JAPAN Trends and Developments Contributed by: Yasushi Kudo, Yukiko Konno and Takayuki Inukai, Nagashima Ohno & Tsunematsu
METI/JFTC: building partnerships with business partners to enhance cybersecurity across the supply chain (Unfair Competition Prevention Act/ Subcontract Act) To clarify the applicability of the Antimonopoly Act and the Proper Transactions Act (formerly known as the Subcontract Act prior to the amendment noted above) in situations where large corporations, as ordering parties, request SMEs and other business partners to implement cybersecurity measures as a condition of the transaction, the Ministry of Economy, Trade and Industry (METI) and the JFTC published a document in October 2022 titled “Toward Building Partnerships with Business Partners to Enhance Cybersecurity Across the Entire Supply Chain.” In December 2025, METI and the JFTC published an explanatory document supplementing their earlier guidance titled “Toward Building Partnerships with Business Partners to Enhance Cybersecurity Across the Entire Supply Chain”. This document further clari - fies the relationship with the Antimonopoly Act and the Proper Transactions Act, presenting hypothetical cases deemed “not problematic” along with explana - tions detailing the scenarios. Specifically, it envisions a scenario where a large enter - prise, as the ordering party, requests its SME business partners to implement security measures based on a security evaluation system aimed at strengthening the supply chain. Within this scenario, the document explains how the large enterprise (ordering party) and its SME business partners can establish an appropri - ate partnership, conduct price negotiations regarding security measures, and reach a mutually satisfactory agreement. The creation of this document stems from two major challenges: the increasing cybersecurity risks across the entire supply chain and the uncertainty surround - ing the cost burden of countermeasures. In recent years, cyber-attacks targeting not only large corpo - rations but also their SME suppliers have become increasingly sophisticated. A vulnerability at a single point can lead to business disruption or information leaks across the entire supply chain, making co-ordi - nated countermeasures essential rather than isolated efforts by individual companies. On the other hand,
surveys by relevant authorities indicate that many SMEs do not perceive the necessity of such meas - ures. Therefore, it is necessary for ordering companies to take the lead in promoting countermeasures. How - ever, the document published by METI and the JFTC in October 2022 outlined basic principles but did not clearly define specific “price negotiation or cost-shar - ing models.” Consequently, large companies, as the ordering parties, sought clarification on how to pass on the costs of organisational security measures to their SME suppliers, particularly in relation to the Anti - monopoly Act and the Proper Transactions Act. Against this backdrop, in December 2025, METI and the JFTC published this document to clarify the fol - lowing key points: • promoting a positive co-operative relationship between large corporations (the ordering parties) and SMEs (their suppliers) to enhance the resil - ience of the entire supply chain; • presenting specific negotiation approaches to ensure that passing on security measure costs does not raise issues under the Antimonopoly Act or the Proper Transactions Act; and • utilising the “Security Measures Evaluation System for Supply Chain Strengthening” under considera - tion by METI to visualise the security measures sta - tus of suppliers, thereby stabilising and facilitating transactions. Based on the foregoing, when large corporations negotiate cost-sharing arrangements for necessary security measures with SME suppliers or contractors, it is imperative for large corporations to provide a suf - ficient notification period, offer thorough explanations and facilitate discussions, and properly document these explanation and discussion processes (eg, by retaining meeting minutes and explanatory materials). METI’s moves towards establishing a security measures evaluation system for supply chain strengthening METI is advancing the establishment of a security measures evaluation system to strengthen supply chains. This initiative aims to address the frequent security incidents occurring within supply chains in
243 CHAMBERS.COM
Powered by FlippingBook