Types of restraint
Assessment of restrictions
How is restricting the buyer’s ability to determine its resale price assessed under antitrust law?
The Japanese Antimonopoly Act (Act No. 54 of 14 April 1947) (AMA) prohibits resale price restriction. There have been several formal administrative orders issued by the Japan Fair Trade Commission (JFTC) in the past 10 years, including the most recent cases, Aprica Children’s Products and Combi. The AMA covers not only price-fixing and minimum resale price but also any measures with equivalent effects, such as limiting the buyer’s ability to give rebates or discounts.
Concerning the maximum resale price, although it may arguably be beneficial for consumers or end-users, the statutory provision for this prohibition does not prima facie differentiate the restriction on maximum price from that on minimum price. Further, in practice, restriction on the maximum resale price may (intentionally or inadvertently) function similarly to the minimum resale price by making it easier than otherwise for competitors to raise the price of their products or services close to the same level. Also, even restriction on the maximum resale price would restrict the purchaser or reseller’s free decision on its pricing. At this stage, there is no precedent where maximum resale price restriction is differentiated from minimum resale price restriction and should be found to be legal, except in a certain emergency like the covid-19 pandemic.
Concerning the suggested resale price, the Guidelines concerning Distribution Systems and Business Practices under the Antimonopoly Act (the DSBP Guidelines) state that if a manufacturer’s suggested retail price or quotation is indicated to distributors solely as a reference price, the conduct itself is not a problem. Regardless of whether it is referred to as a ‘suggested price’, if the manufacturer tries to have its distributors follow the reference price, that conduct would constitute resale price restriction.
Have the authorities considered in their decisions or guidelines resale price maintenance restrictions that apply for a limited period to the launch of a new product or brand, or to a specific promotion or sales campaign; or specifically to prevent a retailer using a brand as a ‘loss leader’?
It has been commonly understood that the assessment regarding the resale price restriction violation would not require the calculation and analysis of the respondent’s market share. In Wakodo v JFTC, the court declined Wakodo’s argument that it only had a minor presence in the market (approximately 10 per cent of the market share) and could strengthen its competitiveness by adopting the resale price restriction. From such a viewpoint, it is unlikely that the former factor listed in this question could justify the resale price restriction. However, some recent academic analysis suggested that court precedent can be found to be fact-specific and can be differentiated. If so, it may still be possible to argue the ‘impediment of fair competition’ based on the facts specific to the case at issue.
Moreover, the Supreme Court of Japan has stated that the resale price restriction cannot be justified if its purpose is to prevent a retailer using a brand as a loss leader (Meiji Shoji v JFTC). However, in this regard, recent academic analysis suggested that court precedent can be found to be silent or neutral regarding whether the resale price restriction can be justified if it is specifically introduced only for the retailers that use the brand as a loss leader.
Relevant decisions
Have decisions or guidelines relating to resale price maintenance addressed the possible links between such conduct and other forms of restraint?
Resale price restriction is to be found not solely based on the existence of an ‘agreement’, but possibly based on the existence of a certain measure by which a party binds the other party to a certain obligation. Therefore, if the other forms of restraint work as an incentive to compel the other party to comply with the resale price restriction, the other forms of restraint may be found to be linked with the resale price restriction.
Have decisions or guidelines relating to resale price maintenance addressed the efficiencies that can arguably arise out of such restrictions?
Concerning the possible benefits that may be rendered by the resale price restriction, such as the prevention of free-riding or the promotion of new entry, according to the DSBP Guidelines, as amended in 2015, resale price restriction is not illegal as an exception on the condition that it has ‘justifiable grounds’, which might be granted within a reasonable scope and reasonable terms. This includes cases where:
- the resale price restriction by a manufacturer will result in actual pro-competitive effects and promote inter-brand competition;
- will increase demand for the product, thus benefiting consumers; and
- pro-competitive effects will not result from less restrictive alternatives other than the resale price restriction at issue.
