CHAMBERS GLOBAL PRACTICE GUIDES

Merger Control
2024
Definitive global law guides offering
comparative analysis from top-ranked lawyers

Contributing Editors
Jean Francois Bellis and Porter Elliot
Van Bael & Bellis

JAPAN
Law and PracticeContributed by:
Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima
Ikeda & Someya

Contents
1. Legislation and Enforcing Authorities p.408
1.1 Merger Control Legislation p.408
1.2 Legislation Relating to Particular Sectors p.408
1.3 Enforcement Authorities p.408

2. Jurisdiction p.409
2.1
2.2
2.3
2.4
2.5
2.6
2.7

Notification p.409
Failure to Notify p.409
Types of Transactions p.409
Definition of “Control” p.410
Jurisdictional Thresholds p.410
Calculations of Jurisdictional Thresholds p.411
Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional
Thresholds p.412
2.8 Foreign-to-Foreign Transactions p.412
2.9 Market Share Jurisdictional Threshold p.413
2.10 Joint Ventures p.413
2.11 Power of Authorities to Investigate a Transaction p.413
2.12 Requirement for Clearance Before Implementation p.413
2.13 Penalties for the Implementation of a Transaction Before Clearance p.413
2.14 Exceptions to Suspensive Effect p.414
2.15 Circumstances Where Implementation Before Clearance Is Permitted p.414

3. Procedure: Notification to Clearance p.414

3.1 Deadlines for Notification p.414
3.2 Type of Agreement Required Prior to Notification p.414
3.3 Filing Fees p.414
3.4 Parties Responsible for Filing p.414
3.5 Information Included in a Filing p.414
3.6 Penalties/Consequences of Incomplete Notification p.415
3.7 Penalties/Consequences of Inaccurate or Misleading Information p.415
3.8 Review Process p.416
3.9 Pre-notification Discussions With Authorities p.416
3.10 Requests for Information During the Review Process p.417
3.11 Accelerated Procedure p.417

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China

RussiaN. Korea
S. Korea

Japan

Tokyo

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4. Substance of the Review p.417
4.1
4.2
4.3
4.4
4.5
4.6
4.7

Substantive Test p.417
Markets Affected by a Transaction p.418
Reliance on Case Law p.419
Competition Concerns p.419
Economic Efficiencies p.419
Non-competition Issues p.420
Special Consideration for Joint Ventures p.420

5. Decision: Prohibitions and Remedies p.420
5.1
5.2
5.3
5.4
5.5
5.6
5.7

Authorities’ Ability to Prohibit or Interfere With Transactions p.420
Parties’ Ability to Negotiate Remedies p.421
Legal Standard p.422
Negotiating Remedies With Authorities p.422
Conditions and Timing for Divestitures p.422
Issuance of Decisions p.422
Prohibitions and Remedies for Foreign-to-Foreign Transactions p.422

6. Ancillary Restraints and Related Transactions p.422
6.1 Clearance Decisions and Separate Notifications p.422

7. Third-Party Rights, Confidentiality and Cross-Border Co-operation p.423
7.1
7.2
7.3
7.4

Third-Party Rights p.423
Contacting Third Parties p.423
Confidentiality p.423
Co-operation With Other Jurisdictions p.424

8. Appeals and Judicial Review p.424

8.1 Access to Appeal and Judicial Review p.424
8.2 Typical Timeline for Appeals p.424
8.3 Ability of Third Parties to Appeal Clearance Decisions p.425

9. Foreign Direct Investment/Subsidies Review p.425

9.1 Legislation and Filing Requirements p.425

10. Recent Developments p.425

10.1 Recent Changes or Impending Legislation p.425
10.2 Recent Enforcement Record p.425
10.3 Current Competition Concerns p.426

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CHAMBERS.COMJAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

Ikeda & Someya was founded in Tokyo in October 2018 by two lawyers, Tsuyoshi Ikeda andTakaaki Someya. The founding partners previously worked at the Japan Fair Trade Commission (Tsuyoshi Ikeda) and the Consumer Affairs
Agency (Takaaki Someya), and used this experience to form a cutting-edge antitrust law practice, handling a number of large-scale cases in-volving business alliances, on-site inspections
by the Japan Fair Trade Commission and consumer law. Ikeda & Someya also has 16 otherlawyers with experience at regulatory agencies or in-house at major companies. The twofounding partners’ comments have been citedin various newspapers, magazines and media,
including the Nikkei.

Authors
Tsuyoshi Ikeda is a partner at
Ikeda & Someya. He previously
served as an investigator at theJapan Fair Trade Commission,
where he participated in around20 dawn raids, prepared theimplementation of the leniency system, andinvestigated a case involving standard
essential patents. He is noted for his successin the most cutting-edge cartel, merger review
and other antitrust/competition cases. Tsuyoshi
is registered as an attorney in New York andCalifornia.
Muneharu Yamamoto gained
extensive experience at a majorinternational law firm in a wide
range of corporate legal matters,with a focus on representing
domestic and foreign companies
in litigation and disputes. He also gained
familiarity with the US legal system while
attending law school in the US. Making use ofsuch experience, Muneharu provides practicaladvice that is tailored to business in the fieldsof antitrust law, competition law and consumer
law, while keeping in mind subsequent legal
developments that may be anticipated fromthe circumstances of each case.

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Aya Yasui is experienced ininternational transactions andlegal consultations forbusinesses, with a particularfocus on antitrust. She
previously worked at a US law
firm and a major Japanese law firm, and has
also been seconded to major global
companies, in addition to serving as a memberof the Environmental Committee of the Tokyo
Bar Association for more than ten years. She
also has legal experience as in-house counsel
at an automobile manufacturer as General
Manager in charge of global compliance. Aya
can provide advice on legal risks in cuttingedge fields by utilising her extensive businessexperience and language skills.
Hiroko Fukushima specialises inareas such as competition/
antitrust, consumer protection
and sustainability. Prior toregistering as an attorney, she
was consistently involved in thefield of news and public relations, such as
making diplomatic speeches at the Ministry ofForeign Affairs and working for a news agency.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

Ikeda & Someya
Yurakucho ITOCiA 16th floor
2-7-1, Yurakucho
Chiyoda-ku
Tokyo
Japan
Tel: +81 50 1745 4000
Fax: +81 3 6261 7700
Email: tsuyoshi.ikeda@ikedasomeya.com
Web: www.ikedasomeya.com

1. Legislation and Enforcing
Authorities
1.1 Merger Control Legislation

Chapter 4 of the Act on Prohibition of Private
Monopolisation and Maintenance of Fair Trade(Act No 54 of 1947 – the “Anti-Monopoly Act”
or AMA) prohibits transactions that will substantially restrict competition in any relevant market.
The Japan Fair Trade Commission (JFTC) is thecompetent Japanese authority for the AMA andprepares and publishes the Guidelines to Application of the AMA Concerning Review of Business Combination (established in May 2004 andmost recently amended in December 2019) (the“Merger Guidelines”) to clarify details of how it
analyses a proposed merger. The Merger Guidelines are also applied to cases below the filingthreshold.
The JFTC has also published the Policies Concerning Review of Business Combination (established in June 2011 and most recently amended
in December 2019) (the “Merger Review Policies”), containing detailed merger control review
procedures.

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1.2 Legislation Relating to Particular
Sectors

The Foreign Exchange and Foreign Trade Act(FEFTA) regulates foreign transactions or inward
investments as foreign direct investments or
specified acquisitions. For example, the FEFTA requires the filing of a notification prior totransactions in certain areas, such as weapons,aircraft, space, nuclear facilities, dual-use technologies (which could be used for military purposes), cybersecurity, electricity, gas, telecommunications, water supply, railways and oil.
In some industries, restrictions on inward investment under the industry-specific legislation will
also apply, including under the following:• the Civil Aeronautics Act;• the Radio Act;• the Broadcasting Act;• the Mining Act;• the Ships Act; and• the Financial Instruments and Exchange Act.

1.3 Enforcement Authorities

Merger control rules under the AMA are enforcedby the JFTC as the sole regulatory authority inJapan. The JFTC is an external agency of the

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

Cabinet Office, and the AMA expressly specifies
that the JFTC must exercise its authority independently from any other governmental bodies.

