Overview
Steptoe specializes in supporting Japanese clients and, with guidance from Japanese law firms, assisting global companies with legal matters in Japan. We have recently welcomed Goki Niimura of TMI Associates in Tokyo, who has joined Steptoe as an International Law Clerk for the next several months. Goki has kindly co-authored this edition of our StepAhead newsletter, in which we turn to Japan to survey developments involving the Japanese Fair Trade Commission (JFTC).
The JFTC has recently benefitted from increased funding and staffing, which is enabling it to enhance its investigation and enforcement efforts. Like antitrust authorities in the United States and Europe, the JFTC has recently become more aggressive against Big Tech companies such as Google and developments in digital markets and AI and their impacts on competition. The JFTC has also focused recently on protecting small and medium-scale businesses against larger competitors. As the JFTC becomes more active in its enforcement efforts, international companies doing business in Japan should continue to monitor developments at the JFTC.
1. JFTC Issues Cease and Desist Order to Google for Violating the Japanese Antimonopoly Act (April 15, 2025)
Like its counterparts in the United States and the European Union, the JFTC's IT Digital Task Force has been investigating the activities of Big Tech companies in recent years. On April 15, in contrast to its previous practices of issuing warnings or negotiating settlements, the JFTC issued a cease-and-desist order to Google LLC for violating the Japanese Antimonopoly Act for restricting Android device manufacturers. The JFTC found that Google's Mobile Application Distribution Agreements (MADAs) unlawfully required Android device manufactures to preinstall "Google Search" and "Google Chrome" and put their icons on the device's home screen. The JFTC also found that in exchange for sharing revenues from search advertising, Google's Mobile Revenue Share Agreements (MRSA) required manufacturers of Android smartphones and mobile phone carriers to favor Google's search and browser services by restricting other search engines and advantaging Google Search and Chrome by setting them as defaults or in preferred positions. The JFTC ordered Google to end the restrictions, appoint an independent monitor to oversee compliance for five years, and to submit reports yearly to the JFTC, and to agree not to conduct similar anticompetitive acts in the future. The JFTC did not levy a fine on Google. The JFTC's order against Google is notable in that the JFTC reached a similar conclusion in part as a US Court and the European Commission for the same anticompetitive actions, but the JFTC acted first, issuing its decision five months earlier.
2. JFTC Issues Warning to 15 Hotel Companies Regarding Information Sharing (May 8, 2025)
On May 8, 2025, the JFTC issued a warning to 15 prominent luxury hotel operators including Imperial Hotel, Hotel New Ohtani, and Okura Tokyo regarding a possible violation of Article 3 of the Antimonopoly Act (prohibition of unfair trade restraints) arising from improper information exchanges. The JFTC found that the 15 hotel operators shared information including monthly occupancy rates, average room rates, revenue per available room, future booking status, and policies for setting future room rates during monthly meetings in Tokyo. Notably, the JFTC opted to issue a warning not to engage in similar actions in the future instead of a cease-and-desist order or fines. It appears that the reason to issue a warning was because the JFTC could not find evidence of a concrete agreement to raise prices, even if it did find clear evidence of an exchange of competitively sensitive information. Despite the JFTC's investigation only resulting in a warning, the JFTC's announcement was widely reported in the Japanese media (see e.g., FTC to warn luxury hotels about suspected price cartel and Tokyo hotel operators face possible warnings over suspected price cartel), thereby presenting reputational risk to the parties involved. The JFTC's action makes clear that it is attuned to and investigating information exchanges among competitors that may violate antitrust laws.
3. JFTC Issues Report on Enforcement of Freelance Acts (May 15, 2025)
On the labor and employment side of competition law, the Freelancer Act, officially the Act on Ensuring Proper Transaction Involving Specified Entrusted Business Operators, came into force on November 1, 2024. The aim of the law is to ensure fair dealing between companies and freelance workers and to ensure safe and reasonable working environments for such workers. According to its first annual report on the law, issued on May 15, the JFTC initiated 137 new cases, processed 96 cases, and issued warnings on 54 cases. To date, the JFTC has focused its investigations on the game software, animation production, and fitness club industries. The 54 warnings issued by the JFTC primarily stemmed from insufficient disclosure of transaction terms between companies and their freelance workers and compensation payments to freelancers exceeding 60 days from the date on which the freelancer performed the work.
4. Change in Leadership of JFTC (May 21, 2025)
On May 21, 2025, the JFTC announced the retirement of Chairman Kazuyuki Furuya, who was replaced by Eiji Chatani. Kazuyuki served as chairman of the JFTC for nearly five years.
During Kazuyuki's tenure, he focused on regulation of data, competition in digital markets, publishing Green Guidelines regarding competition and sustainability, and enforcement of the Subcontract Act and the Freelance Act. Based on Eiji's inaugural press conference, it appears that he will keep the JFTC moving in a similar direction. Eiji outlined the following five pillars:
- Promoting "strict and appropriate enforcement" of the Japanese Antimonopoly Act;
- Ensuring a fair business environment for Small and Medium-sized Enterprises;
- Focusing on digital economic development, the "realization of green society," and promoting innovation;
- Establishing relationships with foreign competition authorities and promoting those relationships; and
- Enhancing JFTC's resources "both in terms of quality and quantity."
Eiji was appointed to serve out Chatani's term, which will expire in March 2028, but he could serve an additional term.
5. JFTC Issues Report on Generative AI Version 1.0 (June 6, 2025)
On June 6, the JFTC published its "Generative AI Report Version 1.0". The report follows an earlier market analysis on AI and Japanese anti-monopoly law. The JFTC identified three key layers in the generative AI market: Infrastructure, Models, and Applications. In its report, the JFTC raised concerns over potential exclusion of competitors and new entrants by dominant companies that restrict access to infrastructure or application programming interface (API) connections and the inability of those competitors and new entrants to locate alternative suppliers. The JFTC also raised concerns about the risk of potential tying arrangements between digital services and generative AI models where a dominant player in a particular digital service market ties its generative AI model to its digital service offering. The report was based on 712 public comments and nearly 50 stakeholder interviews. Like its counterparts in the EU, UK, and US, the JFTC recognizes that the AI space requires continued monitoring and pledged to update and add information to its report.
