JAPAN Law and Practice Contributed by: Junichi Ueda, Etsuko Hara, Nobuto Shirane, Takahiro Hayase, Yutaka Shimoo and Miki Goto, Anderson Mori & Tomotsune
6.2 Merger Control Procedure If a contemplated transaction is subject to the prior notification requirement, the relevant enterprises are prohibited from closing the transaction for a period of 30 calendar days after formal filing (Phase I review period, commonly referred to as the waiting period). If the JFTC forms the view that the transaction does not give rise to concerns about competition, the JFTC issues a clearance within the Phase I review period. However, if the JFTC forms the view that a more detailed review is required, the review process moves into a Phase II review. At the beginning of the Phase II review, the JFTC will request additional information and the Phase II review will continue for 120 calendar days from the formal filing or 90 calendar days from the date of the receipt of all the additional information requested – whichever is the longer period. Parties planning to file a notification may consult the JFTC not only on the descriptions of the notification form, but also on substantive issues such as market definition and competitive assessment at the pre-noti - fication stage. In practice, unless the transaction is very straightforward without any potential substantive issues, it is common to go through the pre-notification consultation, and the JFTC commences its review of the market situation and the potential substantive issues at the pre-notification stage. If it is evident that the transaction would not restrain competition in any relevant market and the notifying parties request the JFTC to shorten the waiting period in writing, the JFTC may shorten the waiting period. 6.3 Cartels Certain anti-competitive agreements and practices such as price fixing and bid rigging are prohibited as an unreasonable restraint of trade under the Antimo - nopoly Act. Unreasonable restraint of trade is defined as business activities by which any enterprise, in con - cert with other enterprises, mutually restricts or con - ducts their business activities in such a manner as to fix, maintain or increase prices, or to limit produc - tion, technology, products, facilities or counterparties, thereby causing a substantial restraint of competition in any relevant market.
As for the interpretation of the elements of unrea - sonable restraint of trade, it is worth noting that – although “substantial restraint of competition” is one such element – the JFTC can easily prove that such a requirement is satisfied in the case of extreme cartel behaviour such as price fixing and bid rigging. It would therefore be difficult to justify extreme cartel behaviour in practice. Major methods of enforcement against unreasonable restraint of trade are cease-and-desist orders and sur - charge payment orders. However, criminal penalties are also available. The amendment to the surcharge payment system came into effect on 25 December 2020. The amount of surcharge is calculated by mul - tiplying the amount of sales of the target products or services during the period in which the unreasonable restraint of trade occurred (the maximum period is ten years) by the surcharge percentage rate. The rate is 10% in principle but can be lower, depending on the size of the alleged violators, or higher if there are aggravating factors (such as repeated violation). A leniency system for an unreasonable restraint of trade is available in Japan. The surcharge reduction rate, which was amended on 25 December 2020, is determined in accordance with the order of applica - tion for leniency as well as the degree of co-operation by the offender with the JFTC. In addition, a deter - mination procedure was introduced on 25 December 2020 to protect attorney–client communications in respect of legal advice regarding the alleged violations to which leniency is applicable (the “Specified Com - munication”). The scope of the protection under the determination procedure is limited compared to that which is available in similar circumstances in the USA or the EU. The requirements for qualifying for protec - tion under the determination procedure include that: • the fact that the contents of the Specified Commu - nication are recorded is indicated on the document itself (eg, “Specified Communications under JFTC Investigation Rules” is written or printed on the cover); • the documents are stored separately from other documents that are not subject to the determina - tion procedure;
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