Laws on Fair Trade, Finance, and Product Liability

The Antimonopoly Act (独占禁止法) is the law that bans conduct obstructing fair and free competition among businesses, protecting competition in the market.

The main banned conduct includes private monopolization, which restricts competition by excluding or controlling other businesses' activities; unreasonable restraint of trade, which covers price agreements (cartels) and bid rigging, where the winner is chosen before bidding; and unfair trade practices such as abuse of a superior bargaining position, where a stronger party forces disadvantages on its trading partner. The law is enforced by the Japan Fair Trade Commission, which exercises its authority independently of other government bodies and can issue cease-and-desist orders or surcharge payment orders to violators.

AnalogyIt is like a referee who stops players from fixing the match or taking over the whole venue, so that the contest itself can happen.

How to rememberIts short name in Japanese is Dokkinhō. The full title, the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, names what it bans in the first half and what it protects in the second.

The Act on Fair Subcontracting for Small and Medium Enterprises (中小受託取引適正化法) is the law that stops businesses commissioning work from using their stronger position to force disadvantages on the small and medium-sized contractors that take the work on.

An amendment in force from January 2026 renamed the law formerly known as the Subcontract Act, and the terms changed too: the parent business became the commissioning business, and the subcontractor became the small or medium-sized contractor. The commissioning business must state trade terms and set a payment date, and it may not delay payment, cut the price unfairly, or refuse to accept delivery. Whether the law applies depends on the kind of transaction and on the size of both parties, measured by stated capital and similar criteria.

AnalogyIn a deal between a large prime contractor and a small workshop, it is an arrangement that puts promises only on the stronger side, to make up for the gap in power.

How to rememberIts short name in Japanese is Toritekihō. Read the word for contractor (jutaku, the side that receives the work) in its name as the protected party, and you will not lose track of whom the law is for.

1 past questions on this term 中小受託取引適正化法 →

The Payment Services Act (資金決済法) is the law that sets up provider registration and user protection for payment and money-transfer services offered by businesses other than banks.

It covers prepaid payment instruments, where value bought in advance is used for later payments; the funds transfer business, where non-bank businesses handle money transfers; and the crypto-asset exchange business, which handles buying, selling and exchanging crypto-assets (under an amendment enacted in July 2026, the regulation of crypto-asset trading is moving to the Financial Instruments and Exchange Act). Issuers of prepaid payment instruments must protect users' funds even if the issuer fails, for example by depositing part of the unused balance with an official depository.

AnalogyThese are rules that watch over the containers of value used in place of cash, and the channels that carry money, so the money does not vanish or get run off with along the way.

How to rememberKessai in its Japanese name means settling a payment. Reading the name as the law on ways to pay and send money makes its scope easy to grasp.

1 past questions on this term 資金決済法 →

The Financial Instruments and Exchange Act (金融商品取引法) is the law that keeps trading in securities such as stocks and bonds fair and protects investors.

Listed companies and others must disclose their financial and business condition in an annual securities report, so that investors can decide on the basis of the same information. Insider trading, where someone in a position to know a company's important unpublished information buys or sells its shares before that information is made public, is banned. The internal control reporting system, under which management of a listed company evaluates and reports on internal control over financial reporting and has it audited, is also based on this law.

AnalogyThink of an auction where everyone reads the same catalogue before bidding, with someone watching so that a person who has peeked behind the scenes cannot get in first.

How to rememberIts short name in Japanese is Kinshōhō. Because its internal control reporting system was modeled on the US SOX Act, the system is also called J-SOX, the Japanese version of SOX.

The Product Liability (PL) Act (PL法, 製造物責任法) provides that when a defect in a product causes harm to a person's life, body or property, the manufacturer or similar party must pay compensation whether or not it was negligent.

A covered product is movable property that has been manufactured or processed, meaning a tangible thing other than land or buildings, so real estate and software on its own, which is intangible information, are excluded. A defect means the product lacks the safety it should normally have, and this includes not only design or manufacturing errors but also inadequate warnings or explanations about hazards. The manufacturers and similar parties who bear liability include, besides those who made or processed the product, importers and anyone who put their name on it as the manufacturer.

AnalogyIt is a shield for victims: someone hurt by a defective product can seek compensation by showing the product itself was dangerous, without having to pin down the maker's carelessness.

How to rememberPL stands for Product Liability. Remember that liability is marked by a flaw in the thing, not a fault in the person.

3 past questions on this term PL法 →