It also states that, for example, in connection with the ‘free-rider’ problem, when a manufacturer performs resale price restriction, as above, it will be granted as having ‘justifiable grounds’ where it results in pro-competitive effects through avoiding that problem, will promote inter-brand competition and will increase the demand for the product, thus benefiting consumers, and pro-competitive effects will not result from less restrictive alternatives.
It has also been commonly understood that resale price restriction cannot be justified solely because it is necessary and reasonable, from a business-management perspective, for example, that stable supply is required (see Wakodo v Japan Fair Trade Commission (JFTC), Meiji Shoji v JFTC), or that it is necessary to conserve a traditional industry (Hamanaka v JFTC). However, some recent academic analysis suggested that certain justification should still be available for the resale price restriction (eg, from the perspective of the necessity to assure product safety).
Explain how a buyer agreeing to set its retail price for supplier A’s products by reference to its retail price for supplier B’s equivalent products is assessed.
Depending on the situation, some certain possible links with resale price restriction may be found. Otherwise, while there is no precedent regarding this issue at this stage, if a buyer has a substantial market share, this could be tantamount to substantially fixing retail market prices of the equivalent (or competing) products. Therefore, this could rather be found problematic from the perspective of these horizontal restraints.
Suppliers
Explain how a supplier warranting to the buyer that it will supply the contract products on the terms applied to the supplier’s most-favoured customer, or that it will not supply the contract products on more favourable terms to other buyers, is assessed.
Although there is no precedent regarding this issue at this stage, it would probably be assessed as a possible violation of the prohibition of trading on restrictive terms (ie, the buyer’s restriction of the supplier’s activities), unless the promise practically works as a cartel or other horizontal restraint (eg, multiple suppliers’ widely warranting in the market, or a supplier’s warranting widely for its multiple dealers in the market). That is, if it is found to have the aspects of avoiding competition, or that the price level of the product covered by the restriction is likely to be maintained, it may constitute the violation. Also, if it incentivises such a supplier not to deal with a new entrant buyer, one would need to examine whether aspects of excluding competitors exist.
It may also constitute the abuse of superior bargaining position.
Explain how a supplier agreeing to sell a product via internet platform A at the same price as it sells the product via internet platform B is assessed.
As far as this works as a supplier’s warranting the most favoured price to some certain specific platform (eg, platform A in this question), the same rule applies as that concerning suppliers providing products on favourable terms to most-favoured customers.
On 1 June 2017, the JFTC issued its press release on the closing of the investigation into the suspected violation of the AMA by Amazon Japan GK. The alleged violating conduct consisted of price parity clauses and selection parity clauses in the seller contracts on Amazon Marketplace. The JFTC listed its concerns over the influence of this conduct as follows:
When an online shopping mall operator imposes price parity clauses and selection parity clauses . . . on sellers, these clauses may exert influence as shown below to negatively affect competition:
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restrict sellers’ business activities by limiting the reduction of prices and expansions of lineups of goods that the sellers sell via other sales channels;
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distort competition among online shopping mall operators by allowing an online shopping mall operator imposing those parity clauses to achieve the lowest price and the richest lineup of goods sold in its online shopping mall without making any competitive effort; or
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reduce online shopping mall operators’ incentive for innovation and hinder new entrants as the reduction of fees charged by an online shopping mall operator for sellers does not result in these sellers’ reduction of prices and expansion of lineups.
The JFTC publicised that it recognised that the measures proposed by Amazon Japan, including the proposal that it will not exercise its rights concerning these parity clauses, would eliminate the suspected violation of the AMA, and decided to close the investigation on this case after confirming that the measures mentioned above had been taken.
Also, on 15 August 2017, the JFTC issued another press release on the report on the e-Books Agreements from Amazon Services International, Inc (ASII). This was also about parity clauses, whereby, concerning e-books of publishers that are delivered from the amazon.co.jp website, including retail prices to general consumers, the parity clauses oblige those publishers to ensure the parity between their transactions with ASII or with general consumers on the amazon.co.jp website, and their transactions with other e-books delivery platform operators or with general consumers on e-books delivery platforms operated by those other operators. Similarly to the above, ASII proposed, among other things, not to enforce the contractual obligations of publishers regarding the parity clauses, and to take these proposed measures for at least five years, and these were found to be satisfactory to eliminate potential anticompetitive concerns by the JFTC.
