Silviase/jgov_v1.4_full_ann huggingface dataset:
## Associations

The basic principles of the Antimonopoly Act reflect an intent to achieve the following objectives: to promote fair and free competition, to stimulate the creativity of firms, to encourage business activities, to raise the levels of employment and people's real income, and by virtue of all of the above, to promote the democratic and wholesome development of the national economy and to assure the interests of consumers in general (Sec. 1).

To achieve these objectives, the Antimonopoly Act prohibits activities of trade association that substantially restrain competition, limit the number of firms, unjustly restrict the functions or activities of the members of trade associations (hereinafter referred to as "constituent firms"), or that cause firms to engage in conduct that constitutes unfair trade practices (Sec. 8).

### 2. Definition of "Trade Association"

The term "trade association" refers to any combination or federation of combinations of two or more firms that has as one of its principal purposes the furtherance of the common business interests of those firms. Such associations can take any of the following forms (Sec. 2 (2)).

{1} Any association, incorporated or not, that has two or more member firms (including any status comparable to membership).

{2} Any foundation, whether a legal entity or not, of which two or more firms control the appointment or dismissal of directors or managers and the execution or existence of business activity.

(3) Any partnership that has two or more member firms, or any contractual combination of two or more firms.

For example, trade associations bear such names as Kogyokai (a manufacturing association), Kyokai (a society), Kyogikai (a council), Kumiai (an association), and Rengokai (a federation of organizations).

The "common business interests of those firms" mentioned above refers to interests that contribute directly or indirectly to the constituent firms' business interests; it is irrelevant whether this benefit is specific to individual firms or general within the industry. In view of this definition, associations such as scientific societies, public service organizations, and religious associations, which, though composed of two or more firms, do not have as their principal purpose the furtherance of the common business interests of firms, are not classified as trade associations.

"Principal purpose" means the most important purpose among several purposes and will be determined on the basis of what an association actually does, regardless of its articles of associations or by-laws.

The term "firms" in the phrase "combination of two or more firms" refers not only to the firms themselves, but includes any officers, employees, or agents who act for the benefit of those firms (Sec. 2 (1)). Therefore, standing committees made up of, for example, directors or section heads of companies are recognized as trade associations if their principal purpose is to promote the common business interests of member companies as firms.
Where individuals with particular qualifications or self-employed professionals are engaged in economic activities, they are regarded as “firms”. Where the primary purpose of a combination of such individuals is to promote the common business interests of those individuals as firms, such a combination is regarded as a trade association.

In addition, a combination of two or more firms, or a federation of such combinations, which has capital stock or capital subscriptions made by its constituent firms, and whose principal purpose is to run business for profit, and which is actually conducting such business, is itself classified as a firm but not considered as a trade association (Proviso to Sec. 2 (2)). Meanwhile, when a trade association that does not meet the above proviso but that adds the characteristics of a firm to its organization operates its own business, the provisions of the Antimonopoly Act concerning firms apply to those business activities.

### 3. Prohibited Activities

Sec. 8 prohibits trade associations from engaging in the following activities.

(1) "Substantially restraining competition in any particular field of trade" (Sec. 8(i)). This paragraph refers to trade association's conduct that involves fixing, maintaining, or increasing prices, or restricting quantities of goods or services supplied or received by that association's constituent firms, or restricting customers or sales channels of constituent firms, or restricting the facilities used by constituent firms in connection with supplies, or restricting the entry of firms thereby causing a substantial restraint of competition in any particular field of trade (i.e., market).

(2) "Entering into an international agreement or an international contract as provided in Sec. 6" (Sec. 8 (ii)).

This paragraph refers to trade association's entering into international agreements (contracts) with foreign firms or trade associations, the provisions of which result in unreasonable restraints of trade or unfair trade practices. Specifically, this paragraph refers the conclusion of international price-fixing agreements and market-allocation agreements.

(3) "Limiting the present or future number of enterprise in any particular field of business" (Sec. 8 (iii)).

This paragraph refers to a trade association's limiting the number of firms in any particular field of business, either by blocking new entrants or by forcing out existing firms.

(4) "Unjustly restricting the functions or activities of the constituent firm" (Sec. 8(iv))

This paragraph refers in general to a trade association's impeding fair and free competition by imposing restrictions on the business activities of constituent firms.

(5) "Inducing an enterprise to employ such an act as falls under unfair trade practices" (Sec. 8 (v)).