2. Jurisdiction
2.1 Notification

Notification is compulsory if the transaction
meets a certain threshold under Chapter 4 of
the AMA and relevant regulations. A transaction
within the same company group is generally
exempt from the obligation of notification.
Meanwhile, the JFTC can review any merger
below the notification threshold, either on its
own initiative or through a voluntary consultation by the merging party or parties. Specifically,in the Merger Review Policies revised in 2019,
the JFTC recommends parties whose domestic
sales amounts fall under the thresholds of thenotification to make a consultation voluntarily
prior to the notification process when the total
consideration for the acquisition (transaction
value) will exceed JPY40 billion and the scheduled transaction is deemed to affect domestic
consumers, such as by satisfying one of the following:• the business base or research and development base of the acquired company islocated in Japan;• the acquired company conducts sales activities targeting domestic consumers, such as
creating a Japanese website or using a brochure in Japanese; or• the total domestic sales of the acquired company exceed JPY100 million.
In practice, the targeted parties conventionallyconsult with the JFTC voluntarily prior to filinga notification, as described in 3.9 Pre-notifi409

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cation Discussions With Authorities. Without
the voluntary consultation, the parties could berequested to provide further related information.

2.2 Failure to Notify

If a party obliged to notify fails to make/file a
notification, it is subject to a criminal fine of
up to JPY2 million. No such penalty has yet
been imposed on any party, but in June 2016
the JFTC issued a warning on a “warehousing”
case; see 2.13 Penalties for the Implementationof a Transaction Before Clearance for further
details.

2.3 Types of Transactions

The thresholds for notification vary in accordance with the following types of transactions:• share acquisitions;• mergers;• joint incorporation-type or absorption-typecompany splits (demergers);• joint share transfers (as defined by the Companies Act); and• acquisitions of businesses or assets.
Interlocking directorships (one type of businesscombination) are subject to merger review by the
JFTC but are not subject to mandatory notification obligation.
More specifically, the above-mentioned acquisitions of businesses or assets include:• accepting assignment of the whole or asubstantial part of the business of anothercompany;• accepting assignment of the whole or a substantial part of the fixed assets used for thebusiness of another company;• taking on a lease of the whole or a substantial
part of the business of another company;

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya• undertaking the management of the whole ora substantial part of the business of anothercompany; and• entering into a contract that provides for a
joint profit and loss account for business withanother company.
Internal restructurings or reorganisations within
the same company group are not subject to notifications in general. The AMA does not technically require notification regarding operations that
do not involve the transfer of shares or assets(eg, shareholders’ agreements or changes toarticles of association), although the JFTC does
investigate such operations in some cases – forinstance, if challenged by relevant parties as a
violation of other provisions of the AMA.

2.4 Definition of “Control”

The AMA does not define or use the concept of“control”. Even if they do not raise any issuesof “control”, transactions are subject to notifications once they meet the thresholds describedin 2.5 Jurisdictional Thresholds.

2.5 Jurisdictional Thresholds

The AMA determines different notification thresholds for each type of transaction described in 2.3
Types of Transactions. It should be noted thatthe thresholds described in this section are thethresholds for a mandatory notification requirement; the JFTC has the authority to review any
merger case below the notification thresholds. In
fact, the JFTC announced that it had completed
merger review of 15 cases below the threshold
during the 2022 fiscal year.
Share Acquisitions
The thresholds in a share acquisition are as follows:

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the acquiring company, its subsidiaries, its
ultimate parent company and subsidiaries of
the ultimate parent company (“Total Domestic
Sales Amount”), exceeds JPY20 billion;• the total domestic sales amount of the target
company and its subsidiaries exceeds JPY5
billion; and• the voting rights in the target company heldby the acquiring company group will exceed
20% or 50% as a result of the acquisition.
Mergers and Joint Share Transfers
The thresholds in a merger are as follows:• the Total Domestic Sales Amount of any ofthe merging parties or the parties involved in
the joint share transfer exceeds JPY20 billion;and• the Total Domestic Sales Amount of any of
the other parties exceeds JPY5 billion.
Absorption-Type Company Split (Demerger)
If a part of the business of the transferred company (not its entirety) is acquired by a succeeding company, a notification is required wheneither of the following applies.
• Case 1:(a) the Total Domestic Sales Amount of thetransferred part of the business of thetransferring company subject to the company split exceeds JPY10 billion; and(b) the Total Domestic Sales Amount of thesucceeding company exceeds JPY5 billion.
• Case 2:(a) the Total Domestic Sales Amount of thetransferred part of the business of thetransferring company exceeds JPY3 billion; andJAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya(b) the Total Domestic Sales Amount of thesucceeding company exceeds JPY20
billion.
When the entire business of the transferring
company is transferred to a succeeding company, different (higher) thresholds will apply (seethe JFTC website at www.jftc.go.jp).
Joint Incorporation-Type Company Split
In the case of a joint incorporation-type company split (where two or more companies jointly
establish a new company), when all the parties
to the transaction transfer only a part of theirbusiness, a notification is required if:• the total domestic turnover of one of thecompany groups splitting all of its businesses
exceeds JPY20 billion and the total domestic
turnover of another exceeds JPY5 billion;• the total domestic turnover of one of thecompany groups splitting all of its businesses
exceeds JPY20 billion and the total domestic
turnover generated by the target businessof another of the company groups splitting
a substantial part of its businesses exceeds
JPY3 billion;• the total domestic turnover of one of thecompany groups splitting all of its businesses
exceeds JPY5 billion and the total domestic
turnover generated by the target businessof another of the company groups splitting
a substantial part of its businesses exceeds
JPY10 billion; or• the total domestic turnover generated by thetarget business of one of the company groups
splitting a substantial part of its businesses
exceeds JPY10 billion and the total domestic
turnover generated by the target businessof another of the company groups exceeds
JPY3 billion.

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When any of the parties to the transaction transfers its entire business to a new company, different (higher) thresholds will apply (see the JFTC
website at www.jftc.go.jp).
All sectors are necessarily subject to these jurisdictional thresholds. Nevertheless, it is worth
noting that the AMA prohibits a bank and an
insurance company from acquiring or possessing more than 5% or 10%, respectively, of voting
rights in another domestic company (except foran acquisition of a bank by another bank or an
acquisition of an insurance company by anotherinsurance company), in principle. The acquisition or possession will be permitted when oneof the exemptions under the AMA applies, or if
the party obtains prior approval from the JFTC.

2.6 Calculations of Jurisdictional
Thresholds

The total amount of the price of goods and services supplied in Japan during the latest fiscal
year is regarded as domestic turnover, fromwhich the thresholds are calculated. In addition
to direct sales within and into the country, indirect sales in Japan will be included in domestic
turnover if the party recognises that the goods
and services will be shipped to Japan by the
direct purchaser at the time of entering into
the contract without changing their nature andcharacteristics. The intra-group company sales
amount within the same group is to be excluded
from the domestic sales.
Sales booked in a foreign currency should be
converted into Japanese yen using the conversion rate applied for the account settlement. Ifsuch an exchange rate is not available, the average telegraphic transfer middle rate is used.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

2.7 Businesses/Corporate Entities
Relevant for the Calculation ofJurisdictional Thresholds

In a share acquisition, the Total Domestic Sales
Amount of the acquiring company for the purpose of the notification thresholds includes thedomestic sales amount of the acquiring company, its subsidiaries, and its ultimate parent
company and (direct and indirect) subsidiaries
thereof. The ultimate parent company must be
included in the relevant entities only if it is in theform of a “company”.
On the other hand, the Total Domestic Sales
Amount of the target company group includes
the domestic sales amount of the target company and its subsidiaries but does NOT include thesales amounts of the seller (ie, a parent companyof the target company) and its affiliates.
It should be noted that not all the subsidiaries
need to be in the form of a “company”, whichmeans a partnership can be considered as a
subsidiary.
A company is deemed to be a subsidiary if
another company holds the majority of the voting rights of that company. In addition, when
40–50% of the voting rights of a company areheld directly or indirectly by another company,
the former company can be considered as a
subsidiary of the latter company, by taking into
account factors such as board representationand loans provided from the latter company.
The scope of the group companies (a parent
company, ultimate parent company and subsidiaries) is defined at the time of the closing of the
proposed transaction. Changes in the businessduring the reference period have to be reflected
in general. For instance, for calculation of the
Total Domestic Sales Amount of an acquiring
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company that consummated a separate shareacquisition transaction that results in obtaining
more than 50% of the voting rights in anothercompany (Company A) after the settlement of
the last fiscal year, the domestic sales of Company A for the last fiscal year must be includedin the calculation of the Total Domestic Sales
Amount of the acquiring company group.

