VZCZCXRO0870
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2564/01 3100846
ZNR UUUUU ZZH
R 060846Z NOV 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 7299
INFO RUEHFK/AMCONSUL FUKUOKA 7278
RUEHNAG/AMCONSUL NAGOYA 4502
RUEHNH/AMCONSUL NAHA 9632
RUEHOK/AMCONSUL OSAKA KOBE 1097
RUEHKSO/AMCONSUL SAPPORO 7788
RUEAWJA/JUSTICE DEPT WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 TOKYO 002564 
 
SENSITIVE 
SIPDIS 
 
STATE FOR E, EEB, EAP/EP, AND EAP/J 
NSC FOR JIM LOI 
USTR FOR AUSTR WENDY CUTLER AND DAUSTR MICHAEL BEEMAN 
STATE PASS TO DOJ STUART CHEMTOB AND FTC RANDOLPH TRITELL 
AND DEIRDRE SHANAHAN 
 
E.O. 12958: N/A 
TAGS: ECIN ECON ETRD KJUS JA
SUBJECT: MOMENTUM GATHERS BEHIND JAPAN'S ABOLITION OF FAIR 
TRADE COMMISSION ADMINISTRATIVE HEARING SYSTEM 
 
REF: TOKYO 2412 
 
¶1. (SBU) SUMMARY: The Japan Business Federation's (Keidanren) 
recent advocacy in support of abolishing the Japan Fair Trade 
Commission's (JFTC) internal appeals process adds to momentum 
gathering behind antitrust policy reform under the new 
government of Prime Minister Yukio Hatoyama.  This call upon 
the government to abolish the JFTC's administrative hearing 
system (shimpan) for reviewing its own orders by the business 
community has shifted discussion of the issue in legal and 
political circles to practical questions of how best to 
transfer appeals to the court system and how to improve 
JFTC's investigation process as well.  END SUMMARY 
 
--------------------------- 
BUSINESS COMMUNITY ADVOCACY 
--------------------------- 
 
¶2. (U) On October 20, Keidanren released a public statement 
urging abolition of the JFTC,s administrative hearing system 
and revision of Japan's Antimonopoly Act (AMA) to bring the 
antitrust investigation and appeals process in line with 
U.S./European standards for due process and predictability of 
enforcement.  Keidanren recommended replacing the existing 
appeals system with a procedure within the judicial system in 
which a named corporation can appeal to the courts.  In view 
of existing capacity constraints in the court system and the 
need for experts trained in antitrust matters, Keidanren 
called for the first trial to be the exclusive jurisdiction 
of the Tokyo District Court for the time being, and for 
subsequent appeals to be the exclusive jurisdiction of the 
Tokyo High Court.  Keidanren also urged human resources 
development, particularly the training of staff with 
expertise in AMA cases.  (For the Japanese-language original, 
see: 
http://www.keidanren.or.jp/japanese/policy/20 09/086.html.) 
 
¶3. (U) Keidanren's basic argument is that the existing 
appeals system under which the JFTC reviews its own decisions 
(effectively serving as both prosecutor and judge) is 
inherently unfair and invites distrust that cannot be 
eliminated by partial measures.  Keidanren has long favored 
abolition and is now engaging more visibly on the issue since 
the prospects for passage of the necessary legislation have 
improved with the advent of a Democratic Party of Japan (DPJ) 
 government (reftel).  Increases in civil and criminal 
penalties for AMA violations also underpin business community 
advocacy. 
 
¶4. (U) The U.S.-Japan Business Council (USJBC) and Japan-U.S. 
Business Council (JUSBC) have similarly called for abolition 
of the administrative hearing system in a joint statement. 
The two business organizations issued a wide-ranging set of 
recommendations to both governments upon conclusion of their 
joint meeting in Washington on November 3.  Their competition 
policy recommendations also criticized the lack sufficient 
safeguards under the existing system to ensure the 
independence of the initial hearing officers. 
 
---------------------------------- 
FOCUS ON THE INVESTIGATION PROCESS 
---------------------------------- 
 
¶5. (U) Both the Keidanren and USJBC/JUSBC statements propose 
measures to ensure that the JFTC investigation process 
adheres to fundamental international standards of due process 
and transparency on a par with international standards.   The 
business groups specifically called for protections such as 
disclosure of evidence held by the JFTC to the party under 
investigation; respect for the attorney-client privilege and 
the right to have counsel present during all stages of an 
investigation (to protect the defense rights of parties that 
are subject to investigations and interviews); holding 
sufficient hearings prior to issuance of an order and 
specification of the reason and evidence serving as the basis 
for the order to the party at the time of the issuance of the 
order; and preservation of confidentiality of information 
provided to the JFTC. 
 
TOKYO 00002564  002 OF 002 
 
 
 
-------------------- 
GOJ REVIEWING POLICY 
-------------------- 
 
¶6. (SBU) Despite Japanese press reports that the Government 
of Japan has decided to scrap the present hearing system 
entirely, JFTC contacts say that the GOJ is still discussing 
the optimal system.  They also confirm the GOJ is considering 
a new rule to allow attorneys to be present during interviews 
by JFTC officials, something the U.S. business community has 
long requested. 
 
---------------------- 
AMERICAN CHAMBER VIEWS 
---------------------- 
 
¶7. (SBU) American Chamber of Commerce in Japan (ACCJ) 
contacts note that by going on the record as it has, 
Keidanren has set the terms of the policy debate.  They 
strongly agree that improvements in the JFTC's investigation 
process are as important as the appeal process.  Regarding 
abolition of the hearing system, what is required next is 
close attention to practical questions regarding the rules 
under any new system regarding issues such as evidence, 
disclosure, confidentiality, and other applicable laws.  For 
example, if the Administrative Procedure Law were to apply, 
it would allow enforcement of any order (including the 
penalty) unless the court issues a suspension order.  The 
ACCJ Competition Policy Task Force is preparing a separate 
viewpoint on due process issues (to be made available soon); 
it is now considering whether to issue a separate comment on 
the hearing system. 
ROOS