This paragraph refers to a trade association's compelling or encouraging firms (constituent and non-constituent) to engage in unfair trade practices such as
refusing to deal, discriminatory dealing, dealing on exclusive terms, dealing on restrictive terms, or interfering with a competitor's transaction.

This paragraph specifically refers to conduct such as pressuring firms' customers not to engage in transactions with non-constituent firms, or pressuring firms' customers to take disadvantageous measures, such as suspension of shipments, against discount traders.

Note: The term "unfair trade practices" means any act falling under any of the Sec.2 (9) (i) to (v), and any act falling under any of the Sec.2 (9) (vi) (a) to (f) which tends to impede fair competition and which is designated by the FTC.

Among unfair trade practices designated according to Sec. 2 (9) (vi) of the Antimonopoly Act, some are applicable to business in general, and others are applicable only to specific fields. The former are designated as "Unfair Trade Practices" (FTC Notification No. 15 of 1982, hereinafter referred to as "General Designations."). "The latter are referred to as "specific designations" that at present issued against three business sectors, such as Large-Scale Retailers.

### 4. Measures to Eliminate Violations

(1) When there exists any activity in violation of the provisions of Sec. 8, the FTC may order the trade association concerned to cease and desist from such activity, to dissolve the said association, or to take any other measures necessary to cease the violation (Sec. 8-2 (1)).

(2) Even when a violation of Sec. 8 has already ceased, the FTC may, when it finds it particularly necessary, order the trade association concerned to publicize the cessation of the violation and to take other measures necessary to ensure that the violation does not recur (Sec. 8-2 (2)).

(3) When ordering a trade association to take such measures as provided in (1) and (2) above, the FTC may, when it finds particularly necessary, order the executive officers, managers, and members of the trade association in question to take relevant necessary measures (Sec. 8-2 (3)).

### 5. Surcharges

If a violation of Sec. 8(i) (limited to when an act committed constitutes an unreasonable restraint of trade) or Sec. 8(ii) (limited to when an international agreement or an international contract concluded contains matters constituting unreasonable restraint of trade) by a trade association pertains to the price of goods or services, or substantially restrains supply or purchase volume etc. with respect to goods or services, thereby affecting their price, the FTC shall order the constituent firms of the trade association to pay a surcharge.

The amount of surcharge is calculated pursuant to the provisions of Section 7-2, etc. which are applied mutatis mutandis pursuant to Section 8-3.

Furthermore, no surcharge payment will be ordered if seven years have passed since the end of the implementation period.
### 6. Penal Provisions

(1) Penal provisions are provided for conduct that violates Sec. 8 (i), (ii), (iii), and (iv).

A. The penalty for violating Sec. 8 (i) is a sentence of maximum five years of penal servitude or a fine of maximum 5,000,000 JPY (Sec. 89 (1) (ii)). If representatives, employees, or others affiliated with a trade association commit a violation of Sec. 89 in relation to their business, they will be subject to the punishment accordingly; and in such a case, however, the trade association involved will also be punished for the same violation by a fine not to exceed 500,000,000 JPY (Sec. 95 (1) (i) and (2) (i)).

B. The penalty for violating Sec. 8 (ii), (iii), and (iv) is a sentence of maximum two years of penal servitude or a fine of maximum 3,000,000 JPY (Sec. 90 (i) and (ii)). If representatives, employees, or others affiliated with a trade association commit a violation of Sec. 90 in relation to their business, they will be subject to the punishment accordingly; and in this case, however, the trade association involved will also be punished for the same violation by a fine not to exceed 3,000,000 JPY (Sec. 95 (1) (iv) and (2) (iv)).

C. Where a violation of Sec. 89 (1) (ii) (see A. above) or Sec. 90 (see B. above) occurs, executive officers, managers, or constituent firms of the trade association involved shall be punished by a fine not to exceed 5,000,000 JPY for a violation of Sec. 89 (1) (ii), or by a fine not to exceed 3,000,000 JPY for a violation of Sec. 90, if they were aware of the planned violation but failed to take necessary preventive measures, or if they were aware of the violation but failed to take necessary corrective measures (Sec. 95-3).

(2) The offenses stipulated in (1) above shall be considered only after an accusation has been filed by the FTC (Note) (Sec. 96).

Note: The FTC has announced its position to actively file accusations seeking for criminal penalties in the following cases:

(1) Vicious and serious cases such as price-fixing cartels, supply-restraint cartels, market allocations, bid-rigging, group boycotts, and other violations that substantially restrain competition in certain areas of trade, and that are considered to have widespread influence on the lives of people; and

(2) Cases where due administrative measures of the FTC are not sufficient to fulfill the purpose of the Act, including cases by repeatedly offending firms or industries or those who do not abide by the FTC's elimination measures.

