Another round of changes to Japan’s Anti-Monopoly Act? This time, attorney-client confidentiality.

By: Alexandra Lee Page

Although Japan’s Anti-Monopoly Act was amended last year in order to help the economy and enhance consumer interests[1], another round of changes could be in store. On April 2, 2020, the Japan Fair Trade Commission (“JFTC”) issued draft rules and guidelines that would establish a new set of rules and guidelines under the June 2019 Amendments to the Japanese Anti-Monopoly Act.[2] The government agency, also known as Kōtori or Kōtorii, is responsible for regulating economic competition and enforcing the Anti-Monopoly Act.

One proposed amendment would establish limited confidentiality protections for attorney-client communications in certain JFTC investigations.[3] Unlike the Model Rules of Professional Conduct in the United States[4], current Japanese law provides very little protection for attorney-client communications, other than simply requiring lawyers to maintain their client confidences.[5] Protection from disclosure requests in Japan are based on a lawyer’s duty to maintain confidentiality rather than being, as in the common law, a right that belongs to the client.[6] According to the Organisation for Economic Cooperation and Development (“OECD”), Japan is one of the only three (3) OECD jurisdictions to not recognize attorney-client privilege.[7]

Unlike the U.S., Japan does not have broad discovery requirements – so a potential change like this may not be of much concern within the general civil litigation realm. But the lack of attorney-client privilege could pose a serious concern with government investigations or “dawn raids” - situations where authorities seek to obtain sensitive attorney-client communications as part of an on-site inspection. This is especially true in antitrust cases – where there are often parallel investigations or related civil cases in other jurisdictions (such as the U.S. and the U.K. with broad discovery requirements) that could pose serious consequences from the disclosure of attorney-client communications.[8] However, these proposed protections for attorney-client communications are specifically limited to JFTC antitrust investigations for allegations of unreasonable restraint of trade and would not apply in other types of antitrust investigations, criminal antitrust investigations, or non-antitrust investigations conducted by other Japanese government authorities.[9]

Some of the other proposed amendments includes an update to the leniency program where entities can receive smaller surcharges if they cooperate with JFTC antitrust investigators and larger criminal fines for those who obstruct investigations.[10] However, the scope of protection seems to be narrowly tailored. In order to qualify for protection, the designated documents and data must contain or reflect confidential communications with outside Japanese law counsel regarding legal advice related to the alleged violation of unreasonable restraint of trade (i.e. cartels and bid-rigging) that is subject to investigation.[11] For example, these protections would not apply to internal communications with in-house counsel, internal notes, or internal investigations conducted by the entity itself.[12] It also would not apply to communications with foreign attorneys, including those who are registered to practice in Japan (“gaikokuho jimu bengoshi” or “gaiben”).[13] Additionally, the entity would have to specifically label qualifying documents and data confident as “Specific Communication Under the Rules on Investigations by the JFTC” (公取委審査規則特定文書), store the documents and data in a location separate from non-privileged documents, and then limit access to such documents and data within the company on a need-to-know basis.[14] In summation, these proposed changes to the Act essentially also introduce a new procedure, referred to as the “Determination Procedure” (Attachment 4), which would set forth that investigators, assuming certain conditions are met, cannot access documents containing confidential communication between an enterprise and an attorney regarding legal advice about unreasonable restraint of trade.[15] Part of the JFTC’s provided reasoning for this amendment is to make the new leniency program established last year more effective and concurrent with the enforcement of the amendment act.[16]

Lastly, the JFTC also drafted an amendment under the Guidelines on Administrative Investigation Procedures under the Anti-Monopoly Act (Attachment 5) to permit employees of the applicant for the leniency program to “take notes on the spot after the completion of interview conducted by investigators.”[17]

The public comment period will solicit input from stakeholders, likely including the Law Society and the International Bar Association.[18] Some early input indicates a favorable review – Law Society president Simon Davis said: “protecting communications between lawyers and their clients not only strengthens access to justice; it ultimately enhances the rule of law and compliance by both individual and business clients. The Law Society therefore welcomes this important consultation.”[19]

The deadline to submit public comments for the five (5) proposed rules and guidelines (Attachment 1, 2, 3, 4 and 5) is May 15, 2020 at 6 p.m. Japan Time (GMT +9).[20]

#internationalbarassociation #japan #JFTC #antitrust #trade #litigation #discovery #Page

[1] See Press Release, Japan Fair Trade Commission, Enactment of the Act of Amend the Antimonopoly Act, (June 19, 2019), https://www.jftc.go.jp/en/pressreleases/yearly-2019/June/19061907.html (summarizing the amendment act).

[2] Press Release, Japan Fair Trade Commission, Public Comments on the Draft of the Amendment of the Rules/Policy/Guidelines with the Amendment of the Antimonopoly Act (Apr. 2, 2020), jftc.go.jp/en/pressreleases/yearly-2020/April/200402.html.

[3] Tomohiko Kimura et al., Japan FTC Proposes New Attorney-Client Privilege Rules For Public Comment, JD Supra, LLC (Apr. 15, 2020), https://www.jdsupra.com/legalnews/japan-ftc-proposes-new-attorney-client-86070/.

[4] See American Bar Association, Model Rules of Professional Conduct (adopted widely by most U.S. jurisdictions), https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/model_rules_of_professional_conduct_table_of_contents/.

[5] See supra note 3.

[6] Jemma Slingo, Japan ponders introducing legal professional privilege, The Law Society Gazette (Apr. 20, 2020), https://www.lawgazette.co.uk/news/japan-ponders-introducing-legal-professional-privilege/5103908.article.

[7] Id.

[8] Tomohiko Kimura et al., supra note 3.

[9] Id.

[10] Slingo, supra note 6.

[11] Tomohiko Kimura et al., supra note 3.

[12] Id.

[13] Id.

[14] Id.

[15] Sling, supra note 6.

[16] See supra note 2.

[17] Id.

[18] Sling, supra note 6.