Jan 10, 2014

NYK, K Line receive advanced notice on violation of Antimonopoly Act from JFTC

Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line) announced on January 9 that they have received an advanced notice of reprimand from the Japan Fair Trade Commission (JFTC) for their suspected violation of the Antimonopoly Act of Japan in relation to the marine transport of automobiles. According to a source affiliated with the JFTC and some reports, about five companies, including NYK and K Line and foreign operators, have received the advanced notice which is believed to be asking them to pay a total fine of around Y22 billion.

The JFTC will explain the detailed reasons for the reprimand and other matters to the companies in question in the future, with the operators required to submit their opinions within 2-3 weeks. Final decision from the JFTC is expected to be handed down after a month at the earliest or by the end of March at the latest.

The JFTC on September 2012 began investigating major car carriers, including the three largest operators in Japan, on suspicion of violating the Antimonopoly Act in their car carrier businesses. The European Commission (EC) of the European Union (EU) and the competition authorities of the U.S. and Canada have also started investigations on the same issue. With domestic consumers at a disadvantage from the joint price fixing of freight rates by the car carrier operators, there have been a series of class actions lawsuits filed in the U.S. and Canada that seek compensation from major car carrier operators.

The Federal Maritime Commission (FMC) of the U.S. announced on December 23, 2013 that it had entered into a settlement agreement with NYK and K Line in relation to the duo's violation of the country's marine transport law and other regulations that require them to inform the FMC about operator-to-operator accords, levying fines $1,225,000 and $1,100,000, respectively, on the two companies. While the two operators are not acknowledging their violation of the said law and other pertinent legislations, it is believed that they still decided to seek a compromise with the FMC after weighing all factors.

NYK and K Line have only received advanced notices, but this notice from the JFTC represents the first reprimand order they have received about this problem from the antimonopoly authorities. In the statements they made about the matter, the two companies commented that they are treating the situation with utmost gravity and that they will review the details of the notice and then carefully study the actions they will take in the future.

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