Some academic analyses find that the above may be understood to be authoritative in that it illustrates a rule or criterion regarding this issue. However, others do not necessarily agree that it establishes such a rule or criterion.
In October 2019, the JFTC issued a press release about its approval of the commitment plan submitted by Rakuten Inc, where it was alleged that, in contracts between Rakuten and accommodation operators that shared information about accommodations on the website Rakuten Travel (operated by Rakuten), Rakuten had set conditions to require the operators to make the prices and the numbers of rooms that they place on the website equal to, or better than, those through other distribution channels with a requirement for a minimum number of rooms. In this case, the JFTC suspected that activities by Rakuten mentioned above violated the law on trading on restrictive terms. As a matter of legal procedure, this approval of the commitment plan does not represent a determination that the activities of Rakuten constituted a violation of the AMA.
In March 2022, the JFTC approved the commitment plan submitted by Booking.com B.V, where it was alleged that the company engaged in similar conduct as that of Rakuten Inc against accommodation operators. This case is different from the Rakuten case in that the narrow MFN conditions on prices (ie, to require accommodation operators to ensure that the prices that they place on the Booking.com website are equal to, or better than, those placed on their own websites) were excluded from the subject of the commitment plan. The JFTC’s reasoning was that such narrow MFN conditions were not necessarily abided by the accommodation operators. The JFTC reserved its opinion, however, that such narrow MFN conditions may be problematic under the AMA, depending on how they are operated. In June 2022, The JFTC approved the commitment plan submitted by Expedia Lodging Partner Services Sàrl based on a similar allegation.
Explain how a supplier preventing a buyer from advertising its products for sale below a certain price (but allowing that buyer subsequently to offer discounts to its customers) is assessed.
In Johnson & Johnson (JFTC order, 1 December 2010), the JFTC found that, regardless of the price range, Johnson & Johnson’s forcing of its retailers not to refer to their retail prices of its products on their advertisements constituted a violation. It can be construed that, although it was not a restraint on pricing, but rather on sales methods, owing to the pricing aspects of the restraint at issue, it was subject to the level of higher scrutiny. That is, as far as such a restraint has any pricing aspects, it may be subject to higher scrutiny, namely, whether the price of the product covered by the restriction is likely to be maintained.
Explain how a buyer’s warranting to the supplier that it will purchase the contract products on terms applied to the buyer’s most-favoured supplier, or that it will not purchase the contract products on more favourable terms from other suppliers, is assessed.
This is likely to be assessed as a possible violation of the prohibition of trading on restrictive terms (ie, the supplier’s restriction of the buyer’s activities) unless it practically works as a cartel or other horizontal restraint (eg, among multiple suppliers to which that buyer warrants similarly in parallel, or among multiple buyers that warrant similarly to that supplier in parallel). That is, from the perspective of vertical restraints, if it is found to have the aspects of avoiding competition, or that the price level of the product covered by the restriction is likely to be maintained, it may constitute the violation. Also, if it incentivises such a supplier not to deal with a new entrant buyer, one would need to examine whether aspects of excluding competitors exist.
It may also constitute an abuse of a superior bargaining position.
Restrictions on territory
How is restricting the territory into which a buyer may resell contract products assessed? In what circumstances may a supplier require a buyer of its products not to resell the products in certain territories?
Although there has been no precedent specifically analysing this matter in the past 10 years, the DSBP Guidelines state that a restriction of this type is assessed from the perspective of whether the price level of the product covered by the restriction is likely to be maintained in connection with the prohibition of unfair trade practices. Whether the price level of the product covered by the restriction is likely to be maintained is to be determined comprehensively, taking into account the following factors:
- actual conditions of inter-brand competition; and
- actual conditions of intra-brand competition for the product, etc.
