Act on Preventing Delay in Payment to Small and Medium-Sized Entrusted Business Operators in Relation to Manufacturing Consignment

The purpose of this Act is to ensure fairness in transactions between entrusting business operators and small and medium-sized entrusted business operators and to protect the interests of small and medium-sized entrusted business operators, by preventing delays, etc. in the payment of the price to small and medium-sized entrusted business operators, related to manufacturing consignment, etc., thereby contributing to the sound development of the national economy.

①The term "manufacturing consignment" as used in this Act means the consignment to another business operator of the manufacture of goods, their semi-finished products, parts, accessories or raw materials, which are the subject matter of sales conducted on a regular basis or manufacturing contracted on a regular basis (including processing; the same applies below) by a business operator, or metal dies, wooden models or other molds for molding goods, workpiece holders or other special tools to be exclusively used for the manufacture of the goods, their semi-finished products, parts, accessories or raw materials referred to above , or the manufacture of parts or raw materials necessary for the repair of goods conducted on a regular basis, and the consignment to another business operator of the manufacture of goods, their semi-finished products, parts, accessories or raw materials, or the relevant molds or tools to be exclusively used for the manufacture of the goods when a business operator engages in the manufacture of goods to be used or consumed by itself on a regular basis.

②The term "repair consignment" as used in this Act means the consignment to another business operator of all or a part of the repair of goods which the business operator contracted on a regular basis, and the consignment to another business operator of part of the repair of goods when the business operator is engaging in the repair of the goods which it uses itself on a regular basis.

③The term "information-based product creation consignment" as used in this Act means the consignment to another business operator of all or part of the creation of an information-based product which is the object of provision conducted on a regular basis or creation on a regular basis, and the consignment to another business operator of all or part of the creation of an information-based product which is used by the business operator in the case where the business operator produces that information-based product in the course of trade.

④The term "service contract" as used in this Act means the consignment to another business operator of all or part of the provision of a service which is the object of provision conducted on a regular basis (excluding any contract by a person conducting a construction business (meaning a construction business as prescribed by Article 2 paragraph 2 of the Construction Business Act (Act No. 100 of 1949); the same applies below in this paragraph) of all or part of the construction work it contracts as a regular business (meaning construction work prescribed in paragraph 1 of that Article) to other parties conducting a construction business of all or part of the construction work it contracts on a regular basis).

⑤The term "specific transportation consignment" as used in this Act means the consignment to another business operator of all or part of the transportation for the counterparty (including a person designated by the counterparty) in the sale, manufacture, repair, or creation of goods that are the subject matter of sales conducted by the business operator on a regular basis, manufacturing contracted on a regular basis, or repairs contracted on a regular basis, or goods on which information products that are the subject matter of creation contracted on a regular basis are stated, recorded, or embodied.

⑥The term "manufacturing consignment, etc." as used in this Act means manufacturing consignment, repair consignment, information-based product creation consignment, service contract and specific transportation consignment.

⑦The term "information-based product" as used in this Act means any of the articles described in the following items.

⑧The term "entrusting business operator" as used in this Act means a person who falls under any of the following items:

⑨The term "small and medium-sized entrusted business operator" as used in this Act means a person who falls under any of the following items:

⑩If a business operator that is a corporation whose appointment and dismissal of officers, or execution or existence of business, is controlled by a business operator that is a corporation with the amount of stated capital or the total amount of contributions exceeding 10 million yen or a business operator that is a corporation with the number of regular employees exceeding 100, and that receives a manufacturing consignment, etc. from the business operator, further entrusts all or a considerable part of the act of manufacturing, repairing, creating, providing, or transporting relating to the manufacturing consignment, etc. (excluding cases where a person who falls under paragraph (8), item (i), item (ii), or item (v) makes a manufacturing consignment, etc. to a person who falls under item (i), item (ii), or item (v) of the preceding paragraph respectively, and cases where a person who falls under paragraph (8), item (iii), item (iv), or item (vi) makes an information-based product creation consignment or service contract to a person who falls under item (iii), item (iv), or item (vi) of the preceding paragraph respectively), when the business operator that receives the further consignment is a business operator who would fall under any of the items of that paragraph if the business operator received the manufacturing consignment, etc. directly from the business operator that controls the appointment and dismissal of officers, or the execution or existence of business, and makes the manufacturing consignment, etc., with regard to the application of this Act, the business operator that makes the further consignment is deemed to be an entrusting business operator, and the business operator that receives the further consignment is deemed to be a small and medium-sized entrusted business operator.

