The Legal 500 & The In-House Lawyer
Comparative Legal Guide
Japan: Competition Litigation
This country-speciﬁc Q&A provides an overview
to competition litigation laws and regulations that
may occur in Japan.

Country Author: Atsumi & Sakai
The Legal 500
Setsuko Yufu, Partner

This Q&A is part of the global guide to Competition
Litigation. For a full list of jurisdictional Q&As
visit http://www.inhouselawyer.co.uk/practice-areas/c
ompetition-litigation/

Setsuko.yufu@aplaw.jp

Hisashi Miyatsuka, Partner
hisashi.miyatsuka@aplaw.jp

Saori Hanada, Partner
saori.hanada@aplaw.jp
The Legal 500

Kohei Murakawa, Partner
kohei.murakawa@aplaw.jp

1. What types of conduct and causes of action can be relied upon

as the basis of a competition damages claim?
Damages claims

In principle, a party that has suﬀered damage due to a violation of the Act on
Prohibition of Private Monopolization and Maintenance of Fair Trade (so called
as the “Antimonopoly Act”) (“AMA”) may ﬁle a damages claim against theviolating party based on either (1) Article 709 of the Civil Code (“Type A
claims”) and/or (2) Article 25 of the AMA (“Type B claims”). Both types ofclaim are based on tort liability. The main diﬀerences lie in that Type B claims
are so-called “follow-on” claims with strict liability (see Question 2) and how thestatute of limitations is calculated (see Question 5).

Unjust enrichment

In addition, an aggrieved party may ﬁle a claim of unjust enrichment (Articles
703 and 704 of the Civil Code), which performs a function similar to that of acompetition damages claim, when a contract has been concluded based on bidrigging, abuse of superior bargaining position, etc. and therefore was held to be
void due to public policy. An unjust enrichment claim is advantageous because(i) the limitation period is a period of 10 years (Article 167 of the Civil Code) and(ii) the burden of proof of damage can be shifted to the defendant. For Type A
and B claims, the limitation periods are shorter (see Question 5) and theaggrieved party assumes the burden of proving damage.

Injunction

At the same time, in relation to violations or potential violations of Article 8(v)or Article 19 of AMA (unfair trade practices), an aggrieved party who is suﬀeringor likely to suﬀer extreme damage is entitled to seek an injunction to suspend
or prevent the infringements (Article 24 of the AMA).

2. What is required (e.g. in terms of procedural formalities andstandard of pleading) in order to commence a competition
damages claim?
Type A claims (Article 709 of the Civil Code)Type A claims are general tort claims. Not only direct purchasers but also
indirect purchasers may commence lawsuits for such claims by the ﬁling ofcomplaints with a competent district court. A claimant must prove (i) existenceof intention or negligence; (ii) violation of rights or legally protected interests;(iii) occurrence and amount of damage; and (iv) legally suﬃcient causation
between the violation and the damage.

Type B claims (Article 25 of the AMA)

Type B claims may only be made after either a cease and desist order or asurcharge payment order by the Japan Fair Trade Commission ("JFTC") has
become ﬁnal and binding regarding, among other things, privatemonopolization, unreasonable restraint of trade or unfair trade practices (followon claims, Article 25(1) and Article 26(1) of the AMA).

While these claims are under strict liability, Type B claims are not considered tobe advantageous for the claimant because, with regard to most violations of theAMA, (i) intention or negligence and (ii) the violation under Type A claims are,as a matter of practice, presumed. On the contrary, those claims are
disadvantageous in that (i) claimants may only assert a compensation claim fordamage arising from violating actions stated in the cease and desist order orsurcharge payment order; and (ii) no claim may be made against persons otherthan those to whom the cease and desist order or surcharge payment order isaddressed. In this regard, a successful leniency applicant that is exempt fromthe relevant order (surcharge payment order and/or cease and desist order) is
not liable for damages under Type B claims (whereas, in contrast, they will still
be liable for damages under Type A claims).

