Abuse of a Superior Bargaining Position: An Antimonopoly Act Framework SMEs Can Use in Dealings With Large Companies

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

When presented with unfavorable terms in a transaction or business alliance with a large company, not a few business owners give up, thinking, "The other side is a large company, so we have no choice but to accept these terms." However, conduct in which a party with a superior position in the transaction uses that position to impose unjust disadvantages may constitute an "abuse of a superior bargaining position," which is prohibited under the Antimonopoly Act. The counterparty's large size or your company's weak bargaining power is not a reason to accept unfavorable terms as they are.

Where the Regulation of Abuse of a Superior Bargaining Position Stands

Abuse of a superior bargaining position is set out in Article 2(9)(v) of the Antimonopoly Act. Checking the text via the e-Gov Laws API (Law ID 322AC0000000054), it prohibits as an unfair trade practice conduct in which a party, "making use of its superior bargaining position over the counterparty, unjustly in light of normal business practices," engages in any of the following.

Item (a) of that provision covers causing a counterparty in continuous transactions to purchase goods or services unrelated to the transaction, and item (b) covers causing a counterparty in continuous transactions to provide money, services or other economic benefits for one's own benefit. Item (c) then lists refusing to receive goods, forcing the counterparty to take back goods after receipt, delaying or reducing payment of consideration, and otherwise setting or changing transaction terms or carrying out transactions in a manner disadvantageous to the counterparty.

The statutory requirements can be broadly divided into two: a "superior bargaining position" and an "unjust disadvantage in light of normal business practices." A superior position is not determined by company size alone. When circumstances combine, such as a high degree of dependence on the transaction making it difficult to switch to other business partners, few alternative sources of supply, or a significant impact on business continuity if the contract is terminated, there is room for the counterparty to be found to hold a superior position. Where an SME or startup is merely one of a large company's many business partners, this is a configuration in which such a relationship tends to arise.

Typical Categories of Problematic Conduct

Conduct frequently raised in practice as abuse of a superior bargaining position falls into representative categories.

Price beating is unilaterally setting consideration at the time of ordering that is significantly lower than the consideration normally paid. This may include increasing only the order volume while keeping the previous unit price unchanged despite rising raw material and labor costs, or uniformly lowering unit prices without regard to market prices. Price reduction is reducing the agreed consideration after an order has been accepted, even though there is no reason attributable to the counterparty. Returns refer to making the counterparty take back delivered goods that have no problems, for the ordering party's convenience, such as a failed demand forecast.

Requests to bear sponsorship fees or promotional expenses are another typical example. Making the counterparty bear event sponsorship fees, system usage fees, consulting fees and the like that are not directly related to the transaction, without showing the basis of calculation or what is received in return, may be viewed as problematic. In collaborations with startups, misappropriating the deliverables of a PoC (proof of concept) without compensation, or unilaterally demanding that intellectual property created in joint development be assigned to the ordering party free of charge, may also constitute forcing the provision of economic benefits.

What these have in common is that the basis for calculating the consideration is decided unilaterally without consulting the counterparty, and that burdens unrelated to the content of the transaction are demanded. Checking whether the terms presented to your company fit these categories provides a foothold for negotiation.

Problem Cases Identified in Collaborations With Startups

The Japan Fair Trade Commission (JFTC) has published the "Guidelines Concerning Business Collaboration With Startups and Investment in Startups." These guidelines take up issues that may arise between startups and their collaborating businesses or investors at each stage, such as nondisclosure agreements (NDAs), PoC agreements, joint research agreements, license agreements and investment agreements, and set out the approach under the Antimonopoly Act.

The problematic conduct cited in the guidelines includes having confidential information disclosed without a prior contract, forcing the startup to sign a one-sided NDA that imposes obligations only on the startup, having the PoC carried out without compensation, and unilaterally vesting intellectual property rights in the results of a PoC or joint research in the collaborating business. Also cited are restrictions on sales destinations, reductions in or delays of fees, and imposing liability for damages only on the startup. At the investment stage, requests to disclose trade secrets without a contract, forcing unpaid work, pushing the cost of outsourcing to third parties onto the startup, setting a buyback price exceeding the amount invested and restricting research and development activities themselves are also covered.

Under the Antimonopoly Act, these acts are said to potentially constitute not only abuse of a superior bargaining position but also other unfair trade practices such as dealing on exclusive terms, dealing on restrictive terms and interference with a competitor's transactions. When a startup is asked by an operating company to assign intellectual property free of charge or to allow free use of PoC results, comparing the request with the cases set out in the guidelines makes it easier to build a concrete basis for requesting changes.

Differences in Scope From the Torihiki Tekiseika Act (Formerly the Subcontract Act)

Regarding the transaction terms of SMEs, there is also a law called the Torihiki Tekiseika Act, separate from the Antimonopoly Act. The Torihiki Tekiseika Act is the former "Act Against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors" (Subcontract Act) under a new title, and according to the JFTC's guidance, it took effect on January 1, 2026.

The Torihiki Tekiseika Act and the regulation of abuse of a superior bargaining position under the Antimonopoly Act use different criteria for their scope of application. The Torihiki Tekiseika Act defines its scope by thresholds based on the stated capital or number of employees of the consigning business and the small and medium-sized entrusted business, and by types of transaction such as manufacturing consignment, repair consignment, consignment for the creation of information-based products and service provision consignment. In contrast, the Antimonopoly Act's regulation of abuse of a superior bargaining position has no capital threshold or limitation by type of transaction, and may apply regardless of the amount of capital if the requirements of a superior position and unjustness in light of business practices are met.

Even where the capital threshold is not met, a transaction may be subject to the Torihiki Tekiseika Act by virtue of the employee-count threshold. Even where neither size threshold is met, or where the transaction does not fit a covered type, room remains for it to constitute abuse of a superior bargaining position under the Antimonopoly Act. When you are suffering disadvantages in transactions not covered by the Torihiki Tekiseika Act, such as investment agreements or business alliance agreements, it is effective to analyze the problem within the framework of the Antimonopoly Act.

Consultation Desks You Can Actually Use

When you are unsure internally whether to accept the terms, you can use the JFTC's consultation desks. In addition to the Business Transactions Division of the Trade Department, Economic Affairs Bureau, General Secretariat of the JFTC, regional offices and branch offices nationwide also accept consultations, and the practice is to arrange a date and time with the officer in charge in advance before visiting.

The Torihiki Kakekomi-dera (Transaction Consultation Center, formerly Shitauke Kakekomi-dera) established nationwide by the Small and Medium Enterprise Agency is also available as a consultation desk for transactions with small and medium-sized entrusted businesses. At either desk, the flow is to present the actual transaction circumstances and the content of the contract and ask for advice on whether the conduct falls under the regulations.

In negotiations, not only is consulting the JFTC itself a strong option, but comparing the requirements with your company's actual transactions before consulting also helps. When asking the counterparty to revise the terms, rather than stopping at an abstract argument such as "because you are a large company," discussions tend to progress more easily if you communicate based on concrete facts, such as that no basis for calculating the consideration has been shown, that the conditions for ownership of PoC deliverables are not stated in the contract, or that the costs demanded are unrelated to the transaction. Putting contract terms in writing in advance to avoid unjust changes later is also useful as a practical safeguard.

When you think the counterparty's demands could develop into an issue under the Antimonopoly Act, I recommend that you do not keep it within the company but consult an attorney based on the contract clauses.