⑪The term "payment for manufacturing consignment, etc." as used in this Act means the payment to be made for the performance (provision of services in the case of service contract or specific transportation consignment; the same applies below) by a small or medium-sized entrusted business operator when the entrusting business operator concludes a manufacturing consignment, etc.

①The due date of the payment for manufacturing consignment, etc. must be set within a period of 60 days, and within as short a period as possible, from the day on which the entrusting business operator receives the performance from the small or medium-sized entrusted business operator (in the case of service contract or specific transportation consignment, the day on which the entrusted services are received from the small or medium-sized entrusted business operator; the same applies below), regardless of whether or not the entrusting business operator inspects the content of the performance from the small or medium-sized entrusted business operator.

②If the due date of the payment for manufacturing consignment, etc. has not been specified, the day on which the entrusting business operator receives the performance from the small or medium-sized entrusted business operator is deemed to be specified as the due date of the payment for manufacturing consignment, etc., and if the due date of the payment for manufacturing consignment, etc. is specified in violation of the provisions of the preceding paragraph, the day before the day on which 60 days have elapsed from the day on which the entrusting business operator receives the performance from the small or medium-sized entrusted business operator is deemed to be specified as the due date of the payment for manufacturing consignment, etc..

①If an entrusting business operator concludes a manufacturing consignment, etc. with a small or medium-sized entrusted business operator, the entrusting business operator must immediately clearly indicate to the small or medium-sized entrusted business operator, in writing or by electronic or magnetic means (meaning a means of using an electronic data processing system or any other means of using information and communications technology that is specified by Japan Fair Trade Commission Rules; the same applies below in this Article), the details of the performance, the amount of the payment of manufacturing consignment, etc., the date of payment, the method of payment, and other matters pursuant to the provisions of Japan Fair Trade Commission Rules; provided, however, that if there are justifiable grounds for the details of any of these matters not being specified, the clear indication is not required, and in this case, the entrusting business operator must clearly indicate the matters to the small or medium-sized entrusted business operator in writing or by electronic or magnetic means immediately after the details of the matters have been specified.

②If the entrusting business operator has clearly indicated the matters prescribed in the preceding paragraph by electronic or magnetic means pursuant to the provisions of that paragraph, and is requested by the small and medium-sized entrusted business operator to issue a document stating the matters, the entrusting business operator must issue the document without delay, pursuant to the provisions of Japan Fair Trade Commission Rules; provided, however, that this does not apply if it is specified by Japan Fair Trade Commission Rules as a case that does not hinder the protection of a small and medium-sized entrusted business operator.

①If an entrusting business operator concludes a manufacturing consignment, etc. with a small or medium-sized entrusted business operator, the entrusting business operator must not conduct any of the following acts (excluding the acts stated in items (i) and (iv) in the case of service contract or specific transportation consignment):

②If an entrusting business operator concludes a manufacturing consignment, etc. with a small or medium-sized entrusted business operator, the entrusting business operator must not unjustly harm the interests of the small or medium-sized entrusted business operator by committing any of the following acts (excluding the act stated in item (i) if a service contract or specific transportation consignment is concluded):

①If an entrusting business operator does not pay the payment for manufacturing consignment, etc. by the due date of the payment for manufacturing consignment, etc., the entrusting business operator must pay to a small or medium-sized entrusted business operator the amount obtained by multiplying the unpaid amount by a rate specified by Japan Fair Trade Commission Rules for the period from the day on which 60 days have elapsed from the day on which the entrusting business operator received the performance from the small or medium-sized entrusted business operator to the day on which the payment is made, in accordance with the number of days, as overdue interest.

