Article 11.2. Anticompetitive Practices
Each Party shall, in accordance with its laws and regulations, take measures which it considers appropriate against anticompetitive practices, in order to achieve the objectives of this Agreement.
Article 11.3. Legislative and Regulatory Framework
1. Each Party shall maintain its competition law that applies to all enterprises in all sectors of the economy and which addresses, in an effective manner, the following anticompetitive practices:
(a) for the European Union:
(i) agreements between enterprises, decisions by associations of enterprises and concerted practices which have as their object or effect the prevention, restriction or distortion of competition;
(ii) abuse by one or more enterprises of a dominant position; and
(iii) mergers or concentrations between enterprises which would significantly impede effective competition; and
(b) for Japan:
(i) private monopolisation;
(ii) unreasonable restraint of trade;
(iii) unfair trade practices; and
(iv) mergers or acquisitions which would substantially restrain competition in a particular field of trade.
2. Each Party shall apply its competition law to all enterprises, private or public, engaged in economic activities. This shall not prevent a Party from providing for exemptions from its competition law, provided that such exemptions are transparent and are limited to those necessary for securing public interest. Such exemptions shall not go beyond what is strictly necessary to achieve the public interest objectives that have been defined by that Party.
3. For the purposes of this Chapter, "economic activities" means those activities pertaining to the offering of goods and services in a market.
Article 11.4. Operational Independence
Each Party shall maintain an operationally independent authority which is responsible and competent for the effective enforcement of its competition law.
Article 11.5. Non-discrimination
When applying its competition law, each Party shall respect the principle of non-discrimination for all enterprises, irrespective of the nationality and type of ownership of the enterprises.
Article 11.6. Procedural Fairness
When applying its competition law, each Party shall respect the principle of procedural fairness for all enterprises, irrespective of the nationality and type of ownership of the enterprises.
Article 11.7. Transparency
Each Party shall apply its competition law in a transparent manner. Each Party shall promote transparency in its competition policy.
Article 11.8. Enforcement Cooperation
1. To achieve the objectives of this Agreement and to contribute to the effective enforcement of the competition law of each Party, the Parties acknowledge that it is in their common interest to promote cooperation and coordination between the competition authorities with regard to developments in competition policy and enforcement activities, within the framework of the Agreement between the European Community and the Government of Japan concerning cooperation on anticompetitive activities, done at Brussels on 10 July 2003 (hereinafter referred to in this Chapter as "Agreement concerning cooperation on anticompetitive activities").
2. To facilitate the cooperation and coordination referred to in paragraph 1, the competition authorities of the Parties may exchange or otherwise communicate information, within the framework of the Agreement concerning cooperation on anticompetitive activities.
Article 11.9. Dispute Settlement
The provisions of this Chapter shall not be subject to dispute settlement under Chapter 21.
Chapter 12. SUBSIDIES
Article 12.1. Principles
The Parties recognise that subsidies may be granted by a Party when they are necessary to achieve public policy objectives. However, certain subsidies have the potential to distort the proper functioning of markets and undermine the benefits of liberalisation of trade and investment. In principle, subsidies should not be granted by a Party when it finds that they have or could have a significant negative effect on trade or investment between the Parties.
Article 12.2. Definitions
For the purposes of this Chapter:
(a) "economic activities" means those activities pertaining to the offering of goods and services in a market;
(b) "subsidy" means a measure which fulfils mutatis mutandis the conditions set out in Article 1.1 of the SCM Agreement, irrespective of whether the recipients of the subsidy deal in goods or services; and
(c) "specific subsidy" means a subsidy which is determined mutatis mutandis to be specific in accordance with Article 2 of the SCM Agreement.
Article 12.3. Scope
1. This Chapter applies to specific subsidies to the extent they are related to economic activities. (63)
2. This Chapter does not apply to subsidies granted to enterprises entrusted by the government with the provision of services to the general public for public policy objectives. Such exceptions from the rules on subsidies shall be transparent and shall not go beyond their targeted public policy objectives.
3. This Chapter does not apply to subsidies granted to compensate the damage caused by natural disasters or other exceptional occurrences.
4. Articles 12.5 and 12.6 do not apply to subsidies, the cumulative amounts or budgets of which are less than 450,000 special drawing rights (hereinafter referred to as "SDR") per beneficiary for a period of three consecutive years.
5. Articles 12.6 and 12.7 do not apply to subsidies related to trade in goods covered by Annex 1 to the Agreement on Agriculture and subsidies related to trade in fish and fish products.
