1 Case Study Abuse of Dominance in Japan Kazuyuki KATAGIRI Japan Fair Trade Commission OECD-Korea...

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Case StudyCase StudyAbuse of Dominance in JapanAbuse of Dominance in Japan

Kazuyuki KATAGIRIJapan Fair Trade Commission

OECD-Korea Regional Centre for Competition

Regional Antitrust Workshop on Abuse of Dominance

23 April, 2008

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Table of contents

1. Backgrounds of the case against NTT East

(1) Services concerned

(2) Related Entrepreneurs

(3) Situation of the FTTH service market in Japan

2. NTT East’s conducts and results

3. Building and presenting of evidence

4. Application of the law

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(1) Services FTTH (fiber to the home) service = one of

broadband internet access services, which permits transmission over longer distances and at higher data rates than other forms of communications.

For this communication, optical fiber network is established between a telecom office and an optical network unit at an end-user’s home.

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Types and technologies of FTTH

There are two types of FTTH services, FTTH service for business and those for private home.

FTTH service for private home has two technologies, FTTH (fiber to a detached home) and FTTB (fiber to an apartment house).

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FTTH (fiber to the home) types, Single Star and Double Star

Single Star

Telecom Office End User’s Home

ONU

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FTTH (fiber to the home) types, Single Star and Double Star

Double Star

Telecom Office End User’s Home

ONUsplittersplitter

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(2) Entrepreneurs

Higashinihon Denshin Denwa Kabushiki Kaisha (NTT East)

Japanese corporation providing regional telecommunications services in the east areas of Japan

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Competitors of NTT East

TEPCO Japanese corporation. It provides electric

power in Kanto areas of Japan Japanese corporation.

USEN Broad Japanese corporation. It is the biggest wired

radio broadcasting company in Japan.

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(3) Situation of FTTH service market

○ 　 Net-work share of NTT EAST and its competitors in FTTH service area except FTTB, in the east areas of Japan

NTT East 　　　　　　　　　　 86.9%NTT East’s competitors 　　 13.1%

（ available lines in September 2004 ） NTT East’s competitors　・ TEPCO and USEN Broad

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Situation of FTTH service market

Share of NTT EAST is quite huge.

Market share of FTTH service

NTT EAST

NTT EAST’ scompetitors

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Background

NTT East possesses high speed fiber-optic networks over eastern Japan.

It is not easy for other telecom carrier to access to NTT East’s competitors’ fiber-optic networks.

It is hard for other telecoms to build new fiber networks on their own.

It is difficult for the telecom carriers to offer an FTTH service without accessing the fiber-optic networks owned by NTT East.

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NTT East’s fiber-optic network

NTT East End User’s Home

Other Telecom Carrier

FTTH Service

Access to NTT East’s network

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Access fee and user charge



User charge

Access fee

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NTT East’s FTTH service named “B-FLET’S”



Access fee

B-FLET’S

6,344 yen per month

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2. NTT East’s conducts and results

Conducts of NTT East

NTT East set a discounted user charge lower than the actual access fee (\6,344 per month).

NTT East made it quite difficult for other telecoms to enter into the detached houses market and eliminated it from the market.

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How to set a lower user charge -1-



Access fee

6,344 yen per month

Single Star

User charge

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How to set a lower user charge -2-



Access fee

Much lower per each end user

Double Star

User charge

Lower charge

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B-FLET’S named “New Family Type”



Access fee

New Family Type

estimated \4,906 per a user

User charge

5,800 yen

On the assumption that double star is adopted

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Actual Situation



Access fee

New Family Type

6,344 yen per a user

User charge

5,800 yen

Actually, single star is adopted

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Actual Situation after discounting



Access fee

New Family Type

6,344 yen per a user

User charge

4,500 yen

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Market Effect of NTT East’s Conducts

○ 　 The total amount of contracts of NTT East’s FTTH service for detached houses

Increasing by 68% in a half year

September 2003 March 2004

Total amount 193,000 324,000

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No other telecom’s entrance



Access fee \6,344

New Family Type

User charge \4,500

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3. Building and presenting of evidence

The record of statement The JFTC recognized the fact by the evidence, mainly the records of statement written on the interviews with an employee of the concerned company. Presenting in the Hearing Procedure In the procedure of the hearing, the investigators presented the evidences concerned to prove the JFTC’s findings with regard to the case.

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4. Application of the law in the decision

Section 3 of the Antimonopoly Act “No entrepreneur shall effect private monopolization or unreasonable restraint of trade.” The definition of “private monopolization” in the Antimonopoly ActThe term "private monopolization" as used in this Act shall mean such business activities, by which any entrepreneur, individually or by combination or conspiracy with other entrepreneurs, or by in any other manner, excludes or controls the business activities of other entrepreneurs, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.

(para 5, Section 2).

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“Substantial restraint of competition”

A situation in which competition itself has significantly lessened and thereby a specific firm or firms can control the market by determining freely, to some extent, prices, qualities, volumes, and various other terms on its or their own volition

(December 9, 1953, Tokyo High Court)

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Elimination measures

No elimination measure was ordered.

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Thank you for your kind attention!

Web site for NTT East Case;http://www.jftc.go.jp/e-page/pressreleases/2003/Dec

ember/031204ntt.pdf

1 Case Study Abuse of Dominance in Japan Kazuyuki KATAGIRI Japan Fair Trade Commission OECD-Korea...

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