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Toshiaki Takigawa

Superior bargaining position (SBP) regulation exercised by the Japan Fair Trade Commission (JFTC) aims at business methods that the JFTC judges as abusive in leveraging bargaining power towards weaker trading partners. This regulation has commonality with the European Commission’s exploitative abuse regulation (based on Art. 102 TFEU), but has been enforced in a considerably different way compared with the EU’s. This chapter, through comparing the Japanese regulation with the EU’s, highlights weakness of the SBP regulation. The weakness emanates from two deficiencies: first, lack of objective standards in identifying unreasonable abuse; second, lack of limitation to targeted enterprises. The JFTC has distinguished SBP from dominant position (or market power), thus identifying SBP whenever the JFTC identifies unreasonable trading terms, effectively transforming the SBP regulation to general regulation against unfair trading terms. This has effectively expanded the role of the JFTC to watching over unfair trading terms, leading to excessive intervention into business methods, at the expense of consumer welfare. The JFTC is advised to emulate the European Commission in minimizing exercise of SBP abuse regulation; at least, through limiting the regulation to instances where SMEs cannot feasibly utilize litigation for resolving their business conflicts with large-scale retailers or producers.

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Toshiaki Takigawa

This chapter examines how different a viewpoint the competition agencies need to adopt in dealing with innovation-intensive industries than with other industries. For this purpose, the chapter looks specifically at the broadband sector, which includes not only broadband networks but also products and services. New communications technologies and services, particularly the mobile ones, have considerably invigorated competition in telecommunications not only in downstream services but also in upstream networks. Therefore, companies operating in the broadband networks and services should no longer be subjected to ex ante telecommunications regulations. The international comparative analysis conducted in this chapter reveals several policy implications regarding competition law enforcement in innovation-intensive industries. First, competition agencies are advised to use the requirement to identify market power as a safeguard against over-regulations of unilateral (and exclusionary) conduct. Correct examination of market power necessitates correct definition of a relevant market, which should include not only ‘locked-in’ customers but also possible new customers. Moreover, a current market share should not be treated as the exclusive indicator of market power; a competition agency needs to grasp innovation trends in order to make a forward-looking assessment of market power. Second, a competition agency needs to base its examination of a refusal to deal (or a price squeeze) regarding access to a broadband network on a standard that balances innovation incentives against chances of new entries. The refined essential-facility doctrine properly reflects this balancing consideration. Still, a competition agency needs not only to identify essentiality of a facility but also to engage in a balancing evaluation between anticompetitive effects and efficiency effects. Third, a competition agency may let a telecommunications agency do the task of setting up behavioural remedies against companies that have engaged in competition law violations. This arrangement leads to administrative efficiency, but presupposes that the two agencies share the same regulatory standard. When this is not the case, the competition agency needs to set up a specific behavioural order against the violating company.