②If an entrusting business operator reduces the amount of the payment for manufacturing consignment, etc. without any reason attributable to the small and medium-sized entrusted business operator, the entrusting business operator must pay to the small and medium-sized entrusted business operator the amount obtained by multiplying the amount of the reduction by the rate specified by Japan Fair Trade Commission Rule in accordance with the number of days from the date on which the amount of the payment for manufacturing consignment, etc. is reduced or the date on which 60 days have elapsed from the date of receipt of the performance from the small and medium-sized entrusted business operator, whichever comes later, until the date on which the amount of the reduction is paid, as delayed interest.

If an entrusting business operator concludes a manufacturing consignment, etc. contract with a small or medium-sized entrusted business operator, the entrusting business operator must prepare and preserve a document or electronic or magnetic record (meaning records made in an electronic form, a magnetic form, or any other form that cannot be recognized by human perception, which are used in data processing by computers; the same applies in Article 14, item (iii)), pursuant to the provisions of Japan Fair Trade Commission Rules, in which the performance of the small or medium-sized entrusted business operator, the receipt of the performance (in the case of a service contract or specific transportation consignment, the fact that services have been received from the small or medium-sized entrusted business operator), the payment for manufacturing consignment, etc., and other matters are stated or recorded.

The Japan Fair Trade Commission, the Commissioner of the Small and Medium Enterprise Agency, or the minister with jurisdiction over the business relating to transactions concerning the manufacturing consignment, etc. may provide guidance and advice to the entrusting business operator, when they find it necessary for the enforcement of this Act,.

The Commissioner of the Small and Medium Enterprise Agency may investigate whether or not there are any facts in violation of the provisions of Article 5 with regard to the entrusting business operator, and when such matters are found to be the facts, may request the Japan Fair Trade Commission to take appropriate measures in accordance with the provisions of this Act.

①If the Japan Fair Trade Commission finds that an act in violation of the provisions of Article 5 has taken place, the Japan Fair Trade Commission is to recommend the entrusting business operator (if the entrusting business operator has ceased to exist as a result of a merger, the corporation surviving after the merger or established as a result of the merger; if all or part of the business involved in the act has been succeeded to as a result of the split of the entrusting business operator, the corporation that has succeeded to all or part of the business; if all or part of the business involved in the act has been transferred by the entrusting business operator, the business operator that has acquired all or part of the business; referred to as the "violating entrusting business operator" in the following paragraph and the following Article) that has committed the act to promptly receive the performance of the small and medium-sized entrusted business operator, pay the payment for manufacturing consignment, etc. or any amount less or delay interest pursuant to the provisions of Article 6, take back the things related to the performance again, increase the amount of the payment for manufacturing consignment, etc. or take back the things that the entrusting business operator had them purchase, cease the disadvantageous treatment, or take measures to protect the interests of the small and medium-sized entrusted business operator, or take other necessary measures.

②Even if an act in violation of the provisions of Article 5 has already ceased to exist, the Japan Fair Trade Commission may, when it finds it particularly necessary, recommend that the violating entrusting business operator take measures to make it known to the public that the act has already ceased to exist, and take any other measures necessary to ensure that the act has been eliminated.

The provisions of Article 20 and Article 20-6 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Act No. 54 of 1947) do not apply to the act relating to the recommendation, limited to the case where the Japan Fair Trade Commission has made a recommendation pursuant to the provisions of the preceding Article and the violating entrusting business operator has followed the recommendation.