2.8 Foreign-to-Foreign Transactions

Foreign-to-foreign transactions are subject topre-notification and merger control examination under the AMA, as long as the thresholds– which apply equally to foreign-to-foreign transactions and domestic transactions – are met.
There is no local effect test; a local presence
does not always trigger the notification requirement. However, any transaction that meets anyof the notification thresholds is considered by
the JFTC to have a local effect.
A party without any sales exceeding the thresholds within or into Japan is not required to filea notification. Nevertheless, the JFTC may recommend that a party to the transaction makes
a consultation voluntarily prior to the notification
process if the amount of the transaction exceeds
JPY40 billion and the attempted business combination is found to affect domestic customers. 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 inJapan;• the acquired company conducts sales activities targeting domestic consumers; or• the total domestic sales of the acquired company exceed JPY100 million.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

2.9 Market Share Jurisdictional
Threshold

The AMA does not define any market share jurisdictional 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 principle 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, evenwhen it does not meet the notification thresholds. The authority is able to require the targetsof the investigation to provide a reasonable
explanation as to why the transaction in question
would not substantially restrain competition in a
relevant market, and can request further detailed
information if competitors or customers of theparties raise concerns about the transaction. In
fact, the JFTC is becoming more proactive inreviewing such business combinations that do
not meet the thresholds.
There is no statute of limitations on the JFTC’s
authority 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 (corresponding to the end of the “Phase
I review period”) from the date of acceptanceof said notification. Nevertheless, the JFTC
can shorten the waiting period in response to a

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paper-based request from the notifying party, if
it is deemed appropriate to do so.
The related parties can theoretically implementtransactions after the waiting period ends, even
if the succeeding review process (the “Phase II
review period”) has been commenced by the
JFTC. In practice, however, they tend not tocomplete transactions before the Phase II review
is completed. If a transaction that has a possibility of restraining competition substantially is
to be closed during the Phase II review period,
the JFTC can request the Tokyo District Court toissue an urgent injunction order to restrain therelated parties from completing the transaction.

2.13 Penalties for the Implementation ofa Transaction Before Clearance

If the related parties fail to meet the waiting period requirement noted in 2.12 Requirement for
Clearance Before Implementation, they will riska criminal fine of up to JPY2 million, which canbe 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 Corporation (TMSC) in 2016,
for being possibly inconsistent with the notification system. To be more specific, before filing thenotification to the JFTC, Canon acquired a share
warrant of TMSC, paying an amount equal to thevalue of the underlying common shares to Toshiba Corporation, the parent company of TMSC.
In addition, a third party other than Canon andToshiba was designated to own voting sharesof TMSC until Canon exercised the share warrant. The JFTC cautioned that a company thatplans to acquire shares of a target company inJAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

this way is required to file a notification prior to
implementation.

3. Procedure: Notification to
Clearance

2.14 Exceptions to Suspensive Effect

3.1 Deadlines for Notification

There is no exception to the suspensive effect;
it is not permitted to seek a waiver or derogate
from the regulation. Meanwhile, because a notification can be filed before a definitive agreement
is executed, the related company will be able toconsummate a tender offer bid, for instance, by
filing a notification 30 days prior to the consummation of the bidding process.
Furthermore, the JFTC can shorten the periodof suspensive effect in response to a paperbased request from the notifying party, when it
is appropriate to do so.

2.15 Circumstances Where
Implementation Before Clearance Is
Permitted

Although the related parties can theoretically implement transactions after the statutory
30-day waiting period, they tend not to implement the transactions in practice before the subsequent review (if any) is completed.
Even under a pressing schedule in the caseof foreign-to-foreign mergers, the JFTC would
not permit the implementation of a transaction
before a clearance by implying a possibility offiling an urgent injunction order. It seems to bepossible technically for the parties to propose acarved-out agreement; nevertheless, as far as
is known, there has been no case in which the
JFTC agreed to such a proposal.

There is no deadline for notification. However,taking into account the 30-day statutory waiting
period, a notification must be filed with the JFTC
at least 30 days prior to the completion of thetransaction (see 3.11 Accelerated Procedure).
The notification can be submitted even before abinding agreement between the parties is made.

3.2 Type of Agreement Required Prior to
Notification

No definitive agreement binding the parties isrequired prior to the notification. The parties cannotify the JFTC on the basis of an agreement
at an earlier stage, such as by a letter of intent
or memorandum of understanding. The JFTC
even regularly accepts filings with less formal
agreements; however, in such cases, it requests
a notifying party to submit a draft or other documents indicating that the parties have a goodfaith intention to consummate the transaction. In
such cases, the notifying party needs to provide
a signed binding agreement to the JFTC as soonas said agreement is executed.

3.3 Filing Fees

No filing fees are required.

3.4 Parties Responsible for Filing

In share acquisitions and business/asset transfers, the acquiring party is responsible for filing.
In other types of transactions as noted in 2.3
Types of Transactions, all the parties are obliged
to jointly file a notification.

3.5 Information Included in a FilingTo file a notification with the JFTC, a company
must comply with the prescribed format, which
can be downloaded from the JFTC’s website.
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It should be noted that different forms are set
out for different types of transactions. The notification form and the materials required to be
attached must be completed in Japanese, whilesummary translations are accepted in generalregarding additional information requested fromthe JFTC on a voluntary basis.
The information to be included in the notification
is as follows:• a brief explanation of the purpose, background and method of the transaction;• descriptions of the notifying company group,
such as domestic sales, assets and the major
business of each company involved;• high-level market information, including typesof products or services subject to horizontal
overlap or vertical relationships between theparties; and• the market ranking and market share of the
major players with which the parties have ahorizontal or vertical relationship.
Certain documents must be attached, depending on the type of transaction, such as a copyof the definitive agreement, financial statements
and annual reports of the notifying party, a list ofmajor shareholders, or the minutes of the shareholder meeting or board meeting that approves
the transaction. If the filing is made by an attorney on behalf of the notifying party, a power ofattorney is required.
In addition to the required information, the JFTC
often requests – usually on a voluntary basis –additional materials in order to review the transactions substantially, such as:• definitions of the product and geographic
markets;

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Furthermore, the parties’ internal documents
can be requested by the JFTC, including presentation materials, the minutes of meetings suchas board of directors’ meetings, materials usedin analysis and decision-making processes, andemails of the persons concerned, which may
refer to synergies, effects or competitive concerns, typically at a later stage of the review.
Although the documents to be submitted are notrequired to be certified, notarised or apostilled,certifications by the company representative are
required for copies of certain documents.

3.6 Penalties/Consequences ofIncomplete Notification

The JFTC will not accept a notification if it isdeemed to be incomplete, in which case it may
recommend the parties to withdraw and refile
the notification once amended.
Nevertheless, prior to said formal notification,
parties can engage in a pre-notification consultation, in which a draft notification is submitted
to the JFTC for review (a so-called draft check).
This draft check process usually takes between
a few days and a couple of weeks. If a submitted draft notification is deemed incomplete, the
JFTC can request the parties to amend the draft
further.

3.7 Penalties/Consequences ofInaccurate or Misleading Information

Filing inaccurate or misleading information is
subject to a criminal penalty of up to JPY2 mil-

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

lion, although no such penalty has yet been
imposed, as far as is known.
In addition, the JFTC can issue a cease-anddesist order at any time if it finds significant
false or misleading information in a notification,
regardless of the time limit of its ability to issue
an order. In other words, the JFTC can overturn its clearance decision at any time if there
is significant false or misleading information ina notification.

