Silviase/jgov_v1.4_full_ann huggingface dataset:
recommendation decision, September 18, 1972).

2) Foundation X—a medical food examination institution—restricted registered items etc. of medical food and restricted sales territories and sales destinations of medical food etc. on the basis of the manufacturing plant recognition system and distributor recognition system for medical food, upon the request of medical food distributor Company Y to become the sole distributor of medical food for medical institutions, with the intent to prevent competition among medical food manufacturers and among medical food distributors. Such conduct was found to exclude the business activities of the entrepreneurs that intended to produce or distribute medical food (JFTC recommendation decision, May 8, 1996).

(Note 5) The following is an illustrative example for multiple acts that are collectively regarded as a series of integrated Exclusionary Conduct:

Company X, which published a large percentage of a daily morning and evening newspaper in the Hakodate area, decided to take up measures to make it difficult for Company Y to continue its daily evening newspaper publishing business and to interfere with Company Y entering into the area. On the basis of the decision, a series of the multiple acts that consisted of a) applying for trademark registrations of newspaper mastheads that were expected to be used by Company Y, b) requiring a news agency to refuse Y's offer for providing news service from Company Y, c) setting significantly discounted advertising rates to entrepreneurs that Company Y looked at as advertisers, and d) requesting a TV station to refuse Company Y's offer to broadcast TV commercials as the countermeasures against Company Y was found to exclude the business activities of Company Y (JFTC consent decision, February 28, 2000).

(Note 6) Regarding whether conduct of restrictions pertaining to the use of technology falls under Exclusionary Conduct, refer to (1) of Part 3 of the Guidelines for the Use of Intellectual Property under the Antimonopoly Act (September 28, 2007, JFTC). Regarding whether joint research and development of technologies that will lead to unification of standards or standardization falls under Exclusionary Conduct, refer to 2 (2) of Part I of the Guidelines Concerning Joint Research and Development under the
Antimonopoly Act (April 20, 1993, JFTC) and 2 of Part 2 of the Guidelines on Standardization and Patent Pool Arrangements (June 29, 2005, JFTC).

(Note 7) There are cases where in order to the protect secrecy of know-how (meaning any technical knowledge or experience that is not publicly known or any accumulation of them, and thereof the economic value of which is independently protected or controlled by entrepreneurs; the same shall apply hereinafter), such conduct is carried out as imposing restrictions regarding procurement sources of the raw materials or the components of the products or sales destination of the products on the trade partners receiving the said know-how. When assessment is made over whether or not such conduct falls under Exclusionary Conduct, comprehensive consideration is given to factors such as the characteristics of the know-how, technology level in the relevant field, characteristics of the raw materials or the product, and duration of the period until the said know-how loses its value for trading, in addition to factors for assessment described in 2 to 5 of Part II below.

For example, there are cases where a manufacturer outsources the manufacturing of products to another manufacturer by providing its know-how to the latter, or where multiple entrepreneurs manufacture or distribute a product that is manufactured by using the know-how developed in their joint research and development. In such cases, imposing restrictions regarding procurement sources of the raw materials or the components of the products or sales destination of the products on trade partners receiving the said know-how would not be deemed to fall under Exclusionary Conduct as far as such conduct is performed within a scope and period essential for protecting the secrecy of the said know-how.

### 2. Below-cost Pricing

(1) Conduct that may fall under Exclusionary Conduct

The free competition economy is based on the assumption that supply and demand adjustment is left to market mechanism, and entrepreneurs have the freedom to decide their prices by adapting to the supply and demand relationship in the market. Price-cutting competition based on entrepreneurs' own efforts essentially constitutes the core of competition on the merits—competition by which entrepreneurs win customers by supplying high-quality and low-cost
products—that competition policies intend to maintain and promote. Therefore, intervention in price-cutting competition should be kept at a minimum in light of the purpose of the Antimonopoly Act, which promotes fair and free competition.

However, generally, when setting a very low price to allow even recovery of the cost, which would not be generated unless the product was supplied, the amount of loss grows larger as the supply of the product increases, so such conduct lacks economic rationality except in extraordinary circumstances (Note 8). Therefore, depriving competitors' customers by setting such a price would not reflect business efforts or the normal competition process and would cause difficulty in the business activities of an equally or more efficient competitor, thereby possibly undermining the competition. Thus, setting a price below the cost that would not be generated unless the product was supplied (hereinafter referred to as the "Below-cost Pricing") may fall under Exclusionary Conduct (Note 9).

