JAPAN Law and Practice Contributed by: Tsuyoshi Ikeda, Aya Yasui, Hiroko Fukushima and Kohei Kohara, Ikeda & Someya
lation of said order with the Tokyo District Court within six months of the order. In fact, the JFTC has not issued a cease-and- desist order for more than 40 years. In practice, if the JFTC informally indicates its competition concern to parties, the parties often propose a remedy, seeking the JFTC’s clearance or volun - tarily withdrawing their notifications. Therefore, the JFTC has not faced the need to issue a cease-and-desist order on business combina - tions. 5.2 Parties’ Ability to Negotiate Remedies The parties in question may discuss remedies with the JFTC at any stage, including during the pre-notification stage, the Phase I review pro - cess and the Phase II review process. If the par - ties propose a remedy, the JFTC will review the business combination on the premise that the proposed remedy will be implemented. During the pre-notification stage, the JFTC and the parties discuss the form and content of the notification, and the competition issues related to the proposed transaction, but there are a few cases in which the parties and the JFTC negoti - ate a remedy in response to the JFTC’s competi - tion concerns. 5.3 Legal Standard The legal standard for a prohibition (ie, cease- and-desist order) is whether a planned business combination is likely to substantially restrict competition in a relevant market. Therefore, any remedy should alleviate a competition concern to the extent that substantial restraint of compe - tition is eliminated so that the transaction can be approved by the JFTC. The Merger Guidelines supplement this point.
The Merger Guidelines also state that the JFTC considers and examines the measures appropri - ate for removing the possibility of substantially restraining competition on a case-by-case basis for each business combination. The Merger Guidelines also clearly state that a structural remedy is the most effective remedy and thus should be applied in principle, such as in busi - ness transfers. However, in practice, a behav - ioural remedy could be acceptable in many cases, if it is appropriate to resolve the JFTC’s competition concern. 5.4 Negotiating Remedies With Authorities Concerning when parties can begin negotiating remedies with the authorities, please see 5.2 Parties’ Ability to Negotiate Remedies . 5.5 Conditions and Timing for Divestitures The Merger Guidelines state that remedies should, in principle, be fully carried out prior to the implementation of the business combina - tion. However, as an exception, remedies can be carried out after the clearance if the proposed remedy properly and clearly defines the deadline and the JFTC approves it. If the parties fail to carry out the remedies, the JFTC may issue cease-and-desist orders to prohibit the parties from implementing the busi - ness combination, or it may take measures to eliminate the substantial restraint of competition caused by the business combination. 5.6 Issuance of Decisions When the JFTC concludes that the business combination will not substantially restrict com - petition, it will issue a notice to the parties that it will not issue a cease-and-desist order. This notice is not available to the public.
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