Silviase/jgov_v1.4_full_ann huggingface dataset:
keeping with actual conditions in a market, if an enterprise apply remarkably progressive rates for a particular rebate, the rebate has the function of encouraging trading partners' preferential handling of the enterprise's products over those of others.

In cases where an enterprise’s provision of a remarkably progressive rebate to its trading partners has the function of restricting those trading partners’ handling of competing products, illegality of the rebate should be determined in accordance with the guidance given in Sub-Section 2(1) (Enterprises’ restriction on trading partners’ dealing with competitors and/or trading partners’ handling of competing products) of Chapter 2 above.

That is, in cases where an influential enterprise in a market provides such a rebate to its trading partners, and if the provision has the function of restricting the trading partners' handling of competing products and as a result has foreclosure effects, the provision of the rebate is illegal as unfair trade practices (Paragraph 4, 11 or 12 of the General Designation).

(Note 11) More specific guidance on each factor is given in Sub-Section 3 (3) A-D of Part II of Exclusionary Private Monopolization Guidelines.

## (3) Rebates that have the function of requiring designated accounts

At times an enterprise may provide a rebate directly or through wholesalers even to retailers who are indirect trading partners of the enterprise, in accordance with each retailer's purchase amount of the enterprise's products. In cases where an enterprise provides such a rebate to retailers, and if the amount of the rebate to each retailer is calculated solely on the basis of the amount of the retailer's purchase of the enterprise's products from a specific wholesaler, it is most likely to have the function of requiring designated accounts.

In cases where provision of such a rebate has the function of requiring designated accounts, its illegality should be determined in accordance with the guidance given in Sub-Section 4(2) (Requiring of designated accounts) of Chapter 2 above.

That is, in cases where price maintenance effects arise from provision of any rebate that has the said function, the provision of the rebate is illegal as unfair trade practices (Paragraph 4 or 12 of the General Designation).
### PART II. SELECTION OF TRADING PARTNERS

1. Through fair and free competition, each enterprise selects its trading partners on its own independent judgment based on their superiority in prices, quality, services and other transaction terms. Furthermore, there may be a case where an enterprise, in selecting its trading partners, takes account of overall business capability of suppliers in terms of, such as steady supply, technological development capability and flexibility in response to the enterprise's requests, in addition to prices, quality, services and other terms of individual transactions. If an enterprise selects its trading partner from the viewpoint mentioned above and such selection results in continuous a transaction relationship between the enterprise and the trading partner, there are no problems under the Antimonopoly Act.

If, however, for example, any enterprise consults with another enterprise on mutual respect of and priority to the existing business relations to maintain such relations, or engages in such conduct as concertedly with another enterprise excluding competitors, competition to win customers in a market is to be restrained and entries of new competitors hindered, which result in restraining competition in the market.

2. This Part II gives guidance on principles applicable under the Antimonopoly Act primarily to enterprises' actions such as the enterprises, in concert with other enterprises, discourage new competitors from entering the market or exclude existing competitors in selection of trading partners which should be done in a free and independent manner.
### Chapter 1. Customer Allocation

### 1. Viewpoint

Such conduct of an enterprise in concert with any other enterprise or enterprises, or of a trade association as mutually respecting existing business relations without contending for customers or agreeing not to enter a market where another enterprise has already engaged in business activities, is sometimes employed. Such conduct is most likely to lead to an attempt to exclude new entrants from the market for the purpose of ensuring the effectiveness of that conduct.

Such conduct, which restricts competition for customers, is in principle illegal.

### 2. Concerted Restrictions by Enterprises on Competition for Customers

In cases where an enterprise, concertedly with any other enterprise or enterprises, engages in the following types of conduct, for instance, and if competition for customers is thereby restricted and competition in a market becomes substantially restrained, such conduct constitutes unreasonable restraint of trade and violates Article 3 of the Antimonopoly Act (Note 1):

(1) Customer Restrictions

(i) Manufacturers enter into a mutual agreement that they should not deal with each other’s customers;

(ii) distributors concertedly refrain from soliciting each other’s customers by offering lower prices;

(iii) distributors enter into a mutual agreement that any of them should pay a rectification charge if it deals with a customer of any other of the distributors;

(iv) manufacturers enter into a mutual agreement that each of them should register its own customers and should not deal with any persons other than the registered customers; or

(v) distributors concertedly limit customers with whom each of the distributors can deal.

## (2) Market Allocation

(i) Manufacturers concertedly limit a sales territory of each of them:

(ii) distributors enter into a mutual agreement that any of them should not
commence marketing activities in an area where any other of the distributors have already engaged in marketing activities;

(iii) manufacturers concertedly limit specifications and kinds of products which each of the manufacturers can manufacture; or

(iv) manufacturers enter into a mutual agreement that any of them should not commence manufacturing any products of any kind which any other of the distributors have already manufactured.

