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Cablegate: Momentum Gathers Behind Japan's Abolition of Fair

VZCZCXRO0870
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2564/01 3100846
ZNR UUUUU ZZH
R 060846Z NOV 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 7299
INFO RUEHFK/AMCONSUL FUKUOKA 7278
RUEHNAG/AMCONSUL NAGOYA 4502
RUEHNH/AMCONSUL NAHA 9632
RUEHOK/AMCONSUL OSAKA KOBE 1097
RUEHKSO/AMCONSUL SAPPORO 7788
RUEAWJA/JUSTICE DEPT WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 TOKYO 002564

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: ECIN ECON ETRD KJUS JA
SUBJECT: MOMENTUM GATHERS BEHIND JAPAN'S ABOLITION OF FAIR
TRADE COMMISSION ADMINISTRATIVE HEARING SYSTEM

REF: TOKYO 2412

1. (SBU) SUMMARY: The Japan Business Federation's (Keidanren)
recent advocacy in support of abolishing the Japan Fair Trade
Commission's (JFTC) internal appeals process adds to momentum
gathering behind antitrust policy reform under the new
government of Prime Minister Yukio Hatoyama. This call upon
the government to abolish the JFTC's administrative hearing
system (shimpan) for reviewing its own orders by the business
community has shifted discussion of the issue in legal and
political circles to practical questions of how best to
transfer appeals to the court system and how to improve
JFTC's investigation process as well. END SUMMARY

---------------------------
BUSINESS COMMUNITY ADVOCACY
---------------------------

2. (U) On October 20, Keidanren released a public statement
urging abolition of the JFTC,s administrative hearing system
and revision of Japan's Antimonopoly Act (AMA) to bring the
antitrust investigation and appeals process in line with
U.S./European standards for due process and predictability of
enforcement. Keidanren recommended replacing the existing
appeals system with a procedure within the judicial system in
which a named corporation can appeal to the courts. In view
of existing capacity constraints in the court system and the
need for experts trained in antitrust matters, Keidanren
called for the first trial to be the exclusive jurisdiction
of the Tokyo District Court for the time being, and for
subsequent appeals to be the exclusive jurisdiction of the
Tokyo High Court. Keidanren also urged human resources
development, particularly the training of staff with
expertise in AMA cases. (For the Japanese-language original,
see:
http://www.keidanren.or.jp/japanese/policy/20 09/086.html.)

3. (U) Keidanren's basic argument is that the existing
appeals system under which the JFTC reviews its own decisions
(effectively serving as both prosecutor and judge) is
inherently unfair and invites distrust that cannot be
eliminated by partial measures. Keidanren has long favored
abolition and is now engaging more visibly on the issue since
the prospects for passage of the necessary legislation have
improved with the advent of a Democratic Party of Japan (DPJ)
government (reftel). Increases in civil and criminal
penalties for AMA violations also underpin business community
advocacy.

4. (U) The U.S.-Japan Business Council (USJBC) and Japan-U.S.
Business Council (JUSBC) have similarly called for abolition
of the administrative hearing system in a joint statement.
The two business organizations issued a wide-ranging set of
recommendations to both governments upon conclusion of their
joint meeting in Washington on November 3. Their competition
policy recommendations also criticized the lack sufficient
safeguards under the existing system to ensure the
independence of the initial hearing officers.

----------------------------------
FOCUS ON THE INVESTIGATION PROCESS
----------------------------------

5. (U) Both the Keidanren and USJBC/JUSBC statements propose
measures to ensure that the JFTC investigation process
adheres to fundamental international standards of due process
and transparency on a par with international standards. The
business groups specifically called for protections such as
disclosure of evidence held by the JFTC to the party under
investigation; respect for the attorney-client privilege and
the right to have counsel present during all stages of an
investigation (to protect the defense rights of parties that
are subject to investigations and interviews); holding
sufficient hearings prior to issuance of an order and
specification of the reason and evidence serving as the basis
for the order to the party at the time of the issuance of the
order; and preservation of confidentiality of information
provided to the JFTC.

TOKYO 00002564 002 OF 002

--------------------
GOJ REVIEWING POLICY
--------------------

6. (SBU) Despite Japanese press reports that the Government
of Japan has decided to scrap the present hearing system
entirely, JFTC contacts say that the GOJ is still discussing
the optimal system. They also confirm the GOJ is considering
a new rule to allow attorneys to be present during interviews
by JFTC officials, something the U.S. business community has
long requested.

----------------------
AMERICAN CHAMBER VIEWS
----------------------

7. (SBU) American Chamber of Commerce in Japan (ACCJ)
contacts note that by going on the record as it has,
Keidanren has set the terms of the policy debate. They
strongly agree that improvements in the JFTC's investigation
process are as important as the appeal process. Regarding
abolition of the hearing system, what is required next is
close attention to practical questions regarding the rules
under any new system regarding issues such as evidence,
disclosure, confidentiality, and other applicable laws. For
example, if the Administrative Procedure Law were to apply,
it would allow enforcement of any order (including the
penalty) unless the court issues a suspension order. The
ACCJ Competition Policy Task Force is preparing a separate
viewpoint on due process issues (to be made available soon);
it is now considering whether to issue a separate comment on
the hearing system.
ROOS

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