3. What remedies are available to claimants in competition

damages claims?
Monetary damages for the amount of damage the aggrieved party actually
suﬀered are available remedies under both Type A and Type B claims (for the
method of calculating damages, see Question 17). It is also possible to demand
an injunction (see Question 1).

4. What is the measure of damages? To what extent is joint andseveral liability recognised in competition damages claims? Are
there any exceptions (e.g. for leniency applicants)?
See Question 17 for the measure of damages.

If more than one person has inﬂicted damage on others by their joint tortious
acts, each of them shall be jointly and severally liable for compensation for suchdamage (Article 719(1) of the Civil Code). Since violators involved in a priceﬁxing cartel or bid-rigging are jointly inﬂicting damage, each of the violators
assumes joint and several liability and therefore is independently liable fordamages for the entire amount of damage. A violator that has provided
compensation to claimants may demand compensation from the other violators
according to the degree that each of the other violators has contributed to thetotal damage to the claimants.

See Question 2 and 16 for leniency applications.

5. What are the relevant limitation periods for competition

damages claims? How can they be suspended or interrupted?
Type A claims (Article 709 of the Civil Code)A Type A claim is extinguished after 3 years from the time that the aggrievedparty comes to know of the damage and the identity of the violator, or 20 years
from the time of the tortious act, whichever comes ﬁrst (Article 724 of the Civil
Code). In practice, the damage and the violator usually become known to theaggrieved party when a cease and desist order or a surcharge payment order isissued by the JFTC, and the limitation period of 3 years starts to run at thattime.

Type B claims (Article 25 of the AMA)A Type B claim is extinguished after 3 years from the date that a cease anddesist order or surcharge payment order becomes ﬁnal and binding (Article
26(2) of the AMA). The 3-year limitation period for a Type A or Type B claim issuspended upon (i) ﬁling of a complaint with the court, (ii) ﬁling of an
attachment, provisional seizure, or provisional disposition, or (iii)
acknowledgment of the claim by the obligor.

6. Which local courts and/or tribunals deal with competition

damages claims?
Type A and Type B claims are both handled by the competent district court.

7. How does the court determine whether it has jurisdiction over acompetition damages claim?
For a Type A claim, the court follows the provision on jurisdiction in the relevant
contract (e.g., a purchase and sale agreement between the claimant anddefendant for the products aﬀected by a price-ﬁxing cartel). If there is no suchprovision, the claimant may submit its complaint to the district court having
jurisdiction over (i) the principal oﬃce or business oﬃce of a defendantcompany; or (ii) the location where the tort was committed or where thedamage occurred.

For a Type B claim, the Tokyo District Court has exclusive jurisdiction.

8. How does the court determine what law will apply to thecompetition damages claim? What is the applicable standard of
proof?
Applicable law

For both Type A and Type B claims, if the claim is obviously closely connected
to a certain place, the law of such place shall apply (Article 20 of the Act onGeneral Rules for Application of Laws (“AGRAL”). Otherwise, in principle, theapplicable law shall be that of the place where the result of the infringement of
the AMA occurred. If the occurrence of the result at that place was ordinarily
unforeseeable, the law of the place where the act of infringement wascommitted shall govern (Article 17 of AGRAL).

Standard of proof

As in other types of civil litigation, a high probability is the standard of proof forcompetition damages claims, where the causes of action needs to be proven to
the extent that an average person would not have doubt.

9. To what extent are local courts bound by the infringement

decisions of (domestic or foreign) competition authorities?
The courts are not legally bound by the infringement decisions issued bydomestic or foreign competition authorities. However, in practice, ﬁnal andbinding cease and desist orders or surcharge payment orders by the JFTC would
be recognized as strong evidence that presumes the existence of the violating
conduct of the AMA. It is generally diﬃcult to overturn such presumptions,although the court examines other evidence and determines the existence ofthe violating conduct based on its own ﬁndings.

We expect that ﬁnal and binding infringement decisions by foreign competition
authorities would have the same evidential value as the ones by the JFTC.