The DSBP Guidelines also state that, if the agreement assigns a specific area to each distributor but does not restrict the distributor from selling to customers outside each area upon request (ie, if it does not restrict ‘passive’ sales but ‘active’ sales only) whether the restriction is imposed by an influential supplier in the market may also be taken into account.
Have decisions or guidance on vertical restraints dealt in any way with restrictions on the territory into which a buyer selling via the internet may resell contract products?
Although there is no precedent regarding this issue at this stage, the DSBP Guidelines, as amended in 2017, stated that the restrictions on the territory into which a buyer selling via the internet resells those contract products, would constitute a restriction on passive sales. Hence, a violation could be found depending on whether the price level of the product covered by the restriction is likely to be maintained.
Restrictions on customers
Explain how restricting the customers to whom a buyer may resell contract products is assessed. In what circumstances may a supplier require a buyer not to resell products to certain resellers or end consumers?
This restriction is to be assessed from the perspective of whether the price level of the product covered by the restriction is likely to be maintained in connection with the prohibition of unfair trade practices as adopted by the DSBP Guidelines. In Matsushita Electric Industrial, a violation was found after a supplier had its contract dealers refuse to deal with non-contract price-cutting dealers (although the applicable type of conduct was indirect refusal to deal, another type of unfair trade practice, as opposed to trading on restrictive terms). If it could be found that the supplier traded on these restrictive terms, Matsushita Electric Industrial could be regarded as a case where said assessment criterion applied. On the other hand, even though vertical restraints may have a price maintenance effect to some extent, if it is to achieve something plausibly rational (eg, to improve brand image) and the restriction on the customers is found to be necessary for that purpose, then it could be allowed, to that extent. In Kao v Egawa Kikaku, it was found that as far as it is tailored to achieve a plausibly rational business purpose, in that buyers were only prohibited from selling the suppliers’ products to unauthorised or non-contract dealers, and it is applied non-discriminatorily, restricting the customers to whom a buyer may resell contract products could usually be found permissible.
In Sony Computer Entertainment, however, the JFTC differentiated the case from what was found in Kao, and it was found that the price level of the product covered by the restriction is likely to be maintained, and also it is not reasonably tailored to achieve its purpose, and therefore the supplier’s requiring a buyer not to resell products to the other wholesalers or retailers violated the law.
Concerning the prevention of the customer’s ability to resell products to end-consumers, the same rule applies as regards restrictions on territory.
Restrictions on use
How is restricting the uses to which a buyer puts the contract products assessed?
Restraints other than trading on exclusive terms and resale price restriction are classified as trading on restrictive terms. Although there is no authoritative precedent showing what kind of scrutiny applies to this issue, considering the analogy with the restriction on the buyer or distributor’s sales methods, if it is plausibly rational and non-discriminatory to the other distributor, it would usually be found to be permissible. This issue may also require analysis from the IP-protection perspective.
Restrictions on online sales
How is restricting the buyer’s ability to generate or effect sales via the internet assessed?
This restriction is to be assessed as a possible violation of trading on restrictive terms. That is, the basic analytical framework is similar to the restriction on the territory or customer (ie, whether the price level of the product covered by the restriction is likely to be maintained).
At this stage, there are no court judgments regarding this issue and the only available material is Johnson & Johnson (JFTC warning, 12 December 2002) which concerned restricting the buyer’s ability to sell its contact lenses via the internet. In this case, it was found that it was not yet sufficiently established but still likely that the restriction at issue hindered low pricing in practice, although the transactions were appropriately approved by an ophthalmologist. It was also found that Johnson & Johnson voluntarily ceased that practice more than one year before the issuance of the said warning, and the JFTC did not issue its formal cease-and-desist order in this case.
Have decisions or guidelines on vertical restraints dealt in any way with the differential treatment of different types of internet sales channel? In particular, have there been any developments in relation to ‘platform bans’?
