New law officially implemented! Unfair behavior of Japanese e-commerce platforms will be strictly restricted

Starting today , a new law in Japan officially came into effect. This law is the "Law on Improving Transparency and Fairness of Transactions on Designated Digital Platforms . "

The purpose of the law is to prevent digital platform providers from taking advantage of their dominant position to enter into unfair contracts with sellers and consumers . Therefore, this legal provision requires digital platform providers to disclose certain terms and conditions to sellers and consumers, develop fair procedures and systems , and submit annual reports on their business operations to the Ministry of Economy, Trade and Industry ( METI ) .

It also empowers the government to assess compliance, make its findings public, and take necessary steps to enforce compliance, including imposing fines for violations.

Who will be regulated?

The law covers operators of e-commerce sites with annual sales of more than $2.8 billion in Japan , as well as app stores with revenue of more than $1.9 billion , covering Japanese business giants such as Amazon, Google, Apple, Yahoo Japan and Rakuten .

What will these business giants need to do?

1. Disclosure obligations

The law imposes disclosure obligations on these platforms , aiming to increase transparency for sellers and consumers and prevent platforms from making unfair decisions that harm sellers .

The disclosures are as follows:

Disclosure to Sellers :

Disclosure to Consumers :

PS: Regarding the requirement to disclose the basic factors used to determine search rankings, METI has announced that it will not require providers to disclose their specific ranking algorithms . After all, each provider’s ranking system is a trade secret .

2. Establish fair procedures and systems

The law also requires these platforms to establish procedures and systems to facilitate mutual understanding in transactions with platform users.

Such as measures to promote mutual understanding of the terms of trade relations , the development of systems to ensure fair services to sellers , systems for handling complaints and resolving disputes, and the appointment of personnel who reside in Japan and are responsible for conducting business in Japan so that close communication with sellers can be maintained.

3. Report to the Ministry of Economy, Trade and Industry

The law requires these platforms to submit annual reports to METI on their compliance status and a self-assessment of their performance with respect to their obligations under the law .

METI will review the reported transactions for transparency and fairness and publish its review results along with an outline of the report for each platform .

The law aims to ensure these platforms increase fairness and transparency over transactions in response to METI’s review of its reporting.

Under the law , platform users (including sellers and consumers) can report to the Minister of METI if they believe that these platforms have not taken necessary measures and can request the implementation of appropriate measures. The law also prohibits these platforms from retaliating against platform users by refusing transactions or otherwise to cover up reports and requests to METI.

For sellers and consumers, the formal implementation of this law means that their relevant rights and interests will be protected by law in the future. At the same time, it will also play a positive role in regulating and promoting the development of Japan's e-commerce market.

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