3.8 Review Process

It should be noted that the parties concerned
can consult voluntarily with the JFTC in advancethrough the pre-notification process. When the
JFTC accepts a formal notification, the statutory
waiting period will commence (Phase I review).
Phase IThe JFTC has 30 calendar days from the dateof a formal acceptance to review the transaction. The party/parties can request the authority
to shorten the waiting period on a discretionary basis; in practice, the period is shortenedin a large number of cases. Please note that arequest for information from the JFTC does notsuspend nor reset the 30-day review period.
If the JFTC comes to the conclusion that thetransaction in question will not substantiallyrestrain competition, the clearance will be granted through a written decision stating that the
JFTC will not issue a cease-and-desist order (a“Clearance Letter”).
If the JFTC determines that it is necessary to
conduct a more detailed review, the Phase II
review will be triggered by officially requiring thefiling party/parties to submit the necessary information or materials, which is called a “Request
for Report, etc”.
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Phase IIAt the initiation of Phase II, the JFTC discloses
the facts of its review and seeks public comments on its website. The authority must conclude the Phase II review within either 120 calendar days from the date of the JFTC’s acceptanceof the notification or 90 calendar days from thedate of acceptance of all the responses to theRequest for Report, etc, whichever is later. In
practice, it usually takes several months or evenmore than a year for the JFTC to formally accept
all the responses to the Request for Report, etc.
While the suspensive effect is not applicable for
the Phase II review period, in practice the partiesare recommended to refrain from completing thetransaction until the clearance is granted.
If, following a Phase II review, the JFTC findsthat the transaction will not substantially restrain
competition, it will grant the clearance by issuinga confirmation letter stating that the JFTC will
not issue a cease-and-desist order on the transaction. When finding that the transaction could
substantially restrain competition, the JFTC will
afford the filing party an opportunity to express
their opinions (including a proposal of remedies)and submit evidence before the JFTC’s final
decision on whether to issue a cease-and-desist
order. In any case, the results of the review will
be made public.

3.9 Pre-notification Discussions With
Authorities

Parties can discuss issues on a voluntary basiswith the JFTC by means of a pre-notification
consultation. During the consultation, the parties
can submit written explanations concerning an
overview of transactions and (potential) competitive issues, and can discuss substantive issues
including market definition and any other competitive concerns (such as high market shares or

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someyalack of strong competitive pressure from current
or potential competitors).

4. Substance of the Review

The period of pre-notification depends mainlyon the intention of the notifying parties. For
instance, if the parties ask the JFTC just toreview the draft of the formal notification, it willtake only a few days, while in the case of complicated transactions, it is expected to take several
months or more.

The JFTC examines whether a business combination is likely to result in a “substantial restrictionof competition in a certain market”, which meansthat competition itself is significantly reduced tosuch an extent that a particular business operator or group of business operators can control amarket by determining prices, quality, quantityand other competitive parameter(s) at their own
volition.

The JFTC and the notifying parties regularly
communicate confidentially in this process. If theparties have already publicly disclosed the transaction, the JFTC may contact their competitorsand customers in order to obtain their opinions
about the transaction.

3.10 Requests for Information During the
Review Process

The JFTC can request the parties to provide further information at any time during the review
process. The amount and content of the information requested depend on the transaction inquestion.
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 torun only when the JFTC accepts all the necessary information requested in the forms of theRequest for Reports, etc.

3.11 Accelerated Procedure

The AMA does not technically provide a shortform or fast-track procedure in terms of thereview process. 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.

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4.1 Substantive Test

The Merger Guidelines, mentioned in 1.1 Merger
Control Legislation, classify business combinations into horizontal, vertical and conglomeratebusiness combinations, and clarify the factors
to be taken into account and the frameworkof determining whether they may substantiallyrestrain competition for each type of businesscombination. According to the Merger Guidelines, the JFTC takes the following factors into
account in assessing the (pro-/anti-) competitiveeffect of the transaction:• competition in the relevant market: numberof competitors, market share, competitive
landscape, supply capacity of competitors,
competition in R&D, characteristics of themarket (whether so-called direct or indirect
network effects are at work or multifaceted
markets through platforms), etc;
• imports: barriers for importing, problems in
distribution, substitutability with imports, etc;
• new entry to the market: barriers for entry,
degree of entry possibility;• competitive pressures from adjacent markets:competing products, geographically adjacentmarkets;• competitive pressure from customers: competition among users, ease of switchingsuppliers;

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya• comprehensive business capabilities of theparties in question;• economic efficiencies;• financial conditions of the parties in question;and• scale of the relevant market.
The Merger Guidelines set forth the safe harbour based on the Herfindahl-Hirschman Index(HHI). In principle, the JFTC does not conduct
a substantive examination of a business combination that falls below the thresholds of thesafe harbour.

4.2 Markets Affected by a Transaction

The JFTC defines relevant markets that are
affected by the business combination from theperspective of the scope of the product and thegeography by considering the substitutability forcustomers and, if necessary, suppliers.
The JFTC will use the factors described in the
Merger Guidelines to define a relevant market.
The Merger Guidelines clearly state that the geographic market may extend beyond the bordersof Japan, depending on the international natureof the relevant business. In fact, in some cases,
the JFTC has defined the global market as therelevant market.
The Merger Guidelines also establish safe harbours for three categories of business combinations, each of which is subject to a specific safe
harbour:• horizontal;• vertical; and• conglomerate.
The JFTC believes that there is usually little orno likelihood of competition being substantiallyrestricted when a business combination meets
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the requirements of a safe harbour, so there is noneed to conduct a detailed examination. In sucha case, the JFTC does not generally conduct theexamination described in 4.1 Substantive Test.
Horizontal Combinations
The safe harbour standards for horizontal business combinations are as follows:• the HHI after the business combination is not
more than 1,500;• the HHI after the business combination ismore than 1,500 but not more than 2,500,
while the increment of HHI is not more than250; or• the HHI after the business combination ismore than 2,500, while the increment of HHI
is not more than 150.
If a horizontal business combination exceeds thesafe harbour standards, the JFTC will examine
whether it would substantially restrict competition in a relevant market through the test
described in 4.1 Substantive Test.
In addition, the Merger Guidelines clarify that,in light of past cases, if the HHI after the business combination is 2,500 or less and the market
share of the business group after the businesscombination is 35% or less, the risk of substantially restricting competition is generally considered to be small.
Vertical and Conglomerate Combinations
The safe harbour standards for vertical or conglomerate business combinations are as follows:• the market share of the parties after the
combination is not more than 10% in all the
relevant markets in which the parties areactive; orJAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya• the HHI is not more than 2,500 and themarket share of the parties after the business combination is not more than 25% in all
the relevant markets in which the parties areactive.
As with the horizontal business combination
described above, even if a vertical or conglomerate business combination does not fall within
the safe harbour standards described above, itdoes not immediately mean that said businesscombination would likely substantially restrain
competition.
In addition, if the HHI after the business combination is 2,500 or less and the market share of
the parties’ group after the business combination is 35% or less, the possibility that a business 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 the JFTC will conduct a further review on the matter if one of theparties has a potentially strong competitive power due to its assets (including important data andintellectual property rights) or any other reason,even if the business combination satisfies thesafe harbour standards.

4.3 Reliance on Case Law

Regarding merger review, the JFTC basicallydefines the relevant market in accordance with
its previous review cases, some of which are notdisclosed to the public. However, if there are
significant changes to the premise of the definition of the relevant market (such as innovation
or development of an adjacent product market),
the JFTC may take them into consideration.
The JFTC basically does not depend on thedecisions of competition authorities in other
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jurisdictions, such as the EU Commission, US
Federal Trade Commission or US Department ofJustice. Nevertheless, if the JFTC has no previous case in the field of the transaction, it may
use such decisions as references to define therelevant market.

4.4 Competition Concerns

The JFTC examines any kinds of competition
concerns that may cause substantial restriction
on competition in the relevant market, including:• unilateral effects;• co-ordinated effects;• conglomerate or portfolio effects;• vertical concerns; and• the elimination of potential competition.
Traditionally, unilateral and co-ordinated conduct possibly arising from horizontal businesscombinations has occupied a large portion of
the JFTC’s concern, since a horizontal businesscombination would basically reduce the number of competitors in the relevant market andthus potentially have a direct negative impact
on competition.
However, this does not mean that the JFTC has
competition concerns only in horizontal businesscombinations. Actually, the JFTC has also conducted numerous investigations on other competition concern matters, and there are somecases in which it has conditionally approved
vertical business combinations as long as theparties undertook remedies. Furthermore, insome cases, the JFTC has assessed conglomerate or portfolio effects and other kinds of anticompetitive effects.

