Photo/Illutration A sign of the Japan Post group, which includes Japan Post Co. (Asahi Shimbun file photo)

Japan Post Co. was slapped with another administrative guidance from a government watchdog last year on suspicion of refusing to appropriately raise fees paid to parcel delivery subcontractors to reflect higher costs.

The Fair Trade Commission found that Japan Post rejected requests for fee increases from subcontractors commissioned to deliver Yu-Pack parcels without due consultations or failed to sufficiently raise delivery fees for extended periods in certain cases, sources said.

The commission concluded that these cases are suspected violations of the Subcontract Law, which prohibits “unjustly setting subcontract proceeds at a level conspicuously lower than the price ordinarily paid for the same or similar content of work.”

The FTC told Japan Post to correct the practices in June, the same month the watchdog gave administrative guidance over excessively high subcontractor penalties for mistaken deliveries and customer complaints in violation of the same law.

The Small and Medium Enterprise Agency, part of the Ministry of Economy, Trade and Industry, investigated whether transaction prices with subcontractors appropriately reflected higher costs stemming from rising prices of goods and services.

The survey covered 150,000 subcontractors in various industries.

The results, released in February 2023, ranked Japan Post, which operates post offices nationwide, at the bottom among the 150 clients cited by 10 or more respondents.

In March 2023, the Ministry of Internal Affairs and Communications called on Japan Post to proactively consult with subcontractors on passing higher costs onto delivery fees and sign contracts under appropriate terms and conditions.

The request was made when the ministry, which has jurisdiction over Japan Post, approved the company’s business plan for fiscal 2023.

Japan Post conducted a voluntary inspection of transaction prices with subcontractors, covering about 1,000 post offices nationwide and 13 regional branches that outsourced package collections and deliveries.

At 139 post offices and two regional branches, there were cases in which officials rejected requests for fee increases without consultations or kept fees unchanged without giving appropriate explanations, according to the results released in April 2023.

Japan Post acknowledged that officials were not sufficiently aware of provisions of the Subcontract Law and other requirements.

The company also promised to improve the practices, such as by proactively proposing to review contract details.

However, the FTC discovered that delivery fees had not sufficiently reflected higher costs, conducted its own investigation and issued administrative guidance.

Japan Post declined to comment whether it received administrative guidance.

In a statement, the company said it will proactively consult with subcontractors and review delivery fees to reflect cost increases.

(This article was written by Nobuya Sawa, a senior staff writer, Yosuke Takashima and Yuji Masuyama.)

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