December 16, 2022 Administrative Guidance to KDDI Corporation on the Appropriate Adjustment of Improper Terminal Discounts

KDDI Corporation (President and CEO TAKAHASHI Makoto) was found to have made improper terminal discounts in violation of the Telecommunications Business Act (Act No. 86 of 1984). Therefore, the Ministry of Internal Affairs and Communications (MIC) has today issued a written instruction to the company to ensure thorough compliance with the provisions of the Act and to implement measures steadily to prevent the recurrence of the violation.

Outline of the case and content of administrative guidance

Article 27-3, Paragraph 2 of the Telecommunications Business Act (hereafter referred to as the "Act") stipulates that telecommunications carriers designated by the Minister for Internal Affairs and Communications pursuant to Paragraph 1 of the same Article shall be assigned to mobile telecommunications services (those stipulated in Paragraph 1 of the same Article, and the same shall apply hereafter). Article 27-3, Paragraph 2 of the Act shall apply to telecommunications carriers concluding contracts for the sale of telecommunications equipment (hereafter referred to as "target equipment"), including mobile terminals required to receive the services. The provisions of this article prohibit the telecommunications carriers from promising users of mobile telecommunications services directly or through third parties to provide benefits that may hinder the proper competitive relationship between telecommunications carriers as specified by the relevant ordinance of MIC.
KDDI Corporation recently ran an offer for users who had concluded a contract with the company for the provision of third-generation mobile phone services before March 31, 2022, on condition that the users purchased target equipment and used the mobile telecommunications services provided by the company. MIC has confirmed that, under this offer, KDDI Corporation had (in 7,473 cases between April 1 and May 12, 2022) promised or had a notifying person entrusted with intermediation, etc. promise to provide benefits in excess of the amounts prescribed in Article 22-2-16, Paragraph 1, Item 2 of the Regulations for Enforcement of the Telecommunications Business Act (Ministerial Ordinance of MPT No. 25 of 1985), namely 20,000 yen or the amount calculated by deducting the amount of consideration provided when accepting the previous model of the same type from the comparative price, whichever is the lower.
MIC recognizes that the conduct violates the provisions of Article 27-3, Paragraph 2 of the Act, and therefore has today issued the company with a written instruction to comply with the provisions of the Act thoroughly and steadily implement measures to prevent the recurrence of the violation.
MIC will continue striving to enforce the law to secure an appropriate competitive environment in the mobile market.
MIC has an information contact window for efforts to optimize terminal sales at each Regional Bureau of Telecommunications to ensure compliance with the law, and has also set up a contact desk related to mobile phone sales agents on the MIC website to collect information on any inappropriate conduct by sales agents. MIC will use the content of the information provided to encourage fair competition in the mobile market, in an effort to ensure the sound development of the telecommunications market and safeguard the interests of the public.