Japan: Introducing attorney-client privilege

Nobuaki Ito

The Anti-monopoly Act of Japan was promulgated on December 13 2013 and is expected to come into force within 18 months (the specific date to be determined by way of cabinet order). The Act will abolish administrative appeal procedures by the Japan Fair Trade Commission (JFTC) for certain JFTC orders. In addition, a supplementary provision of the amended act provides that the government will, within one year of the promulgation date, consider changes to investigation procedures to preserve the rights of potential interested parties and maintain consistency with other administrative procedures, and will take appropriate measures as necessary in accordance with the discussions. In response to this, an advisory panel was set up and one of the main points for consideration is whether attorney-client privilege should be introduced for anti-monopoly procedures in Japan.

In Japan, there is no attorney-client privilege in criminal or administrative investigation procedures. However, some assert that this should be granted in respect of anti-monopoly investigation procedures because: (i) companies providing information which involve communications with their attorneys in response to report orders from the JFTC may possibly be waiving attorney-client privilege that, with respect to these communications, would otherwise be recognised in foreign jurisdictions; and, (ii) granting attorney-client privilege to an extent similar to common law jurisdictions will not unduly hinder JFTC investigations and the JFTC can seek and collect relevant non-protected materials.

On the other hand, opponents (including the JFTC) assert that companies in Japan might have less incentive to cooperate with investigations compared to companies in the US and EU because the JFTC has much less power to sanction for obstruction of investigations. Also, unlike equivalent regulators in other jurisdictions, it has no ability to incentivise cooperation from potential interested parties by reducing the penalties ultimately imposed on them. Therefore, if attorney-client privilege is legally granted, there is a risk of disrupting JFTC investigations. Further, companies do not suffer detriment due to the lack of attorney-client privilege in Japan.

The advisory panel will also consider whether rights regarding the presence of counsel should be granted to potential interested parties during procedures such as the execution of document searches by the JFTC. We should pay close attention to the discussions on and any further amendments to the Anti-monopoly Act of Japan in the near future.

Nobuaki Ito

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