in the past were effectively “untouchable”), should not be underestimated.

Increasing criminal prosecutions

Hesitation in applying creative theories of harm should also not be interpreted as reticence to investigate cartels. The JFTC takes cartels seriously and has been taking an even harder line in recent cases.

The JFTC can treat cartels as civil or criminal matters. It can impose administrative sanctions, such as administrative surcharges (kachoukin) and cease-and-desist orders, or alternatively file a request with the public prosecutor to impose criminal sanctions on individuals and companies – and in some cases both. These criminal sanctions are reserved for “vicious and serious” cases and repeat offenders. They can reach up to JPY500 million in fines for companies and up to five years’ imprisonment and/or fines of up to JPY5 million for individuals (JFTC, The Fair Trade Commission’s Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Antimonopoly Violations, 16 December 2020).

The JFTC has the exclusive right to lodge a criminal complaint with the public prosecutor, and seems increasingly keen to lodge criminal complaints against cartel members. This raises the question of which cases are sufficiently “vicious and serious” to warrant criminal prosecution. The following cases may provide some insight.

• In 2016, the JFTC filed criminal complaints against ten construction companies and 11 individuals for bid rigging in respect of reconstruction works after the Great East Japan Earthquake. The JFTC issued cease-and-desist orders and imposed administrative surcharges on a wider range of companies for the same conduct.
• In 2018, the JFTC filed criminal complaints against four companies for co-ordinating bids for construction of the new Chūō Linear Shinkansen. This was followed by administrative surcharges in 2020.
• In 2023, the JFTC filed criminal complaints against six companies (a mix of advertising, TV production and events planning companies) and seven individuals for bid rigging in relation to the 2020 Olympic and Paralympic Games. The JFTC subsequently issued cease-and-desist orders and imposed administrative surcharges on the six companies in 2025. A seventh received a cease-and-desist order but was not the target of a criminal complaint because it had voluntarily reported the conduct to the JFTC. The companies (and individuals) had engaged in bid rigging, specifically by agreeing in advance which companies would win contracts to hold events at the Olympic Games.

A common factor in these cases that could warrant criminal prosecution is the significant public element: a national event (the Olympics), important public infrastructure (the Shinkansen) and disaster recovery (reconstruction after the 2011 earthquake). The size of the affected contracts could also be relevant, with the total value of affected contracts in the Olympics case reportedly exceeding JPY43 billion (approximately USD400 million at that time), which could explain why the JFTC pursued criminal charges on top of administrative surcharges (Yomiuri Shimbun, JFTC to Fine 6 Firms Over Tokyo Games Bid Rigging; Dentsu Among Those Facing Administrative Penalty, 4 April 2025).

This is not a hard-and-fast rule and does not explain why the JFTC is filing criminal complaints in cases with a seemingly lower profile. In 2026, for example, the JFTC lodged criminal complaints against five petroleum companies for fixing the price of diesel sold to hauliers. While there was a public element (higher petroleum prices due to the conflict in the Middle East), it was arguably of the same magnitude as the cases mentioned above, but was also of more political importance.

Ultimately, the reason for more frequent criminal prosecution of cartels in Japan is likely a function of the JFTC’s discretion as to whether to file a complaint, which will be influenced by available evidence. The JFTC is keen to be seen as an active enforcer. Its exclusive right to lodge criminal cartel complaints ensures that it will only bring cases it can win. And, once brought, Japan’s famously high conviction rate virtually guarantees that these cases will not face an embarrassing setback.

Limited due process

Even if the case is not criminal, the JFTC process still looks criminal. JFTC cartel investigations almost always start with a dawn raid, and it is not uncommon for the JFTC to tip off the press in advance. In some cases, cameras await employees’ arrival at work, and press articles appear quickly, containing more insight into the investigation than journalists could discover by themselves. Once inside, like many authorities, the JFTC focuses on data and documentary evidence and interviews. Investigators will check employees’ desks, lockers and even private vehicles, and seize documents. They will take images of laptops and other devices. They will even interview employees on the spot, if available.

