Regulations of Digital Platform Markets Under the Japanese Antimonopoly Act: Does the Regulation of Unfair Trade Practices Solve the Gordian Knot of Digital Markets?

• DOI: 10.1177/0003603X19898905
• Author: Kazuhiko Fuchikawa
• Published date: 01 March 2020
• Date: 01 March 2020

Article

Regulations of Digital Platform

Markets Under the Japanese

Antimonopoly Act: Does

the Regulation of Unfair Trade

Practices Solve the Gordian

Knot of Digital Markets?

Kazuhiko Fuchikawa*

Abstract

When it comes to digital platform markets, the competitionauthorities of Japan, the EU, and theUnited

States share a similar approach toward the regulation of mergers. Additionally, they share a common

approach with respect to exclusive dealings but apply slightly different rulesconcerning a refusal to deal

in the regulationof monopolization. However,the regulation of UnfairTrade Practices (UTPs) in Japanis

unique in that it is possibleto regulate a vertical nonprice restraint imposed by a company with a market

share between 20% and 50%. The author explores the regulation in the digital platform markets by the

UTPs under the Japanese AntimonopolyAct and examines the possibilityof the regulations by the UTPs

as an alternativemethod. This article argues thatit is desirable, especially in thecase of private suits, that

the assessment of market definition and the burden of proof be simplified.

Keywords

digital platform, two-sided market, multisided market, unfair trade practice, Japanese Antimonopoly

Act

I. Introduction

The Internet of Things and Artificial Intelligence rely on big data to drive technological innovation.

The improvement of industrial productivity through such technological innovation is considered as the

Fourth Industrial Revolution.

1

In recent years, digital platform businesses, such as online malls and

* Associate Professor, Yamaguchi University, Yamaguchi, Japan

Corresponding Author:

Kazuhiko Fuchikawa, Associate Professor, Yamaguchi University, Yamaguchi, Japan.

Email: k.fuchikawa@gmail.com

1. KLAUS SCHWAB,THE FOURTH INDUSTRIAL REVOLUTION 8 (2017).

The Antitrust Bulletin

2020, Vol. 65(1) 102-119

ªThe Author(s) 2020

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0003603X19898905

journals.sagepub.com/home/abx

hotel reservation sites, are growing rapidly worldwide. A digital platform refers to a common founda-

tion or technological base that enables transactions, information dissemination, and access among

members of distinct customer groups.

2

The tremendous amount of data obtained from the use of

products exchanged via digital platforms results in the improvement of the products and leads to

further data collection, as well as additional upgrading. A two-sided or multifaceted market forms a

vital attribute of this virtuous circle.

A two-sided or multisided market features more than two different groups of users and an indirect

network effect.

3

An indirect network effect means an impact on one side of the market affects the other

sides. For instance, the greater the number of consumers who gather in one market, the greater is the

number of companies that sell products on the platform being attracted to the other sides. Although the

two-sided market is not a new model but has long been recognized in various industries, such as for

magazines and newspapers, it connects readers and advertisers. The two-sided and multisided markets

are attracting more attention currently because of the rapid expansion of businesses that employ digital

platforms via the Internet, and it is considered that the indirect network effects of such a model may

give rise to oligopolies.

4

We must clarify the pros and cons of the indirect network effects in two-sided and multisided

markets even as we encourage the utilization of data and promote the Fourth Industrial Revolution by

addressing the following questions: Is it still sufficient to apply traditional regulations to a single-sided

market? How and when does an adverse effect on competition occur? Under what circumstances does

the indirect network effect in two-sided and multisided markets amplify foreclosure, may hamper new

entry, and cause exclusionary outcomes against existing firms? What differences can be observed

between Japan and other regions, such as the US and the EU, in terms of the regulation of digital

platform markets? This article discusses these issues.

In Section II, this article clarifies the characteristics of a digital platform and explains how digital

platform markets are regulatedby competition law. Section IIIexamines the current frameworkto define

marketsand assess market powerwith respect to digital platformmarkets. SectionIV discusses the manner

in which a digital platform is regulated in Japan, both as Private Monopolization and Unfair Trade

Practices (UTPs), while regulations of the latter are one of the unique characteristics of the Japanese

Antimonopoly Act ( AMA).

5

The analysisin the section focuses the UTPregulation’s function toregulate

digital platform markets from the standpoint of lessening competition in the relevant market. Section V

examines whatlessons can be learnt from the pastAMA cases and offers a comparativeanalysis with EU

and U.S. laws. Section VI summarizes the paper. As there are not many instances of anticompetitive

collusion in Japanese digital platform markets, the article does notdelve into this topic.

6

2. David S. Evans, Platform Economics: Essays on Multi-Sided Business,COMPETITION POLICY INTERNATIONAL 2 (2011), https://

papers.ssrn.com/sol3/papers.cfm?abstract_id¼1974020 (last visited Feb. 17, 2019).

3. See Jean-Charles Rochet & Jean Tirole, Platform Competition in Two-sided Markets,1J.E

UR.ECON.ASS’N990, 990–94

(2003); Evans, supra note 2, at 2; OECD, TWO-SIDED MARKETS 28 (2009), https://www.oecd.org/daf/competition/44445730.

pdf (last visited Feb. 17, 2019); OECD, RETHINKING ANTITRUST TOOLS FOR MULTI-SIDED PLATFORMS 9–12 (2018), https://www.

oecd.org/daf/competition/Rethinking-antitrust-tools-for-multi-sided-platforms-2018.pdf (last visited Feb. 2019).

4. AUTORIT´

EDELACONCURRENCE,BUNDESKARTELLAMT,COMPETITION LAW AND DATA 27–28 (2016), http://www.

autoritedelaconcurrence.fr/doc/reportcompetitionlawanddatafinal.pdf (last visited Aug. 8, 2018); JFTC, REPORT OF STUDY

GROUP ON DATA AND COMPETITION POLICY 7–8 (2017)(Tent ative Translation) [hereinafter JF TC, Data and Competition

Policy], https://www.jftc.go.jp/en/pressreleases/yearly-2017/June/170606_files/170606-4.pdf (last visited Aug. 8. 2018).

5. Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of Apr. 14, 1947), https://www.jftc.

go.jp/en/legislation_gls/amended_ama09/index.html (last visited Aug. 8, 2018).

6. Taxi prices in Japan are regulated under the Road and Transportation Act. Hence, the problem of a digital cartel being created

via Uber has not yet occurred. However, such problems could present themselves with online bed and breakfast reservation

services, such as Airbnb.

Fuchikawa 103