Transcript Case study Recommendation decision to a Japanese

OECD-Korea Regional Centre for Competition
Regional Antitrust Workshop on Abuse of Dominance
Case Study
Abuse of Dominance in Japan
23 April, 2008
Kazuyuki KATAGIRI
Japan Fair Trade Commission
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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
End User’s Home
Telecom Office
splitter
splitter
ONU
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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’s
competitors
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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
FTTH
Service
End User’s Home
Access to NTT
East’s network
Other Telecom Carrier
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Access fee and user charge
NTT East
User
charge
End User’s Home
Access
fee
Other Telecom Carrier
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NTT East’s FTTH service
named “B-FLET’S”
End User’s Home
NTT East
B-FLET’S
Access
fee
Other Telecom Carrier
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 -1NTT East
User
charge
End User’s Home
Single Star
Access
fee
Other Telecom Carrier
6,344 yen per
month
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How to set a lower user charge -2NTT East
User
charge
End User’s Home
Double Star
Access
fee
Other Telecom Carrier
Lower charge
Much lower per
each end user
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B-FLET’S named “New Family Type”
5,800 yen
User
charge
End User’s Home
NTT East
New Family Type
Access
fee
Other Telecom Carrier
estimated \4,906
per a user
On the assumption that double star is adopted
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Actual Situation
User
charge
5,800 yen
End User’s Home
NTT East
New Family Type
Access
fee
Other Telecom Carrier
Actually, single star is adopted
6,344 yen per a user
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Actual Situation after discounting
User
charge
4,500 yen
End User’s Home
NTT East
New Family Type
Access
fee
Other Telecom Carrier
6,344 yen per a user
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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
Total amount
September 2003
March 2004
193,000
324,000
Increasing by 68% in a half year
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No other telecom’s entrance
User charge
\4,500
End User’s Home
NTT East
New Family Type
Access fee
\6,344
Other Telecom Carrier
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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 Act
The 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/epage/pressreleases/2003/December/031204ntt.pdf
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