Competition and Competition Law in Japan: Between Scepticism and Embrace

Abstract

Japan’s engagement with international models of competition law has been decidedly ambiguous and counter-cyclical with its economic performance. During times of prolonged economic growth, Japan’s attitude to Western styles of competition regulation has been predominantly skeptical, if not hostile. By contrast, during times of economic stagnation, it has been much more positive.

The first part of this chapter charts the ebb and flow of competition law in Japan. In the 1950s and 1960s, competition law conflicted with Japan’s industrial policy and enforcement became anemic. There was a revival in the 1970s, when the oil crisis wreaked havoc on the Japanese economy, but momentum was lost again in the 1980s. Finally, in the 1990s and 2000s, competition law gained increasing acceptance among policymakers seeking ways to revive a stagnating economy.

The second part of this chapter explores the link between competition law and Japan’s specific form of capitalism. It argues that competition law can best be characterized as a legal irritant, rather than as a legal transplant that is either fully accepted or rejected. Indeed, the introduction of competition law in Japan triggered a process of mutual irritation between the law and Japan's economic system. This process led to a double transformation: on the one hand, competition law was changed, interpreted and enforced in ways to make it more compatible with Japan’s capitalism. At the same time, competition law triggered change in Japan's economic and social order. This process of mutual irritation is still continuing and suggests that competition law in Japan will continue to evolve, in parallel with Japan's capitalist system itself and conditioned by the performance of that system, along a trajectory distinct from that of the West.

Keywords: competition law, competition regulation, antitrust law, Japan, legal transplants, convergence

JEL Classification: K21, L40