Regulating Competition Between Digital Platforms: The Japan Fair Trade Commission’s Preference for Unfair Trade Practices

The Japan Fair Trade Commission (JFTC) has shown an increasing interest in the digital economy. Since the JFTC’s Chairman, Kazuyuki Sugimoto, spoke about this topic in the New Year’s address in 2016, the JFTC publicized several studies on the digital economy. One important issue raised in some of the reports was the central role unfair trade practices could play to force the players in the platform economy to abide with the principles of the Japanese Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (AMA). This conclusion runs parallel to the enforcement actions of the JFTC. In the only cease-and-desist order of the JFTC, a platform was ordered to comply with the AMA through an unfair trade practice. Various decisions to close an investigation on a suspected violation of the AMA, such as against Amazon, Airbnb, or Rakuten, also document the importance of the unfair trade practices as a tool to bring these firms in compliance with the AMA. The evolution to revert to unfair trade practices could be seen as positive. We argue that unfair trade practices allow the JFTC to balance two opposite views in the literature on the platform economy. On the one hand, there is a call for early market intervention to prevent a single platform from growing excessively. On the other hand, there is an argument against intervention because incumbent platforms are innovators and, if not careful, can be challenged on their existence. Unfair trade practices allow for both early intervention and meticulous intervention. Early intervention can be realized because market power is not an important criterion, if at all one, in the conceptualization of an unfair trade practice offence. Meticulous intervention can be guaranteed because unfair trade practices focus on the conduct of an online platform. Unfair trade practices do, in other words, not aim to tackle the ‘bigness’ of the online platforms and so trigger a change in the competitive structure of the market.