Balancing Fairness and Efficiency in the Globalized Competition Law Enforcement: Insights from JFTC Experiences

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Toshiaki Takigawa, Jun 16, 2014

A competition agency’s decision, consisting of a remedy and a fine, causes serious consequences for the targeted firm. Firms (and other respondents) therefore are empowered to appeal to the courts against an agency’s decision. This judicial appeal constitutes the basic safeguard for rights of defense and procedural fairness against abuse of administrative powers by competition agencies.

Nevertheless, discussions at the OECD Competition Committee and, most recently, at the American Bar Association’s Antitrust Spring Meeting indicate that the provision of judicial appeals does not constitute an adequate safeguard. Procedural fairness needs to be secured within the decision-making process of the competition agencies.

Setting up a hearing system within a competition agency is deemed necessary because courts usually find it difficult to negate an agency’s decision. This is caused by the comparative disadvantage between courts and agencies with regard to specialized knowledge of competition law and economics. Another often cited reason for the ineffectiveness of appeals to the courts is that courts take a long time to reach a decision; during court proceedings, an agency’s orders remain in effect.

However, a hearing system presents problems-increasing the administrative and personnel costs of the agency, at the same time slowing down issuance of decisions. Competition agencies therefore need to strike the right balance between procedural fairness and efficient enforcement.

Administrative hearings, as now practiced by the U.S. FTC and the EU’s DG Competition, represent two different models for other countries’ competition agencies to emulate. In this context, the Japanese experience regarding transformation of its administrative-hearing may help reveal the relative pros and cons of the U.S. FTC and the EU models.