Assessment over what costs are regarded as “the cost that would not be generated unless the product was supplied” is made from the viewpoint of whether the cost will increase or decrease depending on the supply quantity of the product and/or whether the cost is closely related with the supply of the product, in a reasonable period in the context of the actual condition.

From the viewpoint of whether the cost will increase or decrease depending on the supply quantity of the product, for example, variable expense—the cost that proportionally increases or decreases in total amount depending on the rate of capacity utilization—is regarded as “the cost that would not be generated unless the product was supplied.” When a cost, due to the nature of the cost, is deemed not to be obviously the variable expense but to be increasing or decreasing to a certain degree depending on the changes in supply quantity, it is presumed to be “the cost that would not be generated unless the product was supplied.”

From the viewpoint of whether or not the cost is closely related with the supply of the product, for example, production cost (the sum of costs required for producing the product) and purchasing cost (the sum of the actual purchasing cost of the product and miscellaneous expenses pertaining to the purchases, such as the transportation cost) of the expense items for corporate accounting are presumed to be “the cost that would not be generated unless the product was supplied.” From the similar point of view, for example, order execution cost such as delivery cost and storage cost within selling cost and general
administration cost are presumed to be “the cost that would not be generated unless the product was supplied.”

Setting a product price below the cost required for supplying the product (Notes 10 and 11) and not less than “the cost that would not be generated unless the product was supplied” is unlikely to be deemed to cause difficulty in the business activities of an equally or more efficient competitor and to fall under Exclusionary Conduct, except in extraordinary circumstances such as a large amount of the products supplied over a long period.

(Note 8) Whether it is economically rational is conceptually assessed from whether a price set by the said entrepreneur can cover average avoidable cost (AAC), which is the average of product-specific fixed costs and variable costs that could have been avoided if the said entrepreneur had not produced extra output. On a practical level, the JFTC will substitute “the cost that would not be generated unless the product was supplied” for the AAC.

(Note 9) Properly setting a low price for a product whose quality is likely to deteriorate rapidly, such as perishable food, for a product whose peak sales periods are over, such as a seasonal good, or for a product with quality defects, such as an inferior product, is not deemed unfair even when the price is lower than “the cost that would not be generated unless the product were supplied” and therefore does not fall under Exclusionary Conduct. The same applies to a case in which a low price is properly set for a product when the prices in the market have been lowered because of the supply–demand relationship.

(Note 10) The cost required for supplying the product refers to the sum of all costs required for supplying a product (average total cost). This corresponds to the gross cost of sales, of the expense items for corporate accounting. Normally, in the manufacturing industry, the gross cost of sales corresponds to the sum of the production cost, selling cost, and general administration cost. In the retail business, the gross cost of sales corresponds to the sum of the purchasing cost, selling cost, and general administration cost.

(Note 11) In terms of common costs in multiple businesses, how to allocate such
costs to respective businesses becomes an issue, and it is general in corporate accounting that each entrepreneur allocates common costs to each business depending on the degree of benefit given by the generation of the costs, pursuant to the allocation criteria that were reasonably selected by the entrepreneur in the context of the actual condition. In such a case, if the entrepreneur is deemed to use the allocation criteria that were reasonably selected in the context of the actual condition, the gross cost of sales is usually calculated by allocating the common costs based on the said allocation criteria, although there are various allocation criteria.

## (2) Factors for assessment

Where setting a product price below “the cost that would not be generated unless the product was supplied” would cause difficulty in the business activities of an equally or more efficient competitor, the said conduct is regarded as Exclusionary Conduct. The JFTC will comprehensively consider the following factors to assess whether or not such conduct would cause difficulty in the business activities of an equally or more efficient competitor.

### A. Conditions of the entire market of the product

Where assessment is made over whether or not Below-cost Pricing falls under Exclusionary Conduct, consideration is given to factors concerning conditions of the entire market of the product, such as the characteristics of the product, economies of scale (the product’s nature that the larger the supply quantity becomes, the lower the per-unit cost of the product becomes; the same shall apply hereinafter), degree of differentiation of the product, distribution channels, dynamics of the market, and difficulty of market entry.

For example, when choosing between the entrepreneur’s and competitors’ products, customers do not consider prices to be important for highly differentiated products as they would when the products are not differentiated. Therefore, such a case would be unlikely to be deemed to cause difficulty in the business activities of an equally or more efficient competitor.