(Note 1) Even in the absence of an explicit agreement, if a tacit understanding or a common intent is formed among enterprises regarding customer restrictions or market allocation, thereby substantially restraining competition in a market, the tacit understanding or the common intent constitutes a violation of the Antimonopoly Act. The same applies in Part II.

### 3. Restrictions by Trade Associations on Competition for Customers

In case where a trade association, in connection with its member enterprises' activities, undertakes any of such conduct as described in the Sub-Section 2(1)(i) through 2(1)(v) or Sub-Section 2(2)(i) through 2(2)(iv) above, and if competition for customers among member enterprises is thereby restricted and competition in a market becomes substantially restricted, such conduct constitutes a violation of Article 8, Item (i) of the Antimonopoly Act. Even if the conduct does not cause substantial restraint of competition in the market, it in principle constitutes a violation of Article 8, Item (iv) of the Antimonopoly Act, because it unjustly restricts the functions or activities of member enterprises.
### Chapter 2. Boycotts

### 1. Viewpoint

Even if free and fair competition results in compelling an enterprise to exit from a market or to fail to enter the market, it would present no problem under the Antimonopoly Act.

It is, however, in principle illegal for an enterprise, in concert with its competitors, customers or suppliers, etc., or for a trade association to prevent new entrants from entering a market or exclude existing enterprises from the market, which is a prerequisite for effective competition.

There are a variety of types in which concerted refusals to deal (boycotts) may take place, and their extent on competition may vary with, among other things, the market structure as well as the degree of probability that such conduct would prevent an enterprise from entering a market or exclude an enterprise from the market. If a concerted refusal to deal makes it very difficult for an enterprise to enter a market, or has the effect of excluding a enterprise from the market, judging from, among other things, the number and position in the market of the enterprises concerned as well as characteristics of the products or services concerned, thereby resulting in substantial restraint of competition in the market, then the concerted refusal is illegal as private monopolization or unreasonable restraint of trade. A concerted refusal to deal, even if it does not cause substantial restraint of competition in a market, is, in principle, illegal as unfair trade practices, because it generally tends to impede fair competition. In the case of a trade association arranging for concerted refusal to deal, such conduct is illegal as substantial restraint of competition by trade associations, or obstruction of competition by them (conduct to limit the number of enterprises in any particular field of business; to unjustly restrict the functions or activities of member enterprises; or to induce any enterprise to engage in such acts as constitute unfair trade practices).

### 2. Refusals to Deal in Concert with Competitors

(1) In cases where competitors concertedly engage in, for instance, the following types of conduct, and, if the conduct makes it very difficult for any enterprise refused to deal with to enter a market or the conduct has the effect of excluding the refused enterprise from the market, thereby resulting in substantial
restraint of competition in the market, such conduct constitutes private monopolization or unreasonable restraint of trade and violates Article 3 of the Antimonopoly Act:

(i) manufacturers concertedly, in an attempt to exclude price-cutting distributors, refuse to supply products to such distributors or limit such supply;

(ii) distributors concertedly, in an attempt to prevent new entries by competitors, refuse to supply products to new entrants and cause their suppliers (manufacturers) to refuse to supply products to the new entrants;

(iii) manufacturers concertedly, in an attempt to exclude imported products, cause distributors not to distribute the imported products, by informing the distributors of the manufacturers' intention to refuse to supply products to the distributors if they distribute the imported products; and

(iv) finished product manufacturers concertedly, in an attempt to prevent competitors from entering a market, cause material manufacturers to refuse to supply products to new entrants by informing the material manufacturers of the finished product manufacturer's intention to refuse to deal with the material manufacturers if they provide their products (i.e., materials for finished products) to the new entrants.

(2) In cases where a concerted refusal to deal brings about, for example, the following situations, competition in a market shall be found to be substantially restrained:

(i) it is made very difficult for any enterprise manufacturing or selling products superior in price and quality to enter a market, or in case where such an enterprise is to be excluded from the market;

(ii) it is made very difficult for any enterprise adopting innovative selling method to enter a market, or in case where such enterprise is to be excluded from the market;

(iii) it is made very difficult for any enterprise having superior overall business capabilities to enter a market, or in case where such enterprise is to be excluded from the market;

(iv) it is made very difficult for any enterprise to enter a market where no active competition is taking place; or

(v) a concerted refusal to deal is conducted toward any potential entrant to
enter a market.

