JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
The Merger Guidelines, mentioned in 1.1 Merger Control Legislation , classify business combina - tions into horizontal, vertical and conglomerate business combinations, and clarify the factors to be taken into account and the framework for determining whether they may substantially restrain competition for each type of business combination. According to the Merger Guidelines, the JFTC takes the following factors into account in assessing the pro-/anti-competitive effect of the transaction: • competition in the relevant market – the num - ber of competitors, market share, competitive landscape, supply capacity of competitors, competition in R&D, characteristics of the market (whether there are so-called direct or indirect network effects or multifaceted mar - kets through various platforms), etc; • imports – barriers to importing, problems with distribution, substitutability with imports, etc; • new entry to the market – barriers to entry, likelihood of entry; • competitive pressures arising from adjacent markets – competing products, geographi - cally adjacent markets; • competitive pressure arising from customers – competition among users, ease of switching suppliers; • comprehensive business capabilities of the parties in question; • economic efficiencies; • the financial conditions of the parties in ques - tion; and • the scale of the relevant market. The Merger Guidelines set forth the safe har - bour based on the Herfindahl-Hirschman Index (HHI). In principle, the JFTC does not conduct a substantive examination of a business com -
and customers in order to obtain their opinions about the transaction. 3.10 Requests for Information During the Review Process The JFTC can request that the parties provide further information at any time during the review process. The amount and content of the infor - mation requested depend on the transaction in question. It should be noted that the review process will not be suspended or restarted by requests for information. Regarding the Phase II review, the 90-day statutory review period will start to run only when the JFTC accepts all the neces - sary information requested in the forms for the Request for Report, etc. 3.11 Accelerated Procedure The AMA does not technically provide a short- form or fast-track procedure for the review pro - cess. Although the party/parties can ask for the 30-day waiting period to be shortened, the JFTC has sole discretion on whether to agree to such a request.
4. Substance of the Review 4.1 Substantive Test
The JFTC examines whether a business combi - nation is likely to result in a “substantial restriction of competition in a certain market”, which means that competition itself is significantly reduced to such an extent that a particular business opera - tor or group of business operators can control a market by determining prices, quality, quantity and other competitive parameter(s) of their own volition.
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