JAPAN Law and Practice Contributed by: Shinya Tago, Atsushi Fukasawa, Hiroshi Iida and Landry Guesdon, Iwata Godo Law Offices
and annual and semi-annual securities reports must be drawn up and disclosed to the public. Under the FIEA, failure to submit any required financial statement or report is subject to a penalty, depend - ing on the type of document. For example, a person who initiates a public offering before a securities reg - istration statement has been accepted, or who fails to submit an annual securities report by the prescribed deadline, will be subject to imprisonment with labour for up to five years and/or a maximum fine of JPY5 million (Article 197-2). A person who makes false statements about important matters regarding those documents will be subject to imprisonment with labour for up to ten years and/or a maximum fine of JPY10 million (Article 197-1). In addition, if the FIEA violation is committed by an officer or employee of a company, the company will also be fined for a violation of: • Article 197-1 – a maximum fine of JPY700 million; and • Article 197-2 – a maximum fine of JPY500 million (Article 207). Furthermore, the violation will be subject to a separate surcharge payment order by the FSA (Articles 172-1 to 172-4). 3.7 Cartels and Criminal Competition Law Cartels The AMA governs cartels (including bid-rigging), which are prohibited as “unreasonable restraints of trade”, defined as “business activities, by which any enterprise, by contract, agreement or any other means irrespective of its name, in concert with other enterprises, mutually restrict or conduct their busi - ness activities in such a manner as to fix, maintain or increase prices, or to limit production, technology, products, facilities or counterparties, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade” (Article 2 (6) of the AMA). The JFTC can conduct primary investigations and impose cease-and-desist orders and administra -
tive fines (surcharge payment orders). The surcharge amount is 10% of: • the sales or purchase amounts of the goods or services in question; and • the amounts of sales or purchases of closely con - nected trade during the violation period (up to ten years from the investigation date). Financial gains made for not supplying the goods or services subject to the violation are added to these amounts. In addition, the maximum surcharge amount can be increased by 50% for repeat offenders and those playing a proactive role in its commission/ring - leaders. A leniency programme allows the JFTC to factor in the order of leniency applications received and the degree of co-operation, and to award a cor - responding discharge of, or discount from, the admin - istrative fines. Criminal Sanctions Cartelists can face criminal sanctions. The filing by the JFTC of a criminal accusation to the Prosecutor Gen - eral is the exclusive means by which a criminal pros - ecution can be brought against enterprises and indi - viduals for cartel violations (Article 96 (1) of the AMA). Violations may result in a maximum fine of JPY500 million for enterprises, or imprisonment of up to five years and a fine of up to JPY5 million for individuals. Other Unfair Trade Practices The JFTC imposes administrative fines (pursuant to surcharge payment orders) if an enterprise is found to be engaged in “private monopolisation” or certain unfair trade practices under the AMA. Surcharges are calculated by applying certain rates to the sales of the relevant goods or services during the violation period (up to ten years). In the case of control-type private monopolisation, the calculation method is the same as for cartels. The sales calculation methods and sur - charge rates differ according to the type of conduct, as follows. • For control-type private monopolisation: 10% of sales (increased by 50% if the enterprise has been ordered to pay surcharges or has been subject to a similar order for private monopolisation or restraint
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