At this stage, there is no court decision or guidelines from the JFTC about this issue. Although this is not restricting the customers to whom a buyer may resell contract products, but just restricting the type of sales channel, it is still likely that the same rule applies as with restrictions on customers. Concerning restrictions on internet sales (including the ban whereby these approved distributors are not allowed to sell the products on certain types of internet platforms, typically those owned or managed by a third party), the assessment for restrictions on online sales is also applicable here.
Selective distribution systems
Briefly explain how agreements establishing ‘selective’ distribution systems are assessed. Must the criteria for selection be published?
The DSBP Guidelines, as amended in 2015, state that a manufacturer may set up certain criteria to limit the distributors that handle its product to those that meet the criteria, and in such a case, the manufacturer may prohibit distributors from reselling its product to other distributors that do not meet the criteria. This is called ‘selective distribution’, defined thereunder, which the DSBP Guidelines state may result in pro-competitive effects, and is generally not illegal in itself (even if the criteria of the selective distribution were to result in preventing certain incompetent price-cutters, etc, from handling the product) provided that the criteria are recognised to have plausibly rational reasons from the viewpoint of the consumers’ interests, such as related to the preservation of its qualities and assuring appropriate use, and that these criteria are equally applied to other distributors who want to deal in the product.
However, in this regard, recent academic analysis has pointed out that the above is the case only ‘generally’, and depending on the nature of the applicable restrictions, it could also be assessed in the light of the restrictions on trading on restrictive terms. The DSBP Guidelines, as amended in 2017, did not change the analytical framework above. Hence, it is unclear whether there must be any control over the application (eg, a right to challenge refusals to admit). However, considering that, as above, these criteria must be applied equally, refusals to admit should be able to be challenged from that perspective, and it would be difficult to limit the total number of distributors to be admitted to the system in advance.
Are selective distribution systems more likely to be lawful where they relate to certain types of product? If so, which types of product and why?
At this stage, there is no authoritative precedent showing that selective distribution systems may be more likely to be lawful where they relate to certain types of product. However, generally speaking, from a practical perspective, it is possible that, for a certain product, the plausibly rational reasons from the viewpoint of the consumers’ interests (eg, related to the preservation of its qualities, assuring appropriate use) may be found more than in certain other products, by paying attention to whether or how this preservation of quality or assuring appropriate use could actually be an issue.
In selective distribution systems, what kinds of restrictions on internet sales by approved distributors are permitted and in what circumstances? To what extent must internet sales criteria mirror offline sales criteria?
At this stage, there is no recent decision that deals with internet sales restrictions imposed on approved buyers in connection with selective distribution systems, and generally, the same rule could likely apply as that for assessing selective distribution systems. This aspect of selective distribution systems could be analysed in light of the restrictions on trading on restrictive terms, and therefore, concerning the restrictions on internet sales (including the ban whereby these approved distributors are not allowed to sell the products on certain types of internet platforms, typically those owned or managed by a third party), the assessment for restrictions on online sales is also applicable here.
Has the authority taken any decisions in relation to actions by suppliers to enforce the terms of selective distribution agreements where such actions are aimed at preventing sales by unauthorised buyers or sales by authorised buyers in an unauthorised manner?
There is no decision specifically dealing with this issue.
Before the amendment of the DSBP Guidelines to introduce the concept of selective distribution systems therein in 2015, as far as this aspect of the restrictions on retailers’ sales methods is concerned, in Shiseido v Fujiki, one of the most famous cases regarding this matter in Japan, the Supreme Court of Japan issued its judgment that Shiseido, a manufacturer of cosmetics, could enforce its contractual terms regarding the distributorship if the terms themselves were plausibly rational and non-discriminatory towards the other distributors. The restriction at issue was to have the sales staff of its retailers provide appropriate support and explanation to end-user customers so that they could use the products appropriately; this conduct could be helpful to improve the supplier’s (products’) brand image and was found plausibly rational and non-discriminatory.
Does the relevant authority take into account the possible cumulative restrictive effects of multiple selective distribution systems operating in the same market?