("The Fair Trade Commission's Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Antimonopoly Violations," published October 7, 2005)

### 7. The Antimonopoly Act Exemption System for Trade Associations

Although the Antimonopoly Act prohibits trade associations from engaging in conduct, such as that described in 3 above, that restricts or impedes competition, it also provides a system that exempts trade associations' activities from the application of the Antimonopoly Act under certain circumstances.
### 1. Conduct that Restricts Prices

A trade association will be found to be in violation of Sec. 8 (i) if it engages in price-related restrictive conduct as described below and substantially restricts competition in a market. Even if such conduct does not lead to the substantial restraint of competition in a market, it shall nonetheless in principle be found to constitute a violation of Sec. 8 (iv) or (v).

#### 1 -1. (Fixing prices, etc.)

Predetermining the prices of goods or services supplied or received by constituent firms, or deciding to maintain or raise such prices.

### 1 -2. (Restricting resale prices)

Restricting the resale price or goods through such conduct as the following: causing a firm to restrict the resale prices of its goods (an activity described as Sec. 2 (9) (iv)); coercing constituent firms to maintain resale prices; and fixing resale prices.

## [Specific Cases]

The Case against X Trade Association of Wholesalers of Knitting and Handicraft Goods (FTC Recommendation Decision No. 4 of 1969)

In this case, the association ordered in various ways to constituent firms that they shall instruct the retailers to strictly maintain minimum resale prices, and hint that they would break off business connection with such retailers who had offered lower resale prices. The association was found to have caused firms to engage in conduct constituting General Designation Article 8 (Sec. 2 (9) (iv) of the existing Antimonopoly Act) and thereby to have violated Sec. 8 (1) (v) (Sec. 8 (v) of the existing Antimonopoly Act).

The Case against Y Trade Association of Manufacturers of Records and Other Goods (FTC Recommendation Decision No. 4 of 1980)

In this case, the association forced constituent firms to maintain resale prices of records and other goods by ordering the firms to suspend shipments to retailers who refused to stop offering discount resale prices. This conduct was found to constitute a violation of Sec. 8 (1) (iv) (Sec. 8 (iv) of the existing Antimonopoly Act).

The Case against Z Trade Association of Milk Manufacturers (FTC Recommendation Decision No. 2 of 1982)

In this case, the association set minimum retail prices for bulk-milk distributors who had transactions with constituent firms, and decided that constituent firms shall demand the mass sales distributors strictly maintain those prices. This conduct was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

## (1) Conduct that Restricts Prices: Specific Forms and Methods

There are many forms and can be pursued through various methods to fix prices (1-1) or restrict resale prices (1-2) (hereinafter collectively referred to as "conduct that restricts prices" in this chapter), such as follows but not limited to. In principle,
conduct that restricts prices constitutes a violation, regardless of their actual form or method.

### 1 ·(1)-1.(Fixing minimum selling prices)

Fixing minimum selling prices.

## [Specific cases]

The Case against X Trade Association of Manufacturers of Meters for Liquefied Petroleum Gas, etc. (FTC Recommendation Decision No. 24 of 1992)

In this case, as a strategy to maintain selling prices, the association set the minimum selling price of microcomputer meters for home use manufactured by constituent firms.

This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

The Case against Y Trade Association of Manufacturers of Purification Tank Blowers, etc. (FTC Recommendation Decision No. 17 of 1990)

In this case, the association set the minimum selling price for blowers manufactured by constituent firms for use on small purification tanks. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

#### 1 -(1)-2. (Setting selling price-increase rates, etc.)

Setting the rate or margin of a price increase.

## [Specific cases]

The Case against X Trade Association of School Album Manufacturers (FTC Recommendation Decision No. 10 of 1991)

In this case, the association decided to increase the prices of FY 1990 school photograph albums manufactured by constituent firms by 15 percent over the previous fiscal year. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

The Case against Y Trade Association of Manufacturers of Paint for Road Surface Markings, etc. (FTC Recommendation Decision No. 32 of 1992)

In this case, the association decided to raise the selling price of liquefied paints manufactured by constituent firms by a targeted 16 JPY per kilogram. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

#### 1 -(1)-3. (Setting standard prices, etc.)

Setting price standards in the forms of standard prices, target prices, etc.