4.5 Economic Efficiencies

In examining competition concerns, the JFTC
takes economic efficiencies into consideration.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

However, as stated by the Merger Guidelines,
the JFTC considers that the improvement ofefficiency must be an inherent outcome of thebusiness combination and must be passed on
to consumers through lower product prices,
improved quality, and so on. Therefore, the JFTC
tends to consider that the improvement of efficiency alone is not likely 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 somecases, such as industrial policy and other issuesof public interest, the JFTC is not bound by thesekinds of concerns.
When a foreign investor (non-resident individual,
corporation established under foreign laws andregulations, etc) makes inward direct investments, etc (eg, the acquisition of shares or voting rights of a domestic listed company resulting
in an investment ratio or voting right ratio of 1%
or more), or specified acquisitions (ie, the acquisition by a foreign investor of shares or equityof a domestic unlisted company from anotherforeign investor), and the business operated by
the investee falls within a designated industry
involving national security, etc, in principle, priornotification must be submitted to the Minister ofFinance, etc, via the Bank of Japan within thesix months before the intended transaction or
activity.
These rules are set forth in the FEFTA and areseparate from the merger control rules.

4.7 Special Consideration for Joint
Ventures

Generally speaking, there is no special consideration for joint ventures under the AMA and420

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the Merger Guidelines. However, 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 between the remaining
businesses of joint venture partners (“spillover
effect”).
With respect to a notification requirement, if thetransaction involves multiple kinds of businesscombinations, each stage of the business combination may constitute a separate businesscombination subject to a pre-notification (in triangular merger cases, for instance, parties will
likely have to file separate notifications for shareacquisition and for merger). Likewise, if a joint
venture transaction comprises multiple businesscombinations subject to pre-notification, parties
have to file notifications separately on the basisof each business combination.

5. Decision: Prohibitions andRemedies
5.1 Authorities’ Ability to Prohibit orInterfere 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 thecompletion of examination) and issue a ceaseand-desist order (prohibition against the consummation of the transaction after the completion of examination).
Regarding an urgent injunction order, the JFTC
must show that the business combination would
likely substantially restrain competition, and thatthe consummation of a business combination
would provoke irreversible damage to competition. The JFTC must file a petition for an urgent
injunction order with the Tokyo District Court andJAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

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 expeditiously; if the court approves the JFTC’s request,
it will issue the order.
A cease-and-desist order is an administrative action to prohibit a business combinationtransaction or to order a party to take measures
to eliminate the likelihood that the transaction
would substantially restrict competition after the
JFTC completes its review. The order includes
business divestitures, stock transfers and business transfers to eliminate substantial restraints
on competition. The JFTC can issue a ceaseand-desist order on its own (without any priorreview or approval by a court), either before orafter the consummation of a planned businesscombination.
The recipient of a cease-and-desist order issued
by the JFTC can file an action seeking cancellation of said order with the Tokyo District Court
within six months from the order being issued.
In fact, the JFTC has not issued a cease-anddesist order for more than 40 years. In practice,if the JFTC informally indicates its competition
concern to parties, the parties often propose aremedy, seeking the JFTC’s clearance, or voluntarily withdraw their notifications. Therefore, the
JFTC has not faced the need to issue a ceaseand-desist order on business combinations.

5.2 Parties’ Ability to Negotiate
Remedies

The parties in question may discuss remedies
with the JFTC at any stage, including during prenotification, the Phase I review process and thePhase II review process. If the parties propose aremedy, the JFTC will review the business com-

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bination on the premise that the proposed remedy will be implemented.
During the pre-notification stage, the JFTC andthe parties basically discuss the form and content of notification and the competition issuesof the proposed transaction, but there are a few
cases in which the parties and the JFTC negotiate a remedy in response to the JFTC’s competition concerns.
Typical Remedies
The Merger Guidelines state that structural
remedies are the most effective remedies, butbehavioural remedies can also be accepted.
Structural remedies include the transfer of allor part of the business units of either party, thewithdrawal of a certain relationship with a company belonging to the parties’ group (eg, suspension of the holding of voting rights, reductionof the ratio of voting rights, or suspension of the
concurrent holding of executive positions), andthe withdrawal of the business alliance with athird party.
On the other hand, behavioural remedies include
the elimination of discriminative terms and conditions or refusal of supply, cost-based trading,a Chinese wall on the exchange of secret information, etc.
The parties may discuss with the JFTC what
remedies are appropriate to eliminate the JFTC’s
concerns. Upon the request of the party/parties
after the consummation of the transaction, the
JFTC may approve a change of content of theremedies or even a termination of the remedies
as a result of assessing the necessity of continuing the remedies in light of changes in competitive conditions after the business combination.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

5.3 Legal Standard

The legal standard for a prohibition (ie, ceaseand-desist order) is whether a planned businesscombination 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 competition is eliminated so that the transaction can beapproved by the JFTC. The Merger Guidelines
supplement this point.
The Merger Guidelines also state that the JFTC
considers and examines what measures areappropriate for solving the likelihood of substantially restraining competition on a case-by-casebasis for each business combination. The Merger Guidelines also clearly state that a structural
remedy is the most effective remedy and thus
should be taken in principle, such as business
transfers. However, in practice, a behavioural
remedy could be acceptable in many cases, if
it is appropriate to resolve the JFTC’s competition concern.

5.4 Negotiating Remedies With
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 combination. However, as an exception, remedies canbe 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 toprohibit the parties from implementing the busi422

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ness combination, or it may take measures toeliminate the substantial restraint of competition
caused by the business combination.

5.6 Issuance of Decisions

When the JFTC concludes that the businesscombination will not substantially restrict competition, it will issue a notice to the parties that
it will not issue a cease-and-desist order. This
notice itself is not available to the public.
Regarding confidentiality, please see 7.3 Confidentiality.

5.7 Prohibitions and Remedies for
Foreign-to-Foreign Transactions

The JFTC may issue a clearance subject to remedies for foreign-to-foreign transactions. It has
issued conditional clearance for the following
foreign-to-foreign transactions:• Korean Air Co., Ltd./Asiana Airlines Inc.
(FY2023);• Google LLC/Fitbit, Inc. (FY2020);• JX Metals Deutschland GmbH/H.C. Starck
Tantalum and Niobium GmbH (FY2018);• Qualcomm/NXP Semiconductors (FY2017);• Dow Chemical/DuPont (FY2016); and• Abbott Laboratories/St Jude Medical(FY2016).

6. Ancillary Restraints and Related
Transactions
6.1 Clearance Decisions and Separate
Notifications

Neither the AMA nor the Merger Guidelines give
express guidance regarding ancillary restraints
or related arrangements. However, the JFTC
may carry out an in-depth assessment regarding ancillary restraints in its substantive review.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

If, in the course of the review process, the party
reports ancillary restraints and the JFTC still
issues clearance without raising any competition
issue, it would be unlikely that the JFTC would
challenge the transaction after the issuance ofclearance in a practical sense. However, ancillary restraints are still subject to challenges by
the JFTC in theory, even after the clearance.

7. Third-Party Rights,
Confidentiality and Cross-Border
Co-operation
7.1 Third-Party Rights

As a general rule, the AMA provides that any
person who believes there is an act in violationof the AMA may make a report to the JFTC andask for appropriate measures to be taken. While
there is no formal or statutory procedure, any
third party may informally submit any report orcomplaint to the JFTC at any time, including
customers and competitors.
As a part of the formal procedure of a merger
review, the Merger Review Policies provide that,at the beginning of a Phase II review, the JFTC
invites the public to offer their written commentson the contemplated transaction within 30 daysof the announcement on the JFTC’s website.
The JFTC is not obliged to respond to a third
party’s comment but will normally take information provided by a third party into account in thesubstantive review. Furthermore, if the report
made by any person under the AMA meets therequirements and qualifies as notice as provided
in the AMA and the Rules on Investigations by
the Fair Trade Commission (established in October 2005, and most recently amended in March
2021), the JFTC shall notify such a person about
its decision as to whether it will take appropriate
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measures for the case reported in accordancewith the AMA.