### B. Positions of the said entrepreneur and the competitors in the market

Where assessment is made over whether or not Below-cost Pricing falls under Exclusionary Conduct, consideration is given to factors concerning positions of the said entrepreneur and the competitors in the market, such as
the share of the product, its ranking, brand value of the product, excess supply capacity, scale of operation (number of places of business, business territory, conditions of diversification, etc.), and proportion of the relevant product in all the businesses of the entrepreneur.

For example, where an entrepreneur with a large scale of operation engages in Below-cost Pricing while compensating for the loss with profits from sales of other products or with other money, excessive Below-cost Pricing can be continued for a much longer period, making it difficult even for an efficient entrepreneur to compete by normal business efforts. Therefore, such a case would be more likely to be deemed to cause difficulty in the business activities of an equally or more efficient competitor.

### C. Period of the conduct and turnover and quantity of the product

Where assessment is made over whether or not Below-cost Pricing falls under Exclusionary Conduct, consideration is given to factors such as the period during which Below-cost Pricing is conducted and the turnover and quantity of the product provided at the said price.

For example, a case where a product is provided over a long period at a price below “the cost that would not be generated unless the product was supplied” would be more likely to be deemed to cause difficulty in the business activities of an equally or more efficient competitor.

### D. Conditions of the conduct

Where assessment is made over whether or not Below-cost Pricing falls under Exclusionary Conduct, consideration is given to factors concerning conditions of the conduct, such as intent and purpose of an entrepreneur, advertising, and publicity associated with the price-cutting (including the entrepreneur’s reputation for price-cutting).

For example, where the said entrepreneur also carries out Below-cost Pricing in other areas or for other products over long period, other entrepreneurs would be more likely to hesitate to enter the market, being cautious about further Below-cost Pricing by the said entrepreneur. Thus, where Below-cost Pricing by the entrepreneur is deemed to be well known, such a case would be more likely to be deemed to cause difficulty in the business activities of an equally or more efficient competitor.
## (3) Reference example

Company X was an entrepreneur selling most of the maps of the residential areas, etc. of Japan and had been the only company that distributed residential maps of City A. When Company Y—an entrepreneur engaging in the distribution of maps of residential areas etc. in the Hokuriku district—began to engage in selling residential maps of City A, Company X intended to cause difficulty in the selling activities of Company Y by a) making Company X's specified agent set a price excessively below the production cost for residential maps of City A ordered via designated competitive bidding etc. by the Gas Bureau and Waterworks Bureau of City A and b) making its wholly owned subsidiary sell a 1998 edition of residential maps at a price excessively below the gross cost of sales (in part at a price lower than the production cost) in the major cities of the Hokuriku area, which was the main distributing territory of Company Y. Such conduct of Company X was deemed to be likely to fall under paragraph (6) of the Designation of Unfair Trade Practices (JFTC Public Notice No.15 of 1982) and to violate the provisions of Article 19 of the Antimonopoly Act (JFTC warning, March 24, 2000).

### 3. Exclusive Dealing

## (1) Conduct that may fall under Exclusionary Conduct

Even if an entrepreneur deals on the condition that the trade partners shall not purchase the products from its competitors, the competitors are able to continue their business activities in the market on the basis of the competition in factors such as prices and product qualities in case that they are able to easily find an alternative trade partner. Therefore, such conduct in itself does not immediately fall under Exclusionary Conduct.

However, where an entrepreneur deals with the trade partners on the condition of prohibition or restraint of transactions with competitors, and the competitors cannot easily find an alternative supply destination to the said trade partner, such conduct may cause difficulties to the business activities of the competitors and therefore may undermine competition. Thus, dealing with the trade partners on the condition of prohibition or restraint of transactions with the competitors (hereinafter referred to as “Exclusive Dealing”) may fall under Exclusionary Conduct (Note 12).

Exclusive Dealing includes not only an entrepreneur’s obvious conduct of making a contract that the trade partners shall not have dealings with its
competitors but also an entrepreneur’s conduct of dealing with its competitors on the substantial condition for prohibition or restraint of the dealings. For example, when achieving a specific quantity of trade is required for dealings, and the said quantity of trade is close to the maximum quantity that the trade partner is capable of dealing (or selling), such conduct can be deemed as prohibiting or restraining dealings with one’s competitor as a virtual requirement for the dealing. Thereby, such conduct falls under Exclusive Dealing. In the same manner, for example, requiring one’s approval before the trade partners’ dealing with one’s competitors falls under Exclusive Dealing when it substantially prevents dealings with one’s competitors by providing economic benefit in return or by attaching economic disadvantage.