10. To what extent can a private damages action proceed while

related public enforcement action is pending? Is there a
procedure permitting enforcers to stay a private action while
the public enforcement action is pending?
Litigation of Type A claims can proceed while the public enforcement action ispending. There is no statutory provision which enables the enforcers to stay theType A private action. Even while the public enforcement action is still pending,the court may render a ﬁnal judgment if it reaches the stage to do so. However,in light of our experience, it is possible that the private litigation proceedings
may be stayed in eﬀect at the court’s discretion if the court becomes cautious
about recognizing the existence of the violation of the AMA.

In contrast, Type B claims may only be made after either a cease and desist
order or a surcharge payment order has become ﬁnal and binding (SeeQuestion 2).

11. What, if any, mechanisms are available to aggregatecompetition damages claims (e.g. class actions,assignment/claims vehicles, or consolidation)? What, if any,
threshold criteria have to be met?
In Japan, there are mechanisms called group action (Shohisya Dantai Sosyo)
and appointed party (Sentei Tojisya).

Group action

Group actions can only be used for limited situations, as provided in the Act on
Special Measures Concerning Civil Court Proceedings for the Collective Redressfor Property Damage Incurred by Consumers. Compared to the well-known U.S.
class action, the characteristics of the Japanese group action are that (i) only
speciﬁed qualiﬁed consumer organizations authorized by the government canserve as claimants (i.e. individuals cannot be claimants); (ii) the subject claims
are limited to those arising from contracts between a consumer and a company;(iii) it is an opt-in type proceeding where only those who opt to participate in
the group action proceeding may beneﬁt from the judgment; and (iv) that thejudge of a group action may only determine whether the company is liable fordamages and the amount thereof cannot be ﬁxed (each consumer needs to ﬁlea separate proceeding to establish the amount of damages).

Appointed party

The “appointed party” is a mechanism where persons with a common interestmay appoint one or more persons from among themselves to stand as theclaimant on behalf of all (Article 30 of the Code of Civil Procedure (“CCP”)). Thismechanism has actually been used in a competition damages litigation in
relation to a violation of the AMA. Appointed parties do not need to be lawyers
but they must have a common interest with the other parties.

Assignment of claims

While it is theoretically possible for each claimant to assign its claims to a
speciﬁc person, in Japan, it is not common for such a person to ﬁle a lawsuit for
the assigned claims. This is because it is prohibited by Article 10 of the Trust
Act to create a trust for the primary purpose of having another person initiate
legal action and the aforementioned lawsuit has a risk to violate this provision.

12. Are there any defences (e.g. pass on) which are unique tocompetition damages cases? Which party bears the burden of
proof?
The concept of passing-on defence per se has not been introduced into
Japanese competition law. However, if a defendant (cartelist) is successful inproving the fact that some or all of the overcharges were passed on to downstream companies or consumers, the defendant may argue that the amount ofdamages should be reduced accordingly.

In addition, in the cases of bid-rigging at the initiative of public oﬃcers, thecourt allows the amount of damages to be reduced by taking into account thenegligence of the public oﬃcers (contributory negligence, Article 722 of the
Civil Code).

13. Is expert evidence permitted in competition litigation, and, if so,

how is it used? Is the expert appointed by the court or theparties and what duties do they owe?
Expert report

In competition litigation related to a price-ﬁxing cartel or bid-rigging, a party
sometimes submits an expert report to prove the amount of damage suﬀered.
The expert in these sorts of cases is privately retained by the party. Given thewide discretion in determining the amount of damage, the court has not been
faced with the necessity of relying on a speciﬁc economic methodology toquantify the amount of damage, although economic analysis of the amount ofdamage is becoming more common (See Question 17).

Expert testimony and technical advisers

In addition, there is the system of expert testimony (Article 212 of the CCP) andthe procedure to hear an explanation from a technical adviser based on theadviser’s expert knowledge (Article 92-2 of the CCP). Although the technicaladviser system was introduced in 2003, it has not been used frequently inpractice.