After the raid, the JFTC will send a request for data, documents and further interviews with employees. These interviews can sometimes resemble a prosecutorial interrogation, with weak due process protections. That said, the JFTC appears to be improving due process in recent years, particularly in cases involving foreign companies. Employees used to be asked to stay in a windowless room for hours of relentless questioning and then asked to sign off the JFTC’s interview transcript with a stamp of their fingerprints. Hopefully, the JFTC’s practice will continue to improve.

Some lawyers would balk at these issues in due process, and have persuaded the JFTC to soften its position in individual cases where foreign companies were the defendants. The JFTC recognises privilege in cartel cases but there is no formal recognition of privilege in unilateral abuse cases. The JFTC recognises that its due process does not meet internationally accepted standards, and individual case handlers are sometimes sympathetic, particularly those with international experience. In some cases, lawyers have managed to negotiate themselves into interviews, cut down interview times and resist the disclosure of material that would be privileged outside Japan.

Leniency (and its incidental shortcomings)

The JFTC first introduced a leniency programme in 2006 and revised it extensively in 2020. Insofar as it provides for immunity for the first applicant and a series of fine reductions for subsequent applicants, the leniency programme reflects the programmes adopted in jurisdictions such as the EU. Divergence arises, however, in the way the JFTC implements the leniency programme.

For example, if the EC decides not to investigate, in some recent cases it has issued a no-action letter, which provides parties with legal certainty. They can determine whether to release holds over potential evidence, and can discuss with auditors whether and when to make a provision for a potential fine. They can also manage communications with customers, assuring them of their full co-operation with the authority.

In Japan, visibility is limited, at least at present. Once a leniency application has been submitted, in many cases (there are exceptions) parties have no insight into when or whether the JFTC will investigate. This is not a unique problem for the JFTC (many of its overseas counterparts take a similar approach), but it leaves parties in limbo, not knowing whether they need to gather and preserve evidence, set aside resources for a lengthy investigation or even consult lawyers on the extent of individual criminal liability. The routine deletion of files, for example, could be construed as tampering with evidence or obstruction if the JFTC eventually decides to move forward with an investigation. This could mean parties lose their place in the leniency queue, potentially exposing them to huge fines.

At the same time, leniency applicants are bound by the JFTC’s confidentiality rules, which are strict compared to its overseas counterparts. Even after the investigation has started and become public, applicants cannot disclose their co-operation with the JFTC to defend themselves against inaccurate media commentary. This can damage business relationships, leading to unexpected collateral damage, as parties cannot reassure customers of their co-operation until the investigation is over, by which time it may be too late to salvage these relationships. In some other jurisdictions, parties can at least issue a brief statement confirming they are co-operating after the case is made public.

This confidentiality also leads to conflicts with companies’ reporting obligations to regulators (for regulated industries) and directors’ duties to auditors (under listed companies’ disclosure rules). Directors have a duty to inform auditors of anything that could materially affect the company’s finances (such as a looming cartel fine) but, again, are obstructed by confidentiality obligations. Other jurisdictions such as the EC would resolve this conflict by permitting limited disclosure to auditors through confidentiality rings.

Further repercussions

After a cease-and-desist order is issued, surcharges are paid, individuals are prosecuted and shareholders are assuaged, companies could be forgiven for thinking that they can get back to work – and ensure that they never get involved in a cartel again. However, in some cases, repercussions may not stop there.

Follow-on-damages are the most common financial consequence of cartel conduct in other jurisdictions after a fine, but they are rare in Japan. An important exception is cases where public bodies are the “victim”, as they are required to recoup their losses for fiscal reasons. Japan does not have a litigious culture, and the assertion of rights through private litigation to hound companies that have already faced administrative and even criminal sanctions could be considered vulgar.

However, in some recent cases, leniency applicants have been blacklisted by some private customers that were not affected by the cartel conduct at all. Increasingly, companies involved in cartels are made pariahs on social media, and their customers are often worried about being criticised for dealing with cartelists. Public bodies would typically include a debarment clause in contracts, but the impact on unrelated private customers is something that companies should also bear in mind. These repercussions may even be greater than the size of the fine avoided by a successful leniency application, undermining the incentive to apply for leniency and, more broadly, the JFTC’s fight against cartels.

Conclusion

In short, Japan remains an active enforcer against cartels, with some features that distinguish it from the rest of the world, such as criminal sanctions, due process irregularities and broader social repercussions for cartelists.