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This update is also available on our Japanese language site.

In a departure from prior precedent, the Tokyo District Court has issued a judgment ordering the Japan Fair Trade Commission ("JFTC") to disclose the entire case record from a JFTC administrative hearing.  In so ordering, the court overruled the JFTC’s decision denying case record access to a private company that argued the case record would assist it in demonstrating that it suffered injury from a dominant competitor’s misconduct.  The court’s decision, if it withstands challenge on appeal, could provide private antitrust litigants with an important new tool to supplement Japan’s relatively weak civil discovery process.

Background – The JFTC’s Hearing Against Dohshin

In 1998, the JFTC conducted an administrative hearing, known as "shimpan," to investigate the charge that Hokkaido Shimbun Press ("Dohshin"), an influential daily news paper publisher in the Hokkaido area, had committed a series of exclusionary acts to deter new entry by a competitive newspaper publisher into a part of Dohshin’s business area.  The new entrant is named Hakodate Shimbun Co., Ltd. ("Hakoshin").  The JFTC alleged that Dohshin’s exclusionary conduct included:  (i) the improper registration of the trademark "Hakodate Shimbun"; (ii) a request to a press company to refuse to provide news to Hakoshin; (iii) making below-cost offers to advertisers for whose business Dohshin competes with Hakoshin; and (iv) a request to a local TV company to refuse to broadcast Hakoshin’s television advertisements.

During the course of the shimpan, Dohshin agreed to accept a consent judgment from the JFTC, and the hearing ended in February 2000 with a JFTC consent judgment.  Hakoshin was not a party to the JFTC hearing.

Hakoshin Requests Access to JFTC Case Record

In 2002, after the JFTC’s consent judgment, Hakoshin – the victim of Dohshin’s exclusionary conduct – filed a private claim against Dohshin for recovery of damages.  Pursuant to Section 69 of the Anti Monopoly Act ("AMA"),[1] Hakoshin requested access to the case record from the JFTC administrative hearing into Dohshin’s conduct, including, among other things, evidence the JFTC presented during the course of the hearing.  The JFTC agreed to provide access to a portion of its case record, but refused to provide access to certain portions of the record that it concluded contained confidential information of other firms.  The JFTC’s decision was in accordance with its internal rules, which provide that access to confidential information should be provided with due care and only after consideration of other firms’ confidentiality concerns, the privacy of individuals, and the potential for harm to future JFTC investigations.

Hakoshin brought an action in the Tokyo District Court to challenge the JFTC ruling and sought an order directing the JFTC to provide Hakoshin with access to the entire JFTC case record.

The Tokyo District Court Issues Judgment Against the JFTC

On February 23, 2006, the court ruled in favor of Hakoshin and directed the JFTC to provide Hakoshin complete access to the JFTC case record.  The court based its decision upon the following factors:

• Hakoshin was an interested party to the JFTC proceeding because Hakoshin claimed damages as victim of the anticompetitive conduct that was at the core of the JFTC complaint.
• Section 69 of the AMA, which provides a right to review and copy the JFTC case record, contains no restriction on the right to access the case record except that the applicant must be an interested party.  The AMA contains no provision that would allow the JFTC to reject a request to review and copy the case record because of the nature of the information.
• While the JFTC’s efforts to protect against the disclosure of confidential third-party information were not unreasonable, the plain language of the AMA does not permit the JFTC to adopt internal standards that would limit the scope of information to be disclosed pursuant to Section 69.
• General provisions of the AMA that create an obligation for the Chairman, Commissioners, and staff to protect the confidentiality of information received are not relevant to a request pursuant to Section 69 for access to the case record.

Implication of the Judgment

If this decision withstands appellate challenge from the JFTC, it could potentially have a significant impact on antitrust practice in Japan by facilitating greater access to evidence that could be useful in private claims for damages.  However, this decision is inconsistent with a Supreme Court judgment that did not raise any question about the JFTC’s traditional practice of limiting access to its case record.  The JFTC has appealed the decision of the Tokyo District Court, and further review will hopefully resolve the apparent inconsistencies.

Pending clarification on appeal, the key implications of this judgment are as follows:

• If this decision becomes final, it will encourage private parties to seek access to JFTC case records and will provide a convenient tool for an interested party to a private antitrust action to supplement traditionally weak discovery in litigation in Japan.
• The knowledge that interested parties may gain access to the full JFTC case record may discourage companies from requesting a JFTC hearing on an alleged antitrust violation, in light of potential risk of disclosure of any confidential information provided during the course of the hearing.  Under the AMA, an interested party may gain access to the case record only after the JFTC hearing is commenced.  Therefore, access to the case file would not be available if the JFTC does not conduct a hearing (as would be the case if the firm does not challenge the JFTC’s cease and desist order).
• The JFTC may review its own practice of submitting evidence in the course of an administrative hearing, including especially confidential evidence it has received from third parties who might be competitors with one another.