An expert is appointed by the court at the request of a party to the litigation. A
technical adviser, in contrast, is appointed by the court after hearing theopinions of the parties to the litigation.

Experts assume the obligation to provide an expert opinion in good faithaccording to the dictates of conscience. Technical advisers must perform theirservices faithfully in accordance with their professional duties. A technicaladviser will be dismissed if he/she violates the foregoing obligation or isdetermined to have engaged in any conduct that is not suitable as a technicaladviser.

14. Describe the trial process. Who is the decision-maker at trial?

How is evidence dealt with? Is it written or oral, and what are
the rules on cross-examination?
Unlike trials in the United States, there is no discovery or jury trial system andtherefore the judge is the decision maker.

For both Type A and Type B claims referred to in Question 1, the claimant ﬁlesan action by submitting a written complaint to the court and, in response
thereto, the named defendant submits a written answer. The court designates
dates for oral proceedings and the parties make written submissions and oﬀer
relevant evidence at a number of these oral proceedings. Evidence includes
documentary evidence, testimony of one or more witnesses or expert witnesses
and observation (by the judge, based on the judge’s ﬁve senses). The court has
wide discretion regarding the types of evidence to be adopted and theassessment of adopted evidence, and ﬁnds facts entirely at its discretion(Principle of the Free Evaluation of Evidence, Article 247 of CCP).

When legal and factual issues have been suﬃciently identiﬁed, the court
conducts examinations of witnesses, which need to be conducted in as focuseda manner as possible. The court has discretion to decide the case without
examination of witnesses. In the cross-examination, it is prohibited to ask about
any matters other than those matters that were raised in the direct
examination, matters related thereto, and matters regarding the reliability of
testimony. In the cross-examination, it is also prohibited to ask questions
seeking statements on facts which the witness has not experienced directly.

15. How long does it typically take from commencing proceedings to

get to trial? Is there an appeal process? How many levels of
appeal are possible?
In our experience, where public entities seek damages in bid-rigging cases,
after the ﬁling of the complaint, it usually takes around 1 year to reach witness
examinations and 1.5 years to a ﬁnal judgment. On the other hand, wherepurchasers of products subject to a price-ﬁxing cartel ﬁle damages lawsuits
against cartelists, it may be expected to take around 3 to 4 years to render aﬁnal judgment as legal and factual issues in dispute tend to be complicated.

A party dissatisﬁed with a judgment by the district court may ﬁle an appeal(Kouso), which is handled by a high court. A party dissatisﬁed with a judgmentby the high court may ﬁle a ﬁnal appeal with the Supreme Court (Jokoku).

16. Do leniency recipients receive any beneﬁt in the damages

litigation context?
Generally, there is no mechanism to give leniency recipients beneﬁts incompetition damages litigation. There are, of course, opinions that such asystem should be introduced in order to make leniency more eﬀective but there
is no momentum to actually establish such system.

However, in relation to Type B claims, if leniency recipients are exempt from an
administrative surcharges order and a cease and desist order, such recipients
will not be liable for damages under Type B claims (see Question 2).

17. How does the court approach the assessment of loss incompetition damages cases? Are “umbrella eﬀects” recognised?
Is any particular economic methodology favoured by the court?
How is interest calculated?
In competition damages litigation concerning a cartel or bid-rigging, the amountof damage is determined by assessing the monetary diﬀerence between theactual price of the products or services and the anticipated price that would
have existed were it not for the violation of the AMA. While there is no
generally-accepted methodology to determine the anticipated price, if it ispossible to identify the price formed immediately before or after the period of
violation and if such price is considered to be formed based on free competition,
then, in principle, the court tends to ﬁnd that such price is the anticipated price.

In cases where the anticipated price cannot be identiﬁed in this way, the judge
has signiﬁcant discretion in determining the amount of damage. This is because
Article 248 of CCP, which was introduced in 1996, sets forth that when it isextremely diﬃcult to prove the amount of damage, the court may determine anappropriate amount of damage at its discretion. Due to this discretionary
power, the court has not been faced with the necessity of relying on a speciﬁc
economic methodology to quantify the amount of damage, although economic
analysis of the amount of damage is becoming more common.

