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Cablegate: Japan: New Administration to Spur Change In

VZCZCXRO4268
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2412/01 2930454
ZNR UUUUU ZZH
R 200454Z OCT 09
FM AMEMBASSY TOKYO
TO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAWJA/JUSTICE DEPT WASHDC
RUEHC/SECSTATE WASHDC 6916
INFO RUEHFK/AMCONSUL FUKUOKA 6976
RUEHNAG/AMCONSUL NAGOYA 4246
RUEHNH/AMCONSUL NAHA 9331
RUEHOK/AMCONSUL OSAKA KOBE 0794
RUEHKSO/AMCONSUL SAPPORO 7488

UNCLAS SECTION 01 OF 02 TOKYO 002412

SENSITIVE
SIPDIS

STATE FOR E, EEB, EAP/EP AND EAP/J
NSC FOR JIM LOI
USTR FOR WENDY CUTLER AND MICHAEL BEEMAN
STATE PAS TO DOJ STUART CHEMTOB AND FTC RANDOPH TRITELL AND
DEIRDRE SHANAHAN

E.O. 12958: N/A
TAGS: ECIN ECON ETRD KJUS JA
SUBJECT: JAPAN: NEW ADMINISTRATION TO SPUR CHANGE IN
COMPETITION POLICY?

1. (SBU) SUMMARY: Japan Fair Trade Commission (JFTC) Chairman
Takeshima suggests that the Democratic Party of Japan (DPJ)
is more friendly to the JFTC and antitrust policy than the
outgoing Liberal Democratic Party, but how such influence may
manifest itself is not yet fully apparent. As an independent
commission, the JFTC is relatively less affected by the
change of government compared to other ministries and
agencies. The JFTC is reviewing its current administrative
hearing system for contesting JFTC orders, and JFTC Chairman
Kazuhiko Takeshima says it will be abolished in the near
term. The scope of such abolition, however, remains unclear.
END SUMMARY.

2. (SBU) Chairman Takeshima suggested that the DPJ is more
friendly to the JFTC as an agency than the LDP during a
September 29 call by Ambassador Roos. He cited the DPJ's
strong support from middle class voters, who believe in
competition policy, unlike the companies in construction and
other fields supporting the LDP, some of which engage in
bid-rigging.

3. (SBU) Chairman Takeshima said he expects Japan's
Antimonopoly Act (AMA) to be revised to abolish the current
administrative hearing system for contesting JFTC orders.
The business and legal communities have long advocated
abolition, arguing that challenging JFTC orders in court
provides greater due process. The precise scope of
abolition, however, remains unclear. We understand from
reliable contacts that the Chairman prefers sweeping
abolition, but that serious questions exist regarding whether
the courts are willing and prepared to handle cases other
than cartels. Concern also exists that retailers of
gasoline, liquor, consumer electronics, and other interests
likely to be affected by decisions concerning unfair trade
practices, may exert pressure on the DPJ to retain the
present authority of the JFTC, which they believe they can
influence unlike any court. The JFTC has been conducting a
complete examination of the administrative hearing system
relating to cartels, mergers and acquisitions, among other
AMA violations. Takeshima himself did not specify the extent
of any abolition, and JFTC staff are not commenting on what
the final decision will be. Abolition would require revision
of the AMA itself, and is not expected until 2010.

4. (SBU) Experts suggest that the electoral victory of the
DPJ, which has promised to abolish the administrative hearing
system, will spur change. Professor Masahiro Murakami of
Hitotsubashi University, for example, told emboff that he
expects forthcoming abolition to cover all cases of AMA
violations, not just cartels. Noting the JFTC's recent
order against Qualcomm, Murakami highlighted how,
particularly in high-profile cases, allowing companies to
challenge JFTC orders in court is more fair than the present
system. It is highly unlikely the very body that is
prosecuting an order will reverse an order once issued, he
emphasized. The embassy has identified three instances where
the JFTC has reversed an earlier order in recent decades.
Although Murakami's view is widely shared, not all experts
concur. Professor Jiro Tamura of Keio University suggested
to emboff that, in view of concerns about the courts'
handling of non-cartel cases, it is possible to envision a
compromise solution under which the administrative hearing
system would be abolished for cartels only. Similarly,
former JFTC Secretary-General Akinori Uesugi told emboff he
believes companies will, in practice, find themselves in a
disadvantageous position when challenging a JFTC order in
court.

5. (SBU) In contrast with many Japanese ministries and
agencies, the JFTC has been relatively unaffected by the
recent change of administration. Chairman Takeshima's term
does not expire until 2012, and JFTC staff continue to work
on projects underway. JFTC staff have confirmed, for
example, that AMA amendments concerning exclusionary
monopolization will become effective in January 2010 and that
they are drafting the final guidelines, which they plan to
release as soon as possible. They did not give a specific
date, but reaffirmed that it will be well ahead of when the

TOKYO 00002412 002 OF 002


revised law becomes effective. We understand the JFTC
received about 40 public comments, including a detailed
submission by the American Chamber of Commerce in Japan.
ROOS

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