6. Article 12.7 does not apply to subsidies granted temporarily to respond to a national or global economic emergency. (64) Such subsidies shall be targeted, economical, effective and efficient in order to remedy the identified temporary national or global economic emergency.
7. This Chapter does not apply to audio-visual services.
8. Article 12.7 does not apply to subsidies granted by sub-central levels of government of each Party. In fulfilling its obligations under this Chapter, each Party shall take such reasonable measures as may be available to it to ensure the observance of the provisions of this Chapter by sub-central levels of government of that Party.
Article 12.4. Relation to the WTO Agreement
Nothing in this Chapter shall affect the rights and obligations of either Party under the SCM Agreement, Article XVI of GATT 1994 and Article XV of GATS.
Article 12.5. Notification
1. Each Party shall notify in English the other Party of the legal basis, form, amount or budget and, where possible, the name of the recipient of any specific subsidy granted or maintained (65) by the notifying Party, every two years from the date of entry into force of this Agreement. However, the first notification shall be made no later than three years after the date of entry into force of this Agreement.
2. If a Party makes publicly available on an official website the information specified in paragraph 1, the notification pursuant to paragraph 1 shall be deemed to have been made. If a Party notifies subsidies pursuant to Article 25.2 of the SCM Agreement, the Party shall be considered to have met the requirement of paragraph 1 with respect to such subsidies.
3. With regard to subsidies related to services, this Article only applies to the following sectors: architectural and engineering services, banking services, computer services, construction services, energy services, environment services, express delivery services, insurance services, telecommunication services and transport services.
Article 12.6. Consultations
1. In the event a Party considers that a subsidy of the other Party has or could have a significant negative effect on its trade or investment interests under this Chapter, the former Party may submit a request for consultation in writing. The Parties shall enter into consultations with a view to resolving the matter, provided that the request includes an explanation of how the subsidy has or could have a significant negative effect on trade or investment between the Parties.
2. During the consultations, the Party receiving the request for consultation shall consider to provide information about the subsidy, if requested by the other Party, such as:
(a) the legal basis and policy objective or purpose of the subsidy;
(b) the form of the subsidy such as a grant, loan, guarantee, repayable advance, equity injection or tax concession;
(c) dates and duration of the subsidy and any other time limits attached to it;
(d) eligibility requirements of the subsidy;
(e) the total amount or the annual amount budgeted for the subsidy and the possibility of limiting the subsidy;
(f) where possible, the recipient of the subsidy; and
(g) any other information, including statistical data, permitting an assessment of the effects of the subsidy on trade or investment.
3. To facilitate the consultations, the requested Party shall provide relevant information on the subsidy in question in writing no later than 90 days after the date of receipt of the request referred to in paragraph 1.
4. In the event that any information referred to in paragraph 2 is not provided by the requested Party, that Party shall explain the absence of such information in its written response.
5. If the requesting Party, after the consultations, still considers that the subsidy has or could have a significant negative effect on its trade or investment interests under this Chapter, the requested Party shall accord sympathetic consideration to the concerns of the requesting Party. Any solution shall be considered feasible and acceptable by the requested Party.
Article 12.7. Prohibited Subsidies
The following subsidies of a Party that have or could have a significant negative effect on trade or investment between the Parties shall be prohibited:
(a) legal or other arrangements whereby a government or a public body is responsible for guaranteeing debts or liabilities of an enterprise, without any limitation as to the amount and duration of such guarantee; and
(b) subsidies for restructuring an ailing or insolvent enterprise without the enterprise having prepared a credible restructuring plan. Such a restructuring plan shall be prepared within a reasonable time period after such enterprise having received temporary liquidity support. (66) The restructuring plan shall be based on realistic assumptions with a view to ensuring the return to long-term viability of the ailing or insolvent enterprise within a reasonable time period. The enterprise itself or its owners shall contribute significant funds or assets to the costs of restructuring.
Article 12.8. Use of Subsidies
Each Party shall ensure that enterprises use subsidies only for the specific purpose for which the subsidies were granted.
Article 12.9. General Exceptions
For the purposes of this Chapter, Article XX of GATT 1994 and Article XIV of GATS are hereby incorporated into and made part of this Agreement, mutatis mutandis.
Article 12.10. Dispute Settlement
Paragraph 5 of Article 12.6 shall not be subject to dispute settlement under Chapter 21.