As far as these cumulative restrictive effects of selective distribution systems are concerned, although no decision or guidelines is dealing with this issue, the DSBP Guidelines state that, in connection with the restriction on trading on restrictive terms, if two or more manufacturers, individually and in tandem, adopt these systems, the price level of the product is likely to be maintained more than otherwise and these cumulative effects may lead the authority to find the likelihood of maintenance of the price level.
Has the authority taken decisions (or is there guidance) concerning distribution arrangements that combine selective distribution with restrictions on the territory into which approved buyers may resell the contract products?
Although there is no precedent from the past 10 years specifically analysing the matter of restriction on the territory, under the DSBP Guidelines, the aspect of restricting territory is subject to the analysis of the analytical framework for the ‘impediment of fair competition’ (whether or not the price level of the product covered by the restriction is likely to be maintained). Also, a selective distribution system would be subject to this analytical framework. Hence, this would be analysed on a combined basis by considering the relevant factors altogether.
Other restrictions
How is restricting the buyer’s ability to obtain the supplier’s products from alternative sources assessed?
Concerning the prevention of distributors buying or selling the supplier’s products among themselves, the DSBP Guidelines apply the same analytical framework that is used for the restriction of selling to certain customers. Therefore, this is to be assessed from the perspective of whether the price level of the product covered by the restriction is likely to be maintained in connection with the prohibition of the unfair trade practices restriction. In Sony Computer Entertainment, the JFTC differentiated the case from what was found in Kao, and applied the same rule to the restriction at issue, and, where it was restricted to buy and sell even between the qualified dealers, it was found to be anticompetitive. In this regard, the DSBP Guidelines, as amended in 2017, made it clearer that, if the buyer’s ability to ‘provide’ the products to a price cutter as its alternative source is to be restricted, it should be assessed from the same criteria as for resale price restriction.
How is restricting the buyer’s ability to sell non-competing products that the supplier deems ‘inappropriate’ assessed?
Restraints other than trading on exclusive terms and the resale price restriction are classified as trading on restrictive terms. So, although there is no authoritative precedent showing what kind of scrutiny applies to this issue, considering the analogy with the restriction on buyers’ or distributors’ sales methods, if it is plausibly rational and non-discriminatory to the other distributors, it would usually be found to be permissible.
Explain how restricting the buyer’s ability to stock products competing with those supplied by the supplier under the agreement is assessed.
Concerning the restrictions on distributors’ handling of competing products, in Toyo Seimaiki v JFTC, the High Court stated that this is to be assessed from the perspective of how the restriction would make the distribution channel foreclosed or exclusive. Subsequently, the same rule was adopted by the DSBP Guidelines, stating that this type of restriction is to be assessed from the perspective of whether the restriction may result in making it difficult for new entrants or competitors to easily secure alternative distribution channels. The DSBP Guidelines also point out that, if the restriction is carried out by an influential supplier in the market, it may lead to a finding that the restriction causes the ‘impediment of fair competition’.
In some cases, restricting buyers to handle competing products or interfering with competitors’ transactions by such restriction against buyers may also constitute exclusionary private monopolisation. On 7 July 2020 and 19 February 2021, respectively, the JFTC issued a cease-and-desist order and a surcharge payment order against Mainami Aviation Services Co, Ltd, where it was found by the JFTC that the company forced its customers not to buy a specific aviation fuel from its competitor and this restriction constituted exclusionary private monopolisation. This is the first case where the JFTC imposed a monetary sanction against the conduct of exclusionary private monopolisation. Mainami filed a complaint with the Tokyo District Court to seek revocation of the cease-and-desist order and the surcharge payment order. In February 2022, the court denied all of the company’s allegations, and the company expressed its intention to appeal to the Tokyo High Court.
How is requiring the buyer to purchase from the supplier a certain amount or minimum percentage of the contract products or a full range of the supplier’s products assessed?
This will be assessed from the perspective of how the restriction would make the distribution channel foreclosed or exclusive, especially if, in practice, the requirement restricts the buyer from dealing with competing products. The DSBP Guidelines address the situation of requiring distributors to deal with such a large volume of their products (which is close to their capacity) in the same manner as the restriction on distributors handling competing products.