(Note 12) For example, where an entrepreneur engages in wholesale business or retail business deals with a manufacturer on the condition of prohibition or restraint of transactions with the competitors, such conduct is included in “Exclusive Dealing.”

## (2) Factors for assessment

Where Exclusive Dealing would cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner, the said conduct is assessed as Exclusionary Conduct. The JFTC will comprehensively consider the following factors to assess whether or not such conduct would cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

### A. Conditions of the entire market of the product

Where assessment is made over whether Exclusive Dealing falls under Exclusionary Conduct, consideration is given to factors concerning conditions of the entire market of the product, such as the degree of market concentration, characteristics of the product, economies of scale, degree of differentiation of the product, distribution channels, dynamics of the market, and difficulty of market entry.

For example, where network effects (Note 13) are recognized as characteristics of the product, a decline in the number of entrepreneurs dealing with the competitors' products would be more likely to lower the utility value of the competitors' products and more likely to lead to further decline in the
number of its users, as compared to cases without the network effects. Therefore, in such a case, Exclusive Dealing would be more likely to be deemed to cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

### B. Position of the said entrepreneur in the market

Where assessment is made over whether Exclusive Dealing falls under Exclusionary Conduct, consideration is given to factors concerning position of the said entrepreneur in the market, such as the share of the entrepreneur's product, its ranking, brand value of the product, excess supply capacity, and the scale of operation.

For example, where the said entrepreneur’s product has a strong brand value, demand for it would be more likely to increase, and it becomes more important for its trade partners to be supplied with the products from the said entrepreneur. Therefore, in such a case, Exclusive Dealing would be more likely to be deemed to cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

### C. Position of the competitors in the market

Where assessment is made over whether Exclusive Dealing falls under Exclusionary Conduct, consideration is given to factors concerning position of the competitors in the market, such as the share of the products, their rankings, brand value of the product, excess supply capacity, and scale of operation.

For example, when the excess supply capacity of the competitors is small as a whole, it is impossible to completely make up for the whole supply of products that would be provided from the said entrepreneur by purchasing the products from the competitors. Therefore, it is more important for a trade partner to be supplied with the products from the said entrepreneur than when the number of the competitors is not small and the excess supply capacity is large as a whole. Consequently, in such a case, Exclusive Dealing would be more likely to be deemed to cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

### D. Period of the conduct, number of trade partners, and their share

When assessment is made over whether Exclusive Dealing falls under Exclusionary Conduct, consideration is given to factors such as the period of
implementation of the Exclusive Dealing, the number, and the share of the counterparties concerned.

For example, where Exclusive Dealing has been implemented over a long period or is implemented with a large number of counterparties, the Exclusive Dealing would be more likely to be deemed to cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

### E. Conditions of the conduct

Where assessment is made over whether Exclusive Dealing falls under Exclusionary Conduct, consideration is given to factors concerning conditions of the conduct, such as the conditions and contents of dealing and the intent and purpose of the entrepreneur.

For example, when trade partners are subject to additional charge or a large amount of penalty for their dealing with the said entrepreneur’s competitors, because of the conditions and contents of the dealing, they become the greater obstacle for the trade partners to trade with the competitors. Therefore, in such a case, Exclusive Dealing would be more likely to be deemed to cause difficulty in the business activities of the competitors who are unable to easily find an alternative trade partner.

(Note 13) The network effects refer to effects in which an increase in the number of users of particular technologies or specifications improves the utility value of the technologies or specifications, thereby allowing a further increase in their users.

## (3) Exclusive Rebate-giving

Rebates are actually used for a variety of purposes such as sales promotions and adjustment of purchase prices. In fact, rebates have the procompetitive effect to stimulate the demand or, as an element of prices, promote formation of prices that reflect the actual market situation. Therefore, Rebate-giving in itself does not immediately fall under an Exclusionary Conduct.

However, when an entrepreneur gives rebates to trade partners on the condition that the amount or volume of purchase from the entrepreneur or the proportion of amount (volume) of purchase from the entrepreneur to the total amount (volume) of its purchase reaches a particular threshold or more during a