7.2 Contacting Third Parties

The JFTC typically contacts third parties suchas competitors or customers by sending written questionnaires or requesting oral interviews
as a part of its review process if the plannedtransaction is publicly announced or the investigation proceeds to the Phase II review. Also, as
stated in 7.1 Third-Party Rights, a third party will
be invited to submit comments in writing at the
beginning of a Phase II review.
The JFTC tends to make these inquiries proactively when it sees issues in the substantive
review. In addition, the JFTC sometimes conducts a kind of “market test”, in which it asks forthe opinions of third parties for the purpose of
assessing the feasibility of proposed remedies.

7.3 Confidentiality

During the Period of the JFTC’s Review
The JFTC does not make information available
to the public until the initiation of the Phase II
review. Therefore, in the course of a merger
review, the existence of a fact of filing and any
confidential information or business secrets thatconsist of filing documents, supporting documents or oral guidance to the JFTC will not be
publicly disclosed if the case is cleared before
going to a Phase II review.
If the case is subject to a Phase II review, the
JFTC invites the public to offer their writtencomments on the contemplated transaction, atthe beginning of Phase II (see 7.1 Third-Party
Rights). The description of the transaction will
be made public in such cases.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

Disclosure for Statistical Purposes or as aPrecedent Case
Aside from the slight chance of the JFTC issuing a cease-and-desist order, which will fully disclose the transaction, the JFTC announces theoutcome of its review on cases subject to thePhase II review.
In addition, the JFTC annually publishes a reportof the major business combination cases on its
website around June, which provides a summary of merger review cases and serves as a usefulreference. These cases are selected from those
cleared in Phase I as well as Phase II, and theparties will be contacted by the JFTC before thepublication, to confirm whether the publication
contains any confidential information.
Since 2017, the JFTC also announces a list of
the cases it has cleared each quarter. The listshows each filing date, the parties’ names, thedate of clearance and whether it was short-track(ie, whether the statutory waiting period was
shortened).

7.4 Co-operation With Other
Jurisdictions

The JFTC has entered into agreements for cooperation with various overseas authorities,
including the European Commission and the US
Federal Trade Commission and Department ofJustice. Article 43-2 of the AMA expressly provides that the JFTC may exchange information
with authorities in other jurisdictions for specific transactions if doing so is not against thenational interest, and if the authorities of otherjurisdictions can maintain the confidentiality ofsuch information.
In practice, if the JFTC wishes to disclose theinformation of a specific transaction to any

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foreign authority, it obtains the parties’ written
waiver in advance.
While the JFTC believes that co-operation withother jurisdictions will be beneficial in multi-jurisdiction filing cases, as a practical matter, whether
the JFTC works closely with other jurisdictions
depends on the specific case and regulators.

8. Appeals and Judicial Review
8.1 Access to Appeal and Judicial
Review

Pursuant to the provisions of the AMA, if a party
is unsatisfied with a cease-and-desist order, it
may bring an action against the JFTC, seeking
the cancellation of such order, before the Tokyo
District Court. Practically speaking, however,
it is unlikely that a cease-and-desist order will
be issued in merger cases, which results in theunavailability of judicial review in merger review
cases.

8.2 Typical Timeline for Appeals

An action seeking cancellation of a cease-anddesist order must be filed with the Tokyo District
Court within six months.
Since there is no precedent of appeal against
a cease-and-desist order on a business combination after the amendment of the AMA thatprovides for the current system, the timeline isdifficult to predict. However, it could take several years if the non-prevailing party appeals thecease-and-desist order, from the first instance
until a court judgment is finalised. Considering
this, a party that plans to bring an action needs
to consider petitioning for a stay of execution of
the order in accordance with the Administrative
Case Litigation Act.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

8.3 Ability of Third Parties to Appeal
Clearance Decisions

There is no precedent in which a third party has
successfully appealed against a clearance decision or a cease-and-desist order. However, any
third party may bring an action against a ceaseand-desist order as long as it has standing tosue.

9. Foreign Direct Investment/
Subsidies Review
9.1 Legislation and Filing Requirements

Article 27 of the FEFTA regulates that a foreign
investor intending to make an inward direct
investment specified by Cabinet Order shallnotify the Minister of Finance and the pertinent
minister for the business in advance of the business purpose, the amount and time of making
the investment, and other items regulated in theOrder. The Cabinet Order determines the list of
business sectors for which prior notification is
mandatory.

10. Recent Developments
10.1 Recent Changes or Impending
Legislation

In December 2019, the JFTC revised the Merger
Guidelines and the Merger Review Policies. This
revision focuses on business combinations indigital markets, which can be outlined as follows.
• Definition of product and geographical market
in a platform service: the JFTC may define a
relevant market consisting of multiple segments of customers (eg, users and shops inthe case of a credit card) as one or multiple
markets. In doing so, the JFTC may take
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into account various elements, including thedegree of scope of products or region forusers’ replacement in competition of qualityof the service, and other elements specificto digital service, such as type of service orfunctions available.
• Substantial restraint of trade: in a horizontal
business combination, the JFTC will takenetwork effects into account where they are
significant, and the difficulty of switching due
to network effects and/or a high switching
cost, among other things. In vertical or conglomerate business combinations, the JFTC
will consider – in a combination of upstream
and downstream players that both deal withdata – whether the transaction may lead toa refusal to supply data to other companies.
In a purchase of start-ups, the transaction
would hinder new entry to the market (“killer
acquisition”). The JFTC has also explained
how to assess the importance of data fromthe competition perspective.
• In a 2019 revision, the JFTC announced that
it will proactively review cases that do notmeet the threshold for notification if the consideration for the acquisition is large and it isexpected to have an impact on the Japanesemarket. Thus, the JFTC explains that voluntary consultation will be encouraged for suchcases, as outlined in 2.1 Notification.

10.2 Recent Enforcement Record

According to the JFTC’s announcement in June
2023, 306 notifications for merger control werefiled in FY2022, with no cases going to Phase II
review, no cases leading to the JFTC imposing
a fine (for failing to file), and seven cases being
withdrawn in the Phase I review period. With
respect to the number of foreign transactions, 28transactions between foreign businesses were
notified to the JFTC in FY2022.

JAPAN Law and PracticeContributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Hiroko Fukushima, Ikeda & Someya

10.3 Current Competition Concerns

In April 2024, the JFTC revised the “Guidelines Concerning the Activities of Enterprises,
etc, Toward the Realisation of a Green Society
Under the Antimonopoly Act” compiled in 2023,
in order to prevent anti-competitive conduct that
deters the realisation of a Green Society and toraise transparency and the predictability of theapplication and enforcement of the Act for businesses working toward a Green Society.
According to these guidelines, a large numberof business combinations aimed at strengthening R&D capabilities and streamlining businessactivities, among other purposes, in their efforts
toward the realisation of a Green Society have

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pro-competitive effects. However, if a businesscombination is to substantially restrain competition in a market despite its purpose being thestrengthening of R&D capabilities that can contribute to a reduction of greenhouse gases, it
may not only reduce users’ choices and thereby
impose a disadvantage on them, such as a priceincrease, but it may also cause the parties tothe business combination to lose their incentives
to appropriately deal with demand and consequently lose opportunities to grow further. Fromthese perspectives, the JFTC clarified that the
AMA prohibits any business combination that
may substantially restrain competition in a market.

JAPAN Trends and Developments
Trends and Developments
Contributed by:
Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee
Ikeda & Someya

Ikeda & Someya was founded in Tokyo in October 2018 by two lawyers, Tsuyoshi Ikeda andTakaaki Someya. The founding partners previously worked at the Japan Fair Trade Commission (Tsuyoshi Ikeda) and the Consumer Affairs
Agency (Takaaki Someya), and used this experience to form a cutting-edge antitrust law practice, handling a number of large-scale cases in-volving business alliances, on-site inspections
by the Japan Fair Trade Commission and consumer law. Ikeda & Someya also has 16 otherlawyers with experience at regulatory agencies or in-house at major companies. The twofounding partners’ comments have been citedin various newspapers, magazines and media,
including the Nikkei.

Authors
Tsuyoshi Ikeda is a partner at
Ikeda & Someya. He previously
served as an investigator at theJapan Fair Trade Commission,
where he participated in around20 dawn raids, prepared theimplementation of the leniency system, andinvestigated a case involving standard
essential patents. He is noted for his successin the most cutting-edge cartel, merger review
and other antitrust/competition cases. Tsuyoshi
is registered as an attorney in New York andCalifornia.