Chapter 13. STATE-OWNED ENTERPRISES, ENTERPRISES GRANTED SPECIAL RIGHTSOR PRIVILEGES AND DESIGNATED MONOPOLIES
Article 13.1. Definitions
For the purposes of this Chapter:
(a) "Arrangement" means the Arrangement on Officially Supported Export Credits, developed within the framework of the Organisation for Economic Co-operation and Development (hereinafter referred to as "OECD") or a successor undertaking, whether developed within or outside of the OECD framework, that has been adopted by at least 12 original WTO Members that were Participants to the Arrangement as of 1 January 1979;
(b) "commercial activities" means activities which an enterprise undertakes with an orientation towards profit-making (67) and which results in the production of a good or the supply of a service, which will be sold to a consumer in the relevant market in quantities and at prices determined by the enterprise;
(c) "commercial considerations" means considerations of price, quality, availability, marketability, transportation and other terms and conditions of purchase or sale, or other factors that would normally be taken into account in the commercial decisions of a privately owned enterprise operating according to market economy principles in the relevant business or industry;
(d) "designate a monopoly" means to establish or authorise a monopoly, or to expand the scope of a monopoly to cover an additional good or service;
(e) "designated monopoly" means an entity, including a consortium or a government agency, that in a relevant market in the territory of a Party is designated as the sole supplier or purchaser of a good or service, but does not include an entity that has been granted an exclusive intellectual property right solely by reason of such grant;
(f) "enterprise granted special rights or privileges" means an enterprise, public or private, including its subsidiaries, to which a Party has granted special rights or privileges; special rights or privileges are granted by a Party where it designates a limited number of enterprises authorised to supply a good or service, other than according to objective, proportional and non-discriminatory criteria, substantially affecting the ability of any other enterprise to supply the same good or service in the same geographical area under substantially equivalent conditions;
(g) "service supplied in the exercise of governmental authority" means a service supplied in the exercise of governmental authority as defined in GATS and, if applicable, in the Annex on Financial Services to GATS; and
(h) "state-owned enterprise" means an enterprise that is engaged in commercial activities in which a Party:
(i) directly owns more than 50 per cent of the share capital;
(ii) controls, directly or indirectly through ownership interests, the exercise of more than 50 per cent of the voting rights;
(iii) holds the power to appoint a majority of members of the board of directors or any other equivalent management body; or
(iv) has the power to legally direct the actions of the enterprise or otherwise exercises an equivalent degree of control in accordance with its laws and regulations.
Article 13.2. Scope
1. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies, engaged in commercial activities. Where they engage both in commercial and non-commercial activities, only the commercial activities are covered by this Chapter.
2. This Chapter applies to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies at all levels of government.
3. This Chapter does not apply to situations where state-owned enterprises, enterprises granted special rights or privileges or designated monopolies act as procuring entities covered either under each Party's annexes to Appendix I to the GPA or under Part 2 of Annex 10 conducting procurement for governmental purposes and not with a view to commercial resale or with a view to use in the production of a good or in the supply of a service for commercial sale.
4. This Chapter does not apply to any service supplied in the exercise of governmental authority.
5. This Chapter does not apply to a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly, if in any one of the three previous consecutive fiscal years the annual revenue derived from the commercial activities of the enterprise or monopoly concerned was less than 200 million SDR.
6. Article 13.5 does not apply with respect to the supply of financial services by a state-owned enterprise pursuant to a government mandate, if that supply of financial services:
(a) supports exports or imports, provided that those services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market;
(b) supports private investment outside the territory of the Party, provided that these services are:
(i) not intended to displace commercial financing; or
(ii) offered on terms no more favourable than those that could be obtained for comparable financial services in the commercial market; or
(c) is offered on terms consistent with the Arrangement, provided that it falls within the scope of the Arrangement.
7. Article 13.5 does not apply to the sectors set out in paragraph 2 of Article 8.6.
8. Article 13.5 does not apply to the extent that a state-owned enterprise, an enterprise granted special rights or privileges or a designate monopoly of a Party makes purchases and sales of a good or a service pursuant to:
(a) any existing non-conforming measure in accordance with paragraph 1 of Article 8.12 and paragraph 1 of Article 8.18 that the Party maintains, continues, renews, amends or modifies as set out in its Schedule in Annex I to Annex 8-B; or
(b) any non-conforming measure by a Party in accordance with paragraph 2 of Article 8.12 and paragraph 2 of Article 8.18 with respect to sectors, subsectors, or activities as set out in its Schedule in Annex II to Annex 8-B.
