New Year Message from Chair Furuya Kazuyuki(January 2025)

1. Strict and Proactive Law Enforcement

The fundamental mission of the JFTC is the strict and proactive enforcement of the Antimonopoly Act (AMA) and other relevant laws. With respect to violations of the AMA, we will rigorously address unreasonable restraint of trade including price cartels, particularly in sectors that have a significant impact on people's daily lives. In addition, from the perspective of ensuring fair trade opportunities for small and medium-sized enterprises (SMEs), the JFTC will continue to engage in strict and proactive law enforcement against unfair trade practices, such as abuse of a superior bargaining position, as well as violations of the Fair Transactions Act or the Act on Improvement of Transactions between Freelancers and Business Operators. In conducting law enforcement, the JFTC will seek to restore competition swiftly and effectively through a diverse range of measures including cease and desist orders and surcharge payment orders, while also making active use of commitment procedures, particularly in the digital sector where technological change is rapid. In the digital field, in April last year, the JFTC issued a cease and desist order against Google concerning contractual agreements that prevented Android smartphone manufacturers and other business operators from implementing search services provided by competing companies. With respect to abuse of a superior bargaining position, the JFTC also has taken measures such as issuing cease and desist orders and approving commitment plans. While actively addressing unilateral conduct in this manner, the JFTC has also taken strict action against cartels and bid-rigging, in which business operators act in concert to unfairly raise prices and thereby harm consumers. In the current fiscal year, as of December, the JFTC issued nine cease and desist orders against cartels and bid-rigging, including a gasoline cartel in Hokushin area of Nagano Prefecture. Under the Fair Transactions Act, the JFTC issued 21 recommendations in FY 2024, the highest number in the past ten years. In the current fiscal year, as of December, the number of recommendations has already exceeded the previous year, reaching 26 cases. Of these, six cases were initiated based on requests for measures from the Commissioner of the Small and Medium Enterprise Agency. Furthermore, with regard to the Act on Improvement of Transactions between Freelancers and Business Operators, which came into effect in November 2024, the JFTC issued six recommendations for violations, including failures to clearly specify transaction terms and violations of obligations to make payments by the due date. Together with its enforcement of the Fair Transactions Act, the JFTC is proactively working to ensure fairness in transactions. In addition to issuing orders and recommendations in individual violation cases, the JFTC has also promoted initiatives to improve trade practices across entire industries and supply chains by making requests and providing guidance to relevant industry associations and other stakeholders. For example, in December last year, in light of a series of recommendations issued under the Fair Transactions Act to automotive-related enterprises, the JFTC compiled key points of attention regarding practices such as the free storage of dies and other items, refusal to accept parts or requiring their free storage in connection with batch production, and placing orders for spare parts at unit prices premised on mass production. The JFTC requested three industry associations related to automobile manufacturing to ensure that these points were thoroughly disseminated throughout the industry.

2. Fair Transactions to Facilitate Smooth Price Pass-Through

As described above, achieving a situation in which wage growth outpaces price inflation is currently the government's highest policy priority. In order to realize sustainable and structural wage increases, including for SMEs, it is essential not only to enhance labor productivity but also to ensure the smooth price pass-through of rising costs, such as labor costs, through the proper conduct of business transactions. In order to realize "structural price pass-through," whereby appropriate price pass-through is embedded across the entire supply chain on the basis of equal relationships between contracting parties, an amendment to the Subcontract Act was enacted and promulgated in May last year and entered into force on January 1 of this year. The amendment introduced measures including the prohibition of unilateral price determination by purchasers who refuse to engage in consultations, the prohibition of payment by promissory notes, the expansion of covered transactions to include transportation consignments, addition of employee based criteria, and the strengthening of area-wide enforcement. Following this amendment, the name of the Act was renamed to the "Act Against Delay in Payment of Fees, etc. to Small and Medium-sized Entrusted Business Operators in Manufacturing and Other Specified Fields" (abbreviated as the Act on Proper Transactions with Small and Medium-Sized Entrusted Business Operators, commonly referred to as the Fair Transactions Act). In order to ensure that the amended Act functions as an effective regulatory framework, the JFTC will work closely with relevant ministries and agencies to promote thorough awareness and understanding of the amended Act, together with the "Guidelines on Price Negotiation for Appropriate Pass-Through of Labor Cost" (formulated in November 2023 and amended in January 2026). Moreover, to achieve smooth price pass-through nationwide, it is necessary to create an environment in which appropriate price pass-through is ensured across the entire supply chain, including transactions that fall outside the scope of the Fair Transactions Act. To this end, the JFTC will continue to jointly convene the "Study Group on Business Transactions" with the Small and Medium Enterprise Agency and will proceed with further examination while listening carefully to the views of relevant stakeholders.