①If the Japan Fair Trade Commission finds it necessary in order to ensure fairness in transactions related to a manufacturing consignment, etc. to a small or medium-sized entrusted business operator (if a small or medium-sized entrusted business operator (limited to a corporation) has ceased to exist as a result of a merger, a corporation that continues to exist after the merger or is established as a result of the merger; if all or part of the business relating to the transactions has been succeeded to as a result of a split of the entrusted business operator, a corporation that has succeeded to all or part of the business; if all or part of the business relating to the transactions of the entrusted business operator has been transferred, a business operator that has acquired all or part of the business; the same applies below in this Article and the following Article) from the entrusting business operator (if an entrusting business operator has ceased to exist as a result of a merger, a corporation that continues to exist after the merger or is established as a result of the merger; if all or part of the business relating to the transactions concerning the manufacturing consignment, etc. has been succeeded to as a result of a split of an entrusting business operator, a corporation that has succeeded to all or part of the business; if all or part of the business relating to the transactions of an entrusting business operator has been transferred, a business operator that has acquired all or part of the business; the same applies below in this Article and the following Article), the Japan Fair Trade Commission may have the entrusting business operator or small or medium-sized entrusted business operator report on the transactions related to the manufacturing consignment, etc. of the entrusting business operator to the small or medium-sized entrusted business operator, or have its officials enter the offices or business premises of the entrusting business operator or the small or medium-sized entrusted business operator and inspect books, documents or any other articles.

②If the Commissioner of the Small and Medium Enterprise Agency finds it particularly necessary for protecting the interests of a small and medium-sized entrusted business operator, the Commissioner may have an entrusting business operator or a small and medium-sized entrusted business operator make a report concerning transactions relating to a manufacturing consignment, etc. from the entrusting business operator to the small and medium-sized entrusted business operator, or have its officials enter the offices or business premises of the entrusting business operator or the small and medium-sized entrusted business operator and inspect books, documents, and any other articles.

③If the minister who has jurisdiction over the business relating to transactions concerning the manufacturing consignment, etc. finds it particularly necessary for cooperating with an investigation under the provisions of Article 9 by the Commissioner of the Small and Medium Enterprise Agency, the minister may have an entrusting business operator or a small and medium-sized entrusted business operator that engages in the business under the minister's jurisdiction make a report concerning transactions related to a manufacturing consignment, etc. from the entrusting business operator to the small and medium-sized entrusted business operator, or may have its officials enter the offices or business premises of these persons and inspect books, documents, and any other articles.

④If the officials enter the offices pursuant to the provisions of the preceding three paragraphs, they must carry their identification cards and present them to relevant persons.

⑤The authority for an on-site inspection under the provisions of paragraphs (1) through (3) may not be construed as granted for criminal investigation.

①The Japan Fair Trade Commission, the Commissioner of the Small and Medium Enterprise Agency, and the minister with jurisdiction over the business relating to transactions concerning the manufacturing consignment, etc. may, to the extent necessary for the enforcement of this Act, provide each other with information concerning an entrusting business operator or a small or medium-sized entrusted business operator that is found to be particularly necessary for making transactions concerning a manufacturing consignment, etc. from an entrusting business operator to a small or medium-sized entrusted business operator fair or for protecting the interests of the small or medium-sized entrusted business operator.

②The Japan Fair Trade Commission may, to the extent necessary for the enforcement of this Act, request the head of a relevant administrative body to provide information concerning an entrusting business operator or a small or medium-sized entrusted business operator or to offer any other necessary cooperation.

If an entrusting business operator falls under any of the following items, the representative, agent, employee, or other worker of the entrusting business operator who has committed the violation is subject to a fine of not more than 500,000 yen:

If a person has failed to make a report under the provisions of Article 12, paragraphs (1) through (3) or has made a false report, or has refused, obstructed or evaded an inspection under these provisions, the person who has committed the violation is punished by a fine of not more than 500,000 yen.

If the representative of a corporation or the agent, employee, or other worker of a corporation or individual commits a violation referred to in one of the preceding two Articles in connection with the business of the corporation or individual, in addition to the offender being subject to punishment, the corporation or individual is subject to the penalties referred to in the relevant Article.