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Aya Yasui is experienced ininternational transactions andlegal consultations forbusinesses, with a particularfocus on antitrust. She
previously worked at a US law
firm and a major Japanese law firm, and has
also been seconded to major global
companies, in addition to serving as a memberof the Environmental Committee of the Tokyo
Bar Association for more than ten years. She
also has legal experience as in-house counsel
at an automobile manufacturer as General
Manager in charge of global compliance. Aya
can provide advice on legal risks in cuttingedge fields by utilising her extensive businessexperience and language skills.

JAPAN Trends and Developments

Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya

Muneharu Yamamoto gained
extensive experience at a majorinternational law firm in a wide
range of corporate legal matters,with a focus on representing
domestic and foreign companies
in litigation and disputes. He also gained
familiarity with the US legal system while
attending law school in the US. Making use ofsuch experience, Muneharu provides practicaladvice that is tailored to business in the fieldsof antitrust law, competition law and consumer
law, while keeping in mind subsequent legal
developments that may be anticipated fromthe circumstances of each case.

Ikeda & Someya
Yurakucho ITOCiA 16th floor
2-7-1, Yurakucho
Chiyoda-ku
Tokyo
Japan
Tel: +81 50 1745 4000
Fax: +81 3 6261 7700
Email: tsuyoshi.ikeda@ikedasomeya.com
Web: www.ikedasomeya.com

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Myongwon Lee is committed toassisting clients to the best of
her ability in both domestic andinternational matters. In college,
she was a member of a seminar
specialising in antitrust law andhas since further deepened her knowledge inthis field. She spent her high school years in
Switzerland, where she was exposed todiverse cultures. While in law school, she wasactively involved in international activities,
including participating in a law school
programme in the US. Myongwon has also
been involved in the development of AI
contract review services and is knowledgeable
about the legal technology field.

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Exploring the Merger Review Policy of theJapan Fair Trade Commission
In Japan, the Anti-Monopoly Act (AMA) governs
merger control matters, including the merger
review process conducted by the Japan Fair
Trade Commission (JFTC), which is the competition authority in Japan. In addition, the JFTC
publishes the Guidelines to Application of the
AMA Concerning Review of Business Combination (the “Merger Guidelines”) and the Policies
Concerning Review of Business Combination(the “Merger Review Policies”).
To grasp the recent trends of the merger review
process conducted by the JFTC, it is importantto understand the latest versions of the Merger Guidelines and the Merger Review Polices,which reflect the JFTC’s recent attitude regarding merger review. It is worth noting that therevised Merger Review Policies explicitly recommend a party to a merger to make a voluntary
consultation with the JFTC, even if the proposed
merger transaction does not meet the thresholds set out under the AMA, in cases where thetotal consideration for an acquisition exceeds acertain amount and would likely affect domestic
consumers in Japan – see Google/Fitbit (Merger
review process), below.
This revision indicates that the JFTC would
likely examine a merger transaction that does
not meet the jurisdictional threshold; in fact, the
JFTC conducted merger reviews on at least twocases in 2019 and 2020 (see Google/Fitbit andM3/Nihon Ultmarc, below). Also, when a corporation plans a business combination that does
not require notification because the domestic
sales, etc, do not meet the standards, and said
corporation consults with the JFTC concerning
said business combination plan by showing thespecific contents thereof, the JFTC may exam-

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ine a merger transaction (see Furukawa Battery/
Sanyo, below).
Furthermore, in understanding the framework ofmerger review in Japan, it is important to understand the merger review flow in a practical sense,
rather than the formal process stipulated under
the law. Although the AMA literally stipulates amerger review process comprising two review
steps (Phase I and Phase II), the JFTC has rarely
initiated the Phase II review process. According
to a JFTC publication in June 2023, no case proceeded to Phase II review from 1 April 2022 to 31
March 2023 (FY 2022), while the JFTC received
306 notifications (a 9.2% decrease from FY2021) from parties during the same period (seethe official website of the JFTC for details: www.
jftc.go.jp, available in Japanese only).
There are two reasons why so few cases haveproceeded to the Phase II process:• first, a party to a merger has the right towithdraw a notification at its discretion, andthus can withdraw the notification and refile a
notification later if it hopes not to proceed to
the Phase II process; and• second, in almost all cases, the parties andthe JFTC discuss potential competitive
concerns regarding the proposed transaction
during the pre-notification consultation, andthe parties file notifications as a mere formality after they resolve the JFTC’s competition
concerns.
In some cases, the parties and the JFTC evensubstantially discuss potential remedies proposed by the parties during the pre-notification consultation period (see Z Holdings/Line,below).

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Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya

Google/Fitbit
Overview
The JFTC published the following facts on its
official website:• on 1 November 2019, Google LLC announced
that it planned to acquire all shares in Fitbit, Inc., the manufacturer of a watch-typewearable device, by the method of triangularmerger;• although this transaction did not meet thethresholds under the AMA, the JFTC decided
to conduct a merger review on the grounds
that the transaction was significantly large
and would likely affect consumers in Japan;• the JFTC investigated this “below threshold”
transaction in the same way as it reviews
cases that meet notification thresholds – itsreview included interviews with the parties’
competitors and information exchange withforeign authorities (including the European
Commission); and• on 14 January 2021, the JFTC cleared thetransaction by concluding that it would not
substantially restrain competition based on
the behavioural remedy proposed by the parties.
Merger review process
Under the revised Merger Review Policies, aparty to a merger that does not meet the relevant jurisdictional threshold under the AMA is“recommended” to have a voluntary consultation with the JFTC if the merger meets the following conditions:• the total consideration for the acquisition(transactional value) will exceed JPY40 billion;and• the scheduled transaction is deemed to affectdomestic consumers, including if:

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CHAMBERS.COM(a) the business base or research and development base of the acquired company islocated in Japan;(b) the acquired company conducts sales
activities targeting domestic consumers inJapan, such as creating a Japanese website or using Japanese brochures; or(c) the total domestic sales of the acquiredcompany exceed JPY100 million.
In this transaction, based on the information published by the JFTC, it is likely that the
total consideration for the acquisition of Fitbit
exceeded the threshold of JPY40 billion. However, it is not clear from the JFTC’s announcement whether Google and/or Fitbit voluntarily
contacted the JFTC prior to their announcementof this transaction.
One of the takeaways from this case is that amerger transaction that is not subject to notification thresholds would still likely be subject to amerger review by the JFTC, which could have an
impact on the schedule of a global filing project.
Therefore, it should be noted that a party to amerger needs to analyse whether its proposedtransaction will meet the threshold for a recommended voluntary consultation in addition to thethreshold for a formal notification.
Vertical relationship and conglomerate effect
As Google and Fitbit had no significant competitive issues in their horizontal relationship, the
JFTC focused its examination on three types ofvertical relationships, such as the relationshipbetween the operation system for a smartphone
provider (as an upstream service) and the watchtype wearable device manufacturer (as a downstream product). The JFTC also raised the issueof whether a health-related database to be possessed by the parties would substantially dimin-

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Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya

ish competition in the digital advertising market
as a conglomerate effect.
Google and Fitbit proposed behavioural remedies to address the JFTC’s concerns regarding both the vertical and conglomerate effects.
Regarding the vertical relationships, for instance,
the parties promised not to refuse to provide anoperation system for smartphones to watchtype wearable device manufacturers other thanFitbit for at least ten years. Concerning the conglomerate effect, the parties promised not to use
the health-related database for digital advertising services for at least ten years.
Takeaways
This is the first public case in which the JFTC
investigated a merger on a consolidation thatfell below the notification thresholds since theMerger Review Policies were amended in 2019.
It would be sensible to assume that the JFTC
will investigate future merger cases involving Big
Tech companies, regardless of whether or not
the transaction meets the notification thresholds. This case is a good example of the JFTC’s
active attitude towards enforcement in verticaland conglomerate mergers.

certain concern regarding restraint of competition, and therefore opened a merger review
process on its own, including oral interviews
with the parties’ competitors; and• on 24 October 2019, the JFTC determinedthat this transaction would not substantiallyrestrain competition based on the behavioural
remedies proposed by the parties.
Merger review process
Despite the facts that this transaction did notmeet the jurisdictional threshold and was not
subject to a notification requirement, and thatthe parties had already consummated the transaction, the JFTC still started a merger review
on whether it would likely substantially restrain
competition in certain relevant markets.