(3) Any of the types of conduct listed in (1) (i) through (iv) above, undertaken in concert by competitors, is in principle illegal as unfair trade practices, even if the conduct does not cause substantial restraint of competition in a market (Violation of Article 19 of the Antimonopoly Act) (Article 2, Paragraph (9), Item (i) of the Antimonopoly Act or Paragraph 1 (Concerted Refusal to Trade) of the General Designation).

## (Examples)

(i) Company X and other 4 companies are record producers or subsidiaries of record producers, and engage in “Chaku-uta” services (services that provide part of singing voice recorded on the original master, produced for the release of music CDs, to a cellular phone for use as a ring tone). They entrust Chaku-uta services to Company A.

These 5 companies entered into an agreement that they would not grant licenses for their original master records to any enterprises which provided Chaku-uta services or wished to do so other than those which entrusted Chaku-uta services to Company A, and the 5 companies actually refused to grant such licenses.

This conduct was found to fall under Paragraph 1, Sub-Paragraph 1 of the General Designation and to violate the provisions of Article 19 of the Antimonopoly Act. (JFTC recommendation decision dated July 24, 2008; JFTC Decision No. 11 of 2005) (Tokyo High Court Judgement of January 29, 2010; (Gyo Ke) Nos. 19, 20, 35 and 36 of 2008)

(ii) Ten companies including Company X owned numerous patent rights for the manufacture of pachinko machine (pachinko is a popular Japanese pinball game) and, at the same time, distributed almost all of the pachinko machines in Japan. The ten companies including Company X outsourced the management of their owned patent rights to Company Y and substantially participated in the decision making on granting a license of patented inventions for pachinko and pachislot. The patented inventions owned or managed by Company Y were important rights for the manufacture of pachinko machines. Under the circumstances, it was difficult to manufacture pachinko machines without being granted a license of the patented
inventions.

On the basis of a policy of preventing new entry into the pachinko machine manufacturing market (downstream market), the ten companies including Company X and Company Y attempted to accumulate patented inventions owned or managed by Company Y and made it impossible for persons who intended to enter the market to commence the manufacture of pachinko machines by refusing to grant a license of the patented inventions to anyone other than the existing pachinko manufacturers in the market, pertaining to licensing the patented inventions (upstream market).

As a result, such conduct by the ten companies including Company X and Company Y was deemed to exclude the business activities of any persons who intended to manufacture pachinko machines and therefore to constitute private monopoly set forth in Article 2, Paragraph (5) of the Antimonopoly Act and violate Article 3 of the Act. (JFTC recommendation decision dated August 6, 1997; JFTC recommendation No. 5 of 1997)

### 3. Refusals to Deal in Concert with Trading Partners, etc

(1) In case where an enterprises concertedly with their trading partners, etc., engage in, for instance, the following types of conduct, and if the conduct makes it very difficult for any enterprise refused to deal with to enter a market or the conduct has the effect of excluding the refused enterprise from the market, thereby resulting in substantial restraint of competition in the market, then such conduct constitutes private monopolization or unreasonable restraint of trade (Note 2) and violates Article 3 of the Antimonopoly Act:

(i) two or more distributors and two or more manufacturers concertedly, in an attempt to exclude price-cutting distributors, undertake such conduct that the latter refuses or restricts the supply of products to such distributors and that the former refuses to deal in the products of those manufacturers which have supplied their products to such distributors;

(ii) a manufacturer and two or more distributors concertedly, in an attempt to exclude imported products, undertake such conduct that the latter does not deal in the imported products and that the former refuses to supply products to those distributors selling the imported products;

(iii) two or more distributors and a manufacturer concertedly, in an attempt
to prevent other distributors from entering a market, undertake such conduct that the latter refuses to supply products to new entrants and that the former refuses to deal in the products of those manufacturers which have supplied their products to such new entrants: or

(iv) two or more material manufacturers and a finished product manufacturer concertedly, in an attempt to exclude imported materials, the latter does not purchase the imported materials and that the former refuses to supply materials to those finished product manufacturers which have purchased the imported materials.

(Note 2) In order for any conduct to constitute unreasonable restraints of trade, it is required that an enterprise “in concert with other enterprises, mutually restrict…their business activities” (Article 2, Paragraph (6) of the Antimonopoly Act). The content of a restriction of business activities in this context does not need to be identical in all of the enterprises engaging in the concerted action (for example, manufacturers and distributors), but it is sufficient if the action restricts business activities of each of those enterprises and is done for the purpose of achieving a common purpose, such as exclusion of a specific enterprise.

