JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Takuya Ohata and Kohei Kohara, Ikeda & Someya
thresholds is considered by the JFTC to have a local effect. A party without any sales exceeding the thresholds within or outside Japan is not required to file a notifi - cation. Nevertheless, the JFTC may recommend that a party to the transaction voluntarily has a consultation prior to the notification process if the amount of the transaction exceeds JPY40 billion and the attempted business combination is found to affect domestic cus - tomers. That is to say, even without sales in Japan, according to the Merger Review Policies referred to in 2.1 Notification , the business combination could affect domestic customers if: • the party has its business or research base in Japan; • the acquired company conducts sales activities targeting domestic consumers; or • the total domestic sales of the acquired company exceed JPY100 million. 2.9 Market Share Jurisdictional Threshold The AMA does not define any market share jurisdic - tional thresholds. 2.10 Joint Ventures Due to the absence of the concept of “joint control”, the JFTC does not apply any special rules to joint ventures regarding filing requirements under the AMA; instead, joint ventures are regulated by the same prin - ciple as the jurisdictional thresholds mentioned in 2.5 Jurisdictional Thresholds . 2.11 Power of Authorities to Investigate a Transaction The JFTC can investigate any transaction, even when it does not meet the notification thresholds. The author - ity is able to require the targets of the investigation to explain why the transaction in question would not substantially restrain competition in a relevant market and can request further detailed information if com - petitors or customers of the parties raise concerns about the transaction. In fact, the JFTC is becoming more proactive in reviewing business combinations that do not meet the thresholds.
There is no statute of limitations on the JFTC’s author - ity to investigate. 2.12 Requirement for Clearance Before Implementation The completion of transactions that are subject to a notification requirement must be suspended for 30 calendar days of the statutory waiting period (cor - responding to the end of the Phase I review period) from the date of acceptance of said notification. Nev - ertheless, the JFTC can shorten the waiting period in response to a paper-based request from the notifying party, if it is deemed appropriate to do so. The related parties can theoretically implement trans - actions after the waiting period ends, even if the suc - ceeding review process (the Phase II review period) has been commenced by the JFTC. In practice, how - ever, they tend not to complete transactions before the Phase II review is completed. If a transaction that has a possibility of restraining competition substan - tially is to be closed during the Phase II review period, the JFTC can ask the Tokyo District Court to issue an urgent injunction order to restrain the related parties from completing the transaction. 2.13 Penalties for the Implementation of a Transaction Before Clearance If the related parties fail to meet the waiting period requirement noted in 2.12 Requirement for Clearance Before Implementation , they risk a criminal fine of up to JPY2 million, which can be imposed both on the notifying company(ies) and on any representative(s) or employee(s) responsible for the failure. Although the JFTC has never imposed such penalties in practice, it did issue a warning in the case of Canon Inc’s acquisition of Toshiba Medical Systems Corpo - ration (TMSC) in 2016 due to possible inconsistency with respect to the notification system. To be more specific, before filing the notification to the JFTC, Canon acquired a share warrant of TMSC, paying an amount equal to the value of the underlying common shares to Toshiba Corporation, the parent company of TMSC. In addition, a third party other than Canon and Toshiba was designated as the owner of voting shares of TMSC until Canon exercised the share warrant. The JFTC cautioned that a company that plans to acquire
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