Article 13.3. Relation to the WTO Agreement
The Parties affirm their rights and obligations under paragraphs 1 to 3 of Article XVII of GATT 1994, the Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994, as well as under paragraphs 1, 2 and 5 of Article VIII of GATS.
Article 13.4. General Provisions
1. Without prejudice to the rights and obligations of each Party under this Chapter, nothing in this Chapter prevents a Party from establishing or maintaining a state-owned enterprise, granting an enterprise special rights or privileges or designating a monopoly.
2. Neither Party shall require or encourage a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly to act in a manner inconsistent with this Chapter.
Article 13.5. Non-discriminatory Treatment and Commercial Considerations
1. Each Party shall ensure that each of its state-owned enterprises, enterprises granted special rights or privileges and designated monopolies, when engaging in commercial activities:
(a) acts in accordance with commercial considerations in its purchase or sale of a good or service, except to fulfil any terms of its public service mandate that are not inconsistent with subparagraph (b) or (c);
(b) in its purchase of a good or service:
(i) accords to a good or service supplied by an enterprise of the other Party treatment no less favourable than it accords to a like good or a like service supplied by enterprises of the Party; and
(ii) accords to a good or service supplied by a covered enterprise as defined in subparagraph (c) of Article 8.2 treatment no less favourable than it accords to a like good or a like service supplied by enterprises of entrepreneurs of the Party in the relevant market in the Party; and
(c) in its sale of a good or service:
(i) accords to an enterprise of the other Party treatment no less favourable than it accords to enterprises of the Party; and
(ii) accords to a covered enterprise as defined in subparagraph (c) of Article 8.2 treatment no less favourable than it accords to enterprises of entrepreneurs of the Party in the relevant market in the Party. (68)
2. Subparagraphs 1(b) and (c) do not preclude a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly from:
(a) purchasing or selling goods or services on different terms or conditions, including those relating to price, provided that such different terms or conditions are made in accordance with commercial considerations; or
(b) refusing to purchase or sell goods or services, provided that such refusal is made in accordance with commercial considerations.
Article 13.6. Regulatory Framework
1. The Parties respect and make best use of relevant international standards including, inter alia, the OECD Guidelines on Corporate Governance of StateOwned Enterprises.
2. Each Party shall ensure that any regulatory body or any other body exercising a regulatory function that the Party establishes or maintains is independent from, and not accountable to, any of the enterprises regulated by that body, and acts impartially (69) in like circumstances with respect to all enterprises regulated by that body, including state-owned enterprises, enterprises granted special rights or privileges and designated monopolies. (70)
3. Each Party shall apply its laws and regulations to state-owned enterprises, enterprises granted special rights or privileges and designated monopolies in a consistent and non-discriminatory manner.
Article 13.7. Information Exchange
1. A Party which has reason to believe that its interests under this Chapter are being adversely affected by the commercial activities of a state-owned enterprise, an enterprise granted special rights or privileges or a designated monopoly (hereinafter referred to in this Article as "the entity") of the other Party may request the other Party in writing to provide information on the commercial activities of the entity related to the carrying out of the provisions of this Chapter in accordance with paragraph 2.
2. The requested Party shall provide the following information, provided that the request includes an explanation of how the activities of the entity may be affecting the interests of the requesting Party under this Chapter and indicates which of the following information shall be provided:
(a) the organisational structure of the entity and its composition of the board of directors or of any other equivalent management body;
(b) the percentage of shares that the requested Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies cumulatively own, and the percentage of voting rights that they cumulatively hold, in the entity;
(c) a description of any special shares or special voting or other rights that the requested Party, its state-owned enterprises, enterprises granted special rights or privileges or designated monopolies hold, where such rights are different from those attached to the general common shares of the entity;
(d) a description of the government departments or public bodies which regulate the entity, a description of the reporting requirements imposed on it by those departments or public bodies, and the rights and practices, where possible, of those departments or public bodies with respect to the appointment, dismissal or remuneration of senior executives and members of its board of directors or any other equivalent management body;
(e) annual revenue and total assets of the entity over the most recent three year period for which information is available;
(f) any exemptions, immunities and related measures from which the entity benefits under the laws and regulations of the requested Party; and
(g) any additional information regarding the entity that is publicly available, including annual financial reports and third party audits.
Article 13.8. General Exceptions
For the purposes of this Chapter, Article XX of GATT 1994 and Article XIV of GATS are hereby incorporated into and made part of this Agreement, mutatis mutandis.