See Sub-Section 2(2) above for examples of cases where competition in a market should be found to be substantially restrained through refusals to deal enterprise in concert with its trading partner, etc.

(2) Any type of conduct described in (1)(i) through (iv) above, undertaken by any enterprise concertedly with its customers, suppliers, etc., even if the conduct does not cause substantial restraint of competition in a market, is in principle illegal as unfair trade practices (Article 2, Paragraph (9), Item (i) of the Antimonopoly Act or Paragraph 1 (Concerted Refusal to Deal) or 2 (Other Refusal to Trade) of the General Designation).

### 4. Refusal to Deal Arranged by Trade Associations

In cases where a trade association engages in, for instance, the following types of conduct, and if the conduct makes it very difficult for any enterprise refused to deal with to enter a market, or its effect is to likely exclude the
enterprise refused from the market, thereby resulting in substantial restrain of competition in a market (Note 3), such conduct violates Article 8, Item (i) of the Antimonopoly Act. Furthermore, in any case where a trade association engages in the following types of conduct, even if such conduct does not cause substantial restraint of competition in a market, the conduct, in principle, violates Article 8, Item (iii), (iv) or (v) of the Antimonopoly Act (Article 2, Paragraph (9), Item (i) of the Antimonopoly Act or Paragraph 1 or 2 of the General Designation).

(i) a trade association composed of distributors, in an attempt to exclude imported products, prohibits its member enterprises from dealing in the imported products (Article 8, Item (i) or Article 8, Item (iv) of the Antimonopoly Act);

(ii) a trade association composed of distributors and manufacturers induces member manufacturers to supply their products only to member distributors and not to outsiders (Article 8, Item (i) or Article 8, Item (iv) of the Antimonopoly Act);

(iii) a trade association composed of distributors, in an attempt to exclude outsiders, applies pressure on manufacturers dealing with its member enterprises, by requesting the manufacturers not to supply their products to outsiders or through other means (Article 8, Item (i) or Article 8, Item (v) of the Antimonopoly Act);

(iv) a trade association composed of distributors, in an attempt to prevent competitors of its member enterprises from entering a market, applies pressure on manufacturers dealing with member distributors, by requesting the manufacturers not to supply their products to those new entrants or through other means (Article 8, Item (i) or Article 8, Item (v) of the Antimonopoly Act);

(v) a trade association composed of distributors restricts new membership in the association and causes manufacturers dealing with member distributors to refuse to supply their products to outsiders (Article 8, Item (i); Article 8, Item (iii) or Article 8, Item (v) of the Antimonopoly Act); or

(vi) a trade association composed of service providers restricts new membership in the association under the circumstances where it is difficult for any service providers to carry on business without membership in the association (Article 8, Item (i) or Article 8, Item (iii) of the Antimonopoly Act).
See Sub-Section 2(2) above for examples of cases where competition in a market should be found to be substantially restrained through concerted refusals to deal arranged by trade associations.
### Chapter 3. Primary Refusals to Deal by a Single Enterprise

### 1. Viewpoint

Basically speaking, it is a matter of freedom of choice of trading partners for an enterprise to decide which enterprise it does business with. Even if an enterprise, considering such factors as price, quality and service, decides not to deal with a certain enterprise at its own judgment, there would be fundamentally no problem under the Antimonopoly Act.

However, exceptionally, even a refusal to deal by a single enterprise is illegal in cases where the enterprise refuses to deal as a means to secure the effectiveness of its illegal conduct under the Antimonopoly Act. A refusal to deal by a single enterprise may also present a problem in cases where the enterprise refuses to deal as a means to achieve such unjust purposes under the Antimonopoly Act as excluding its competitors from a market (Note 4).

(Note 4) As to in what cases these practices substantially restrict competition in markets and are illegal as private monopolization, the Japan Fair Trade Commission has given guidance on this issue in Exclusionary Private Monopolization Guidelines.

### 2. Cases Where There are Problems under the Antimonopoly Act

In cases where an enterprise engages in, for example, the conduct mentioned in Sub-Section (i) below as a means to secure the effectiveness of its illegal practice under the Antimonopoly Act, such conduct is illegal as unfair trade practices (Paragraph 2 (Other Refusal to Trade) of the General Designation).

Moreover, in cases where an influential enterprise in a market (Note 5) engages in, for example, the conduct mentioned in Sub-Section (ii) or (iii) below as a means to achieve unjust purposes under the Antimonopoly Act (such as exclusion of its competitor from a market), and if such conduct tends to make it difficult for the refused competitor to carry on normal business activities, such conduct is illegal as unfair trade practices (Paragraph 2 of the General Designation):

(i) an influential manufacturer in a market, by causing distributors not to