“Umbrella eﬀects” have not been recognized by the court although the theories
have been introduced to Japan.

As for interest, interest for the period from the date of service of the written
complaint until the payment of damages is usually approved.

18. Can a defendant seek contribution or indemnity from otherdefendants? On what basis is liability allocated between
defendants?
See Question 4.

19. In what circumstances, if any, can a competition damages claim

be disposed of (in whole or in part) without a full trial?
In Japan, there is no U.S.-style summary judgment. If an action was not ﬁled inaccordance with the law (for example, the party does not have standing or theaction violates the prohibition of duplicate actions) and such defect cannot becorrected, the court may render a decision to dismiss the action without trying
the merits of the case.

In addition, before the stage of examination of witnesses, courts often explore
the possibility of settlement by the parties. Also, courts may issue a default
judgment if the defendant fails to appear.

20. What, if any, mechanism is available for the collective

settlement of competition damages claims? Can such
settlements include parties outside of the jurisdiction?
As discussed in Question 11, while the group action and appointed party
mechanisms for aggregating competition damages claims do exist, there is no
special procedure in place for collective settlement.

21. What procedures, if any, are available to protect conﬁdential orproprietary information disclosed during the court process?
What are the rules for disclosure of documents (including
documents from the competition authority ﬁle or from otherthird parties)? Are there any exceptions (e.g. on grounds ofprivilege or conﬁdentiality, or in respect of leniency orsettlement materials)?
Inspection of case records (Both Type A and B claims)

A third party may inspect and read a case record of competition litigation at the
court by ﬁling a request with the court clerk (Article 91(1) of CCP). Whenconﬁdential information, such as a trade secret being kept by a party to thelitigation, is recorded in the case record, such party may request that the court
issue an order to limit the persons who may request inspection or copying of
the parts of the case record containing such trade secret to only the parties tothe litigation (Article 92(1)(ii) of the CCP). If the court issues such order, theconﬁdential information will not be disclosed to third parties.

Commission to send documents (Both Type A and B claims)

There is no U.S.-style disclosure in Japan but a claimant in competition litigation
may request that the court commission the JFTC to send relevant documents(Article 226 of CCP). In accordance with JFTC’s internal policy, if a cease anddesist order or surcharge payment order has already become ﬁnal and biding,the JFTC discloses documents relating to the existence of violating acts, amountof damage, and causation between such act and damage that were prepared or
obtained in the course of issuing such order. The JFTC takes appropriate
measures, such as redacting some parts of the documents, taking into accounttrade secrets, knowhow, and privacy of oﬃcers or employees.

Order for submission of documents (Both Type A and B claims)

If disclosure by way of commission is insuﬃcient, the claimant may require thatthe court issue an order for submission of documents (Article 223 of CCP).
Unless there are grounds for refusing to submit the documents set forth in
Article 220 of CCP, the party possessing such documents may not refuse tosubmit the same. The main categories of documents subject to the grounds forrefusing submission are: (i) documents concerning conﬁdential information inconnection with a public oﬃcer’s duties, which, if submitted, would likely harm
the public interest or substantially hinder the performance of a public duty; (ii)documents recording technical or professional secrets which are not released
from non-disclosure obligation; and (iii) documents prepared mainly for the useof the persons in possession. Among these grounds, item (iii) above refers tointernal documents which are never intended to be disclosed to a third party.
While item (iii) might cover documents subject to attorney-client privilege, todate, we are not aware of any statute, ordinance, or court precedent whereanything to this eﬀect is explicitly stated in relation to civil litigation system inJapan. In addition, documents created by public oﬃcers for organizational use
do not fall under (iii).

Since the employees of the competition authority are public oﬃcers, whether
they have an obligation to submit documents to the parties of competition
litigation is determined pursuant to the above criteria. There are several court
precedents which ordered the JFTC to disclose written statements of employees.

