JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
tion is 35% or less, the possibility that a busi - ness combination may substantially restrain competition is generally considered to be small. It should be noted that the latest version of the Merger Guidelines states that, even if the busi - ness combination satisfies the safe harbour standards, if one of the parties has a potential - ly strong competitive power due to its assets (including important data and intellectual prop - erty rights) or for any other reason, the JFTC will conduct a further review of the matter. 4.3 Reliance on Case Law Regarding merger review, the JFTC basically defines the relevant market in accordance with its previous review cases, some of which are not disclosed to the public. However, if there are sig - nificant changes to the premise of the definition of the relevant market (such as innovation or the development of an adjacent product market), the JFTC may take them into consideration. Essentially, the JFTC does not depend on the decisions of competition authorities in other jurisdictions, such as the EU Commission, US Federal Trade Commission and US Department of Justice. Nevertheless, if the JFTC has no pre - vious case in the field of the transaction, it may use these authorities’ decisions as references to define the relevant market. 4.4 Competition Concerns The JFTC examines all kinds of competition con - cerns that may impose a substantial restriction on competition in the relevant market, includ - ing unilateral effects, co-ordinated effects, con - glomerate or portfolio effects, vertical concerns and the elimination of potential competition. Traditionally, unilateral and co-ordinated con - duct possibly arising from horizontal business
combinations has represented a large portion of the JFTC’s concern, since a horizontal business combination would basically reduce the num - ber of competitors in the relevant market and thus potentially have a direct negative impact on competition. However, this does not mean that the JFTC has competition concerns only in horizontal business combinations. Actually, the JFTC has also con - ducted numerous investigations of other com - petition concern matters, and there are some cases in which it has conditionally approved vertical business combinations as long as the parties undertook remedies. Furthermore, in some cases, the JFTC has assessed conglom - erate or portfolio effects and other kinds of anti- competitive effects. 4.5 Economic Efficiencies In examining competition concerns, the JFTC takes economic efficiencies into consideration. However, as the Merger Guidelines state, the JFTC considers that the improvement in efficien - cy must be an inherent outcome of the business combination and must be passed on to con - sumers through lower product prices, improved quality and so on. Therefore, the JFTC tends to consider improvement in efficiency alone as being unlikely to justify the transaction. 4.6 Non-Competition Issues In principle, the JFTC considers only competition issues in the process of examination. Although it may consider non-competition issues in some cases, such as industrial policy and other issues of public interest, the JFTC is not bound by these kinds of concerns. When a foreign investor (non-resident individual, corporation established under foreign laws and regulations, etc) makes direct inward invest -
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