JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
5. Decision: Prohibitions and Remedies 5.1 Authorities’ Ability to Prohibit or Interfere With Transactions Under the AMA, the JFTC can file a motion for an urgent injunction order (ie, an injunction against the consummation of the transaction prior to the completion of examination) and issue a cease- and-desist order (prohibition against the con - summation of the transaction after completion of the examination). Regarding an urgent injunction order, the JFTC must show that the business combination would likely substantially restrain competition, and that the consummation of a business combination would result in irreversible damage to competi - tion. The JFTC must file a petition for an urgent injunction order with the Tokyo District Court and prove the existence of a suspected violation of the AMA and the urgent need for such an order. The hearing will be held privately and expedi - tiously; if the court approves the JFTC’s request, it will issue the order. A cease-and-desist order is an administra - tive action to prohibit a business combination transaction or to order a party to take measures to eliminate the possibility that the transaction would substantially restrict competition after the JFTC completes its review. The order includes business divestitures, stock transfers and busi - ness transfers to eliminate substantial restraints on competition. The JFTC can issue a cease- and-desist order on its own (without any prior review or approval by a court), either before or after the consummation of a planned business combination. The recipient of a cease-and-desist order issued by the JFTC can file an action seeking cancel -
ments, etc (eg, the acquisition of shares or voting rights of a domestic listed company as a result of which the investment ratio or voting right ratio is 1% or more) or specified acquisi - tions (ie, the acquisition by a foreign investor of shares or equity of a domestic unlisted company from another foreign investor), and the business operated by the investee falls within a desig - nated industry involving national security, etc, in principle, prior notification must be submitted to the Minister of Finance, etc, via the Bank of Japan within the six months before the intended transaction or activity. These rules are set forth in FEFTA and are sepa - rate from the merger control rules. 4.7 Special Consideration for Joint Ventures Generally speaking, there is no special consid - eration for joint ventures under the AMA and the Merger Guidelines. That said, the Merger Guidelines state that when joint venture partners establish a joint venture to integrate only a part of their business, the JFTC will analyse the co- ordinated effects on the remaining businesses of the joint venture partners (the “spillover effect”). With respect to a notification requirement, if the transaction involves multiple kinds of business combinations, each stage of the business com - bination may constitute a separate business combination subject to a pre-notification (for instance, in triangular merger cases, parties will likely have to file separate notifications for share acquisition and for merger). Likewise, if a joint venture transaction comprises multiple business combinations subject to pre-notifications, par - ties have to file notifications separately on the basis of each business combination.
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