Japan Fair Trade Commission may launch investigation into U.S. IT giants’ transactions

TOKYO (The Japan News/ANN) - The Japan Fair Trade Commission (JFTC) is considering a policy of launching a large-scale investigation into the actual status of transactions conducted by massive information technology (IT) firms called “platformers” as soon as the beginning of next year, it has been learned.

Since markets are increasingly dominated by such IT giants, their strength within their respective markets has increased. As a result, there is concern that such companies might be conducting unfair trade practices with their business partners. The JFTC is considering conducting a compulsory investigation based on Article 40 of the Antimonopoly Law (see below).
 Google, Apple, Facebook and Amazon.com — collectively called GAFA — are all platformers that are based in the United States.
 IT giants operate online shopping sites or provide operating systems for smartphones or social networking services (SNS), among other things. As their services gain popularity for being convenient, their control of each field becomes increasingly oligopolistic.
Against a backdrop of overwhelming negotiating power, there has been a high amount of problematic behavior by these IT firms such as asking companies selling goods on their shopping websites to lower prices or demanding high usage fees.
 For instance, regarding smartphones, it is said one IT giant restricts payment methods and charges the sky-high fee of about 30 percent of sales as a condition for selling items in its app store. 
 If the planned investigation takes place, the JFTC will obtain information from business partners of IT giants to verify whether these major companies are conducting unfair trade practices in Japan.
 The JFTC will start with a voluntary investigation. However, companies trading with IT giants might be concerned about breach of contract and refuse to disclose the details of the transactions, hindering the investigation.
This is because IT giants often start off by locking clients into confidentiality agreements. Because of that, the JFTC is eying the possibility of conducting a compulsory investigation based on Article 40 of the Antimonopoly Law, which allows the JFTC to force firms to disclose the details of their transactions. Based on the results of the investigation, the JFTC aims to encourage IT giants to correct unfair trade practices.
 Overseas, antimonopoly authorities have been strengthening monitoring efforts on acts of such companies based on their dominant positions, such as displaying their own services in eye-catching positions in search engines or collecting personal data without sufficiently obtaining the consent of users. The JFTC is also collecting information to use for the large-scale investigation.

■ Compulsory investigation based on Article 40 of the Antimonopoly Law
 The investigation is conducted mainly on business partners of monopolistic or oligopolistic firms. If they refuse to respond to the investigation, they will be charged with a penalty of up to ¥200,000. On-site inspections, which are another compulsory investigation based on Article 47, are conducted mainly on individual companies suspected of violating laws and regulations. One of the advantages of the Article 40 investigation is that it allows a probe into a wide range of players in a relevant industry, including business partners of the companies in question. The JFTC launched an Article 40 investigation in 2016 for the first time in about 40 years. It concerned liquefied natural gas transactions.

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