3. Strengthening Competition Policy

The JFTC is actively working to strengthen the competitive environment by developing new rules, reviewing existing regulations and institutional frameworks, and enhancing enterprises' compliance with competition laws in the light of changes in economic and social landscape, including the advancement of the digital economy and the diversification of working styles. In the digital field, the Mobile Software Competition Act, which was enacted and promulgated in June 2024, entered into full force in December last year. In conjunction with its full implementation, initiatives aimed at expanding user choice have begun, including the display of so-called "choice screens" on certain smartphones that allow users to select browsers and search services. Unlike the AMA, this Act establishes a new regulatory framework under which the JFTC engages in continuous dialogue with stakeholders including the designated providers and application developers, encourages designated providers to improve their business models. Through effective and wide-ranging public outreach and awareness-raising efforts, the JFTC will seek to enhance consumer understanding and foster an environment in which relevant business operators can readily raise their voice, thereby promoting the development of sound competitive environment. In addition, in the digital field, the JFTC published the "Report Regarding Generative AI, Version 1.0" in June last year. While generative AI has the potential to generate new innovations, it also entails potential risks from the perspective of competition policy. Taking these factors into account, the report sets out the JFTC's approach under the AMA and competition policy. As markets related to generative AI remain fluid, the JFTC will, as indicated by the title "Version 1.0", continue to conduct surveys and update information in a more agile, timely, and flexible manner than in conventional market studies. By fully leveraging the expertise of specialists, including the Chief Technologist newly appointed in July last year, the JFTC will continue its efforts to improve the competitive environment in digital markets. Furthermore, efforts to strengthen economic security are being advanced across the government as a whole. In this context, in November last year, the JFTC published "Basic Approach to the Antimonopoly Act for Business Activities Related to Economic Security" and the "Casebook on Economic Security and the Antimonopoly Act." Amid rapid changes in the economic and social environment, it is important to clarify the basic principles of the AMA and disseminate them to industry. By doing so, the JFTC seeks to promote the development of appropriate rules and enhance predictability, thereby ensuring that business operators do not refrain from legitimate business activities due to vague concerns about potential violations of the Act, but instead conduct such activities based on a proper understanding of the law. Beyond initiatives related to economic security, the JFTC, as an "open competition authority", will continue to respond proactively to consultations regarding business activities and encourage business operators to make active use of the consultation system.

4. Promoting International Cooperation

As the digital economy continues to advance, the activities of large digital platform operators increasingly extend across national borders on a global scale. In order to address competitive concerns in digital markets, such as those arising from mergers and acquisitions and anti-competitive conduct, the need for international cooperation with overseas competition authorities has become ever more important, both in the enforcement of competition law and in the promotion of competition policy. Last year, the JFTC strengthened its international cooperation with competition authorities in other jurisdictions and, with a view to leading discussions on future regulatory approaches to digital markets as well as promoting awareness and understanding of the Mobile Software Competition Act among relevant business operators and other stakeholders, hosted the 1st Global Forum on Digital Competition. The Forum was attended by a wide range of participants, including officials from overseas competition authorities, academics, practitioners, and representatives of relevant enterprises. This year, the JFTC plans to hold the Second Forum and, with the Act now fully in force, will work to further enhance its effective implementation. Since assuming the position of Chair, I have also attended the G7 Competition Summit and, through overseas visits, engaged in exchanges of views with the heads of competition authorities in the Republic of Korea, the United States, Europe, and other jurisdictions, thereby working to build and strengthen international relationships. I intend to continue to maintain and further strengthen these relationships.

Finally, the period from December last year into this year marks an important milestone for the JFTC. During this time, the relocation of headquarters to the Toranomon Alcea Tower commenced, the Mobile Software Competition Act entered into a full force, and the Fair Transactions Act came into effect at the beginning of this year. In addition, under the draft budget approved by the Cabinet at the end of last year, the authorized number of officials in the Secretariat will be increased to 995. Together with the members of the Commission (the Chair and four Commissioners), the total personnel of the JFTC will reach 1,000.
By contrast, since the introduction of the General Secretariat system in 1996-when the number of officials was in the range of the 500s-the organizational structure consisting of one Secretariat, two Bureaus, and two Departments has remained unchanged. As the role expected of the JFTC continues to expand and the scope of its responsibilities broadens significantly, I will carefully consider the most effective organizational structure in order to ensure fair and free competition and to contribute to the growth of Japan's economy and the improvement of people's lives.
I respectfully request your continued understanding and support for the JFTC. With my sincere wishes for your good health and continued prosperity, I conclude my New Year's greetings.

(Tentative translation)