Special provisions for injunction (Article 24 of the AMA)

With regard to competition litigation seeking an injunction, there is a special
rule regarding court orders for submission of documents (Article 80(1) of theAMA). Under this rule, unless there is a justiﬁable reason, a holder of documents
necessary to prove the alleged infringement must submit such documents. In
addition to ordering submission of documents, the court may also issue
protective orders that trade secrets may not be used for any purpose other thanthe purpose of conducting the litigation or be disclosed to third parties (Article
81 of the AMA).

22. Can litigation costs (e.g. legal, expert and court fees) berecovered from the other party? If so, how are costs calculated,
and are there any circumstances in which costs recovery can belimited?
In principle, court costs are entirely borne by the losing party (Article 61 of
CCP). The court costs include ﬁling fees, which are determined based on thevalue of the subject of litigation, postal charges, transportation costs and daily
allowances for witnesses and fees for experts, but do not include attorneys’
fees. The amounts for transportation costs and daily allowance are determined
pursuant to the rules of the Supreme Court. Fees for expert testimony are
determined by the court as it ﬁnds reasonable.

Basically, the court does not order a losing party to pay attorneys’ fees, but aclaimant for Type A or B claims may recover some portion of attorneys’ feesfrom the defendant as part of damages, since obtaining appropriatecompensation for damage through litigation is diﬃcult to achieve without
retaining lawyers.

23. Are third parties permitted to fund competition litigation? If so,

are there any restrictions on this, and can third party funders bemade liable for the other party’s costs? Are lawyers permitted
to act on a contingency or conditional fee basis?
There is no statute or court precedent that expressly and directly bans thirdparty funding. However, it is still under discussion whether any statutory
provisions indirectly prohibit third-party funding. For example, article 72 of the
Attorney Act provides that no person other than attorney may, for the purposeof obtaining compensation, engage in the business of providing legal services. Athird-party funder would be exposed to the risk of violating this provision if itwere to signiﬁcantly inﬂuence a party’s actions in competition litigation. For
some consumer litigation, there has been a growing use of crowdfunding toraise funds for litigation.

Lawyers are permitted to act on a contingency fee basis, although a 100%
contingency fee arrangement risks violating the Code of Conduct of Japaneselawyers.

24. What, in your opinion, are the main obstacles to litigatingcompetition damages claims?
Where the AMA is violated in the course of a business transaction, theaggrieved party and perpetrator usually have an ongoing business relationship.
In such cases, since the parties wish to maintain a smooth working relationship,
it is common for the dispute to be resolved through an out-of-court settlement.
Due to this preference for settlement, we do not expect that competition
damages litigation will increase in the near future.

Where the aggrieved party is a consumer, as discussed in Question 11, thesystem for group actions is inadequate, and makes it diﬃcult for consumers toinitiate competition damages litigation.

25. What, in your opinion, are likely to be the most signiﬁcantdevelopments aﬀecting competition litigation in the next ﬁve
years?
The AMA was amended in June 2019 (but not yet eﬀective at the time when we
write this article), and a new system was adopted by the amended AMA, inwhich the JFTC may more ﬂexibly reduce the administrative surcharges to be
imposed on leniency applicants, except for the ﬁrst applicant which willcontinue to receive a 100% reduction, in accordance with the degree of theircooperation with the investigations. In addition, for the purpose of promoting
the leniency applicants’ cooperation with the investigation, a system similar toattorney-client privilege was introduced–investigators will not accessdocuments stating the contents of conﬁdential communication between theclient and attorney regarding legal advice, especially for cases concerning
price-ﬁxing cartels and bid-rigging.

While there have been a number of court cases where public entities havepursued claims for damages against parties that engaged in bid-rigging inconnection with public works or procurement in Japan, there have been only a
few court cases where companies having ongoing businesses relationships withviolators of the AMA initiated competition damages litigation.

As we are not aware, at this time, of any speciﬁc movement aimed at promoting
competition damages litigation, it does not appear to us that there will be major
developments in the ﬁeld of competition litigation in the coming ﬁve years.