## [Specific cases]

The Case against X Trade Association of Propane Gas Distributors (FTC Recommendation Decision No. 14 of 1977)

In this case, at an "explanatory meeting" that all constituent firms had been
requested to attend, the trade association distributed three similar standard pricing charts, explained that it planned to raise the retail price of propane gas on the basis of one of those charts, and obtained the approval of the attending firms. This was recognized as a decision to raise prices and was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

### 1 -(1)-4. (Establishing common price-calculation formulas)

Establishing price calculation formulas that, by using specific numerical values, coefficients, and other factors, provide constituent firms with common and specific price standards.

## [Specific cases]

The Case against X Trade Association of Meat Processors (FTC Recommendation Decision No. 14 of 1992)

In this case, the association decided the purchasing price of pork to constituent firms, by using wholesale standard prices of pork meat, which were set as the weighted averages of wholesale prices of pork meat in A, B, and C markets at proportions of 50 percent, 30 percent, and 20 percent, respectively. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

#### 1 -(1)-5. (Setting user delivery prices, etc.)

Setting user delivery prices, retail prices, and standard prices served as reference in setting prices of the goods when constituent firms supply to distributors.

## [Specific cases]

The Case against X Trade Association of Producers of Neutral Anhydrous Mirabilite, etc. (FTC Recommendation Decision No. 3 of 1985)

In this case, wherein constituent firms supplied end users with neutral anhydrous mirabilite through distributors and determined the price they charged distributors by subtracting an amount equivalent to the distributors' commission from the price to demanders, the association decided to raise the user delivery price of the neutral anhydrous mirabilite, thereby causing constituent firms to raise the selling price to distributors. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

The Case against Y Trade Association of Manufacturers of Cameras and Other Goods (FTC Recommendation Decision No. 1 of 1961)

In this case, under conditions where it was recognized that the wholesale prices of cameras manufactured by constituent firms were regularly determined by multiplying the retail selling prices by a certain fixed percentage, the trade association set the retail prices of said cameras, thereby fixing the wholesale prices charged by constituent firms. This was found to constitute a violation of Sec. 8 (1) (i) (Sec. 8 (i) of the existing Antimonopoly Act).

1-(1)-6. (Price negotiation by group, etc.)
Conducting group negotiation on prices with their trade partners, or forcing constituent firms to negotiate jointly with their trade partners.

(2) Conduct that Restricts Prices and that Ensures the Implementation Thereof

Conduct that restricts prices is sometimes accompanied by conduct, such as the following, that is intended to ensure the implementation of the conduct that restricts prices. In this case, in principle both conduct that restricts prices and that ensures the implementation thereof constitute violations. Even when not accompanied by such conduct, however, conduct that restricts prices in principle constitutes a violation of the Act (Notes 1 and 2).

Note 1: Conduct similar to those stipulated below (for example, 1-(2)-1 and 1-(2)-

3) can also be performed to ensure the implementation of conduct that restrains competition in other ways of conduct, including: conduct that restricts quantities; conduct that restricts customers, sales channels, and so forth; conduct that restricts facilities or technologies; and conduct that restricts the entry of firms into a market. In such cases, however, the principle described above applies.

Note 2: Conduct that ensures the implementation of conduct that restricts prices might in some cases in itself violate the Act (Sec. 8 (iv) or (v)). For example, if a trade association forces a firm to refuse to trade with companies that do not cooperate in conduct that restricts prices (as described in 1-(2)-1), that conduct, independently from conduct that restricts prices, might in itself be in violation of Sec. 8 (v).

#### 1 -(2)-1. (Inviting or compelling a firm to cooperate in restricting prices, etc.)

Inviting or compelling to convince a firm to restrict prices, or imposing disadvantages on a firm that fails to cooperate in restricting prices, through such means as refusing to trade with it, discriminatingly treating within the trade association, demanding monetary payment from it, or expelling it from the trade association.

## [Specific cases]

The Case against X Trade Association of Wire Rope Manufacturers (FTC Recommendation Decision No. 5 of 1980)

In this case, the association compiled a "unified price list" of selling prices for each standard of wire rope, and decided, among other things, that the prices charged by constituent firms for wire rope were to be raised and that there should be no transactions at prices below the listed prices by a certain percentage. To ensure implementation of these decisions, the trade association established a monetary deposit system, and decided that any constituent firm that sold wire rope below the prescribed minimum prices would be punished through such means as refusal of trade or confiscation of its deposit. This was found to constitute a violation of Sec. 8(1)(i) (Sec. 8(i) of the existing Antimonopoly Act).

The Case against Y Trade Association of Taxi Operators (FTC Recommendation Decision No. 16 of 1982)