In Nordion, the long-term, total amount of purchase obligation was found to be anticompetitive. Although it was found in the context of exclusionary private monopolisation, it is broadly understood that the foreclosure found therein should also apply to the trading on exclusive terms as unfair trade practices. Also, in Intel, while it was not expressly required, Intel’s licensing terms and conditions, especially in connection with the applicable rebate settings, incentivised the licensees and original personal computer equipment manufacturers to purchase all or almost all of the central processing units to be installed in their personal computers from Intel, and it was found that this constituted exclusionary private monopolisation. In this regard, Intel’s market share was found to be approximately 89 per cent of the Japanese market.
Further, such a requirement for the buyer to purchase a full range of the supplier’s products may constitute tie-in sales, etc, depending on the situation.
Explain how restricting the supplier’s ability to supply to other buyers is assessed.
The DSBP Guidelines apply the analytical framework for the ‘impediment of fair competition’ – that is, whether the restriction may result in making it difficult for new entrants or competitors to easily secure alternative distribution channels. It also points out that if the restriction is carried out by an influential reseller or customer in the market, it may lead to a finding that the restriction causes the ‘impediment of fair competition’. The restriction may still be found to be legal if:
- a finished product manufacturer supplies materials to the manufacture of a part, commissions them to make parts and requires them to sell all parts exclusively to itself; or
- a finished product manufacturer provides the know-how to parts manufacturers, commissions them to make parts and requires them to sell all parts exclusively to itself, and if that restriction is deemed necessary for keeping the know-how confidential or preventing the unauthorised diversion of it.
In Oita Oyamacho Agriculture Association, the JFTC concluded that the restraint at issue made it difficult for a certain specific competitor to secure an alternative supply source, and was found anticompetitive. In this regard, in DeNA, although it was similarly intended to restrain the suppliers’ abilities to supply to a certain specific competitor, the category of the applied violation was not the trading on restrictive terms, but the interference with a competitor’s transactions. Although the reason why those two cases were differentiated has not been made clear, considering that interference with a competitor’s transaction does not necessarily require the level of the anticompetitiveness for trading on restrictive terms in this context (ie, whether the restriction may result in making it difficult for new entrants or competitors to easily secure alternative sources of supply), close attention needs to be paid to whether, practically, making restraint of this kind illegal by less strict scrutiny may be the case in the future.
Explain how restricting the supplier’s ability to sell directly to end-consumers is assessed.
In Tottori Chuo Agricultural Association, while the same restriction was found anticompetitive, the reasoning was not necessarily clear. See also Himeji-shi Plumbing Business Cooperative Association and Sagisaka.
Although there is no guidance or authoritative precedents regarding this issue at this stage, the potential anticompetitive effect caused hereby could be found equivalent to the restriction on the distribution channel, although it is made by the distributor, as opposed to the supplier. Therefore, it should be assessed, in the context of trading on restrictive terms from the perspective of whether or not a restriction may result in making it difficult for new entrants or competitors to easily secure alternative distribution channels.
Have guidelines or agency decisions in your jurisdiction dealt with the antitrust assessment of restrictions on suppliers other than those covered above? If so, what were the restrictions in question and how were they assessed?
The DSBP Guidelines deal – as for the restrictions on suppliers other than those covered above – with the issue of how the request by a certain distributor A (appointed for a certain territory X) to the effect that the supplier should prevent another distributor B (appointed for another certain territory Y) from selling products into territory X, especially in connection with exclusive distributorship agreement should be dealt with. It is stated that it is permissible. On the other hand, assuming that territory X is Japan while territory Y is a foreign country, and a certain third-party customer of distributor B purchases products in territory Y and then tries to sell (export) them into territory X (Japan), if the distributor A (in Japan) requires the supplier (or its distributor B) to prevent the third party from their exporting to Japan to maintain prices of the products, it would be found to be anticompetitive, either as trading on restrictive terms or as interference with a competitor’s transaction, as the case may be.
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