M3/Nihon Ultmarc
Overview
The JFTC published the following facts on its
official website:

The AMA does not literally prohibit the JFTC fromconducting a merger review on a transaction that
does not meet the threshold under the AMA but,in practice, there was no precedent in which the
JFTC examined such a transaction before thiscase. In this context, this case would be considered the leading case ruling on the JFTC’s power
or authority (Google/Fitbit is considered to beconsistent with this precedent). It is also worth
noting that the JFTC started a merger review andimposed the behavioural remedy proposed by
the parties even though the parties had alreadyconsummated the transaction several months
previously.

• on 1 April 2019, M3, Inc., which operates
platforms that provide information on drugs,
announced that it had closed a transaction
to acquire all of the voting rights in Nihon Ultmarc Inc., which provides a medical information database;• although this transaction did not meet thejurisdictional threshold under the AMA andwas already consummated, the JFTC had a

Vertical relationshipIn this case, the JFTC intensively examined
whether the vertical relationship between thebusiness conducted by M3 (as an upstream
service) and the business conducted by Nihon
Ultmarc (as a downstream service) might cause
a substantial limitation on competition. Since M3
had a high share of 75% in the upstream market
as of 2019, the JFTC determined that M3 had

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Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya

sufficient capacity to implement input foreclosure against Nihon Ultmarc’s competitors, andthus this transaction would likely harm competition in the downstream market. The JFTC
also examined the conglomerate effect of thebundling supply of the parties’ services (see the
JFTC’s official website for details).

• the JFTC examined this case in response to
the party’s voluntary consultation, although
the case did not meet the statutory thresholdof filing requirement; and• in this case, the JFTC conducted an economic analysis based on actual sales results andother data the parties submitted to the JFTC.

To resolve these concerns, the parties proposeda behavioural remedy that included but was not
limited to the following:

Pre-notification consultation
The AMA prohibits merger transactions that
substantially restrain competition in a particular field of trade, regardless of whether or notthey are subject to notification. As noted above,
merger transactions that meet the notification
criteria based on domestic sales, etc, must filea notification before implementation. Even formerger transactions not subject to notification,
if a company consults with the JFTC, the JFTC
may review the transaction based on the policy
for handling merger transaction reviews. If there
is a concern about substantial restraint of competition in a particular field of trade in notified
cases or those consulted on despite being outside the notification criteria, the case may need
remedial measures for clearance. The JFTC may
also conduct a review ex officio.

• the parties promised to continue providing
drug information to competitors in the downstream market; and• the parties promised not to discriminate
against downstream competitors in the terms
and conditions of the provision of drug information.
Takeaways
This was the first case in which the JFTC madeit public that it had challenged a consummatedmerger. It is worth noting that the JFTC opened
an investigation for a consummated transaction just to investigate vertical and conglomerate concerns. In addition, this case shows the
JFTC’s interest in platform and data businesseven aside from the Big Tech companies.
It is also important to note that the proposed
remedies are supposed to remain in place for anindefinite period of time. The duration of behavioural remedies will be an important issue in remedy discussion in future cases as well, because
the JFTC cannot extend the remedy period after
the clearance decision.
Furukawa Battery/Sanyo
Overview
The JFTC published the following facts on its
official website:
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In this case, although the notification requirements were not met, the JFTC conducted amerger review following the procedures applicable to notifiable merger transactions because
the party presented the specific plans related tothis case and consulted the JFTC.
Horizonal relationship
The JFTC explains in the announcement that
there were many product areas in which theparties compete or transact, identifying andreviewing three markets of horizonal relationship among such products, which may have an
impact on competition:

JAPAN Trends and Developments

Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya• the production and sales of cylindrical NiCd
unit cells;• the production and sales of cylindrical NiCd
assembled batteries for emergency broadcasting systems; and• the production and sales of cylindrical NiCd
assembled batteries for interlocking repeatersof fire shutters.
In the assessment of substantial restraint ofcompetition, the JFTC found that there is competitive pressure from an “indirect” neighbouringmarket because customers are gradually changing from NiCd batteries to nickel hydride batteries, which puts a brake on the price increaseof NiCd unit cells, cylindrical NiCd assembled
batteries for emergency broadcasting systems,
and cylindrical NiCd assembled batteries forinterlocking repeaters of fire shutters.
Takeaways
In this case, the JFTC conducted an economic
analysis based on actual sales results and otherdata the parties submitted to the JFTC. The
JFTC assessed that the degree of competition
between the parties was limited and that there
was competitive pressure from a neighbouringmarket. As a result, the JFTC concluded that themerger in this case was not problematic.
Z Holdings/Line
Overview
The JFTC published the following facts on its
official website:• on 18 November 2019, Z Holdings Corporation (ZHD – a subsidiary of Japanese IT
giant SoftBank) announced that it plannedto acquire all shares in Line Corporation, themost well-known messenger application provider in Japan;

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CHAMBERS.COM• on the same date, ZHD and Line voluntarily
submitted a written explanation stating that
there was no competition issue on the shareacquisition and other relevant materials to the
JFTC, and started a pre-notification consultation;• on 14 July 2020, ZHD and Line filed a notification with the JFTC; and• on 4 August 2021, the JFTC granted a clearance conditional on behavioural remedies incertain markets.
Pre-notification consultation
ZHD and Line consulted with the JFTC between
18 November 2019 and 14 July 2020, with the
purpose of resolving the JFTC’s competition
concerns. While the parties spent eight months
in pre-notification consultation with the JFTC,
the JFTC took just 21 calendar days (12 business days in Japan) to review the transaction in
the Phase I process. Based on these facts, it isreasonable to state that the JFTC investigatedthe case substantially during the pre-notification
phase, including evaluating the proposed remedy. It would be fair to assume that the parties
filed the notification with a reasonable anticipation that the remaining procedure would be completed within 30 days.
In almost all cases, the JFTC addresses andresolves its competition concerns during the
pre-notification consultation process, and therefore rarely opens a Phase II process.
Digital platform market
The JFTC’s examination focused on news distribution services, advertisement-related businesses and code-based payment businesses
due to the competitive pressure of competitors,
customers or new entries, while there are manyother markets in which the parties have overlaps
or vertical relationships.

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It is worth noting that the JFTC evaluated themagnitude of competitive pressure from competitors in the code-based payment businessby taking the “indirect network effect” into consideration, since said business was considered
one of the multiple digital platform businesses
in which the parties and competitors operated.
Although the aggregate market shares of the parties in the code-based payment business wasapproximately 60%, the JFTC concluded that
this transaction would not substantially restrain
competition in the code-based payment business, based on the following behavioural remedy
proposed by the parties:• the parties promised to annually report thecompetition situation of the code-based payment business to the JFTC; and• the parties promised to remove exclusive
dealing conditions in the code-based payment business.
Takeaways
This case is an excellent example of a horizontal
merger with a significant combined market sharethat was cleared by the JFTC without any condition (for the free news supply business) or withrelatively lenient behavioural remedies (for thecode-based payment business). Even though
the parties’ consumers are general smartphoneusers, the JFTC did not have an opportunity tocollect comments from the general public as theparties successfully avoided the Phase II review.
Significant developments
On 16 June 2022, the JFTC released a statement
titled “Proactive promotion of competition policy
in response to socioeconomic changes such as
digitalisation: Co-operation and strengtheningof advocacy and enforcement” (the “Position
Paper”). The JFTC aims to enhance its response
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to changes in social economics, such as digitalisation, by considering enforcement and advocacy as the fundamental tools for creating andpreserving competitive environments.
The JFTC has outlined its plans to enhance theeffectiveness of advocacy. Instead of primarily relying on voluntary surveys and hearings,
the JFTC will exercise its investigative authority under Article 40 of the AMA, which grants
compulsory powers, when information gathering
becomes challenging.
On the other hand, the JFTC has outlined several
measures for the strengthening of enforcement
effectiveness.
• Firstly, in cases involving digital platform
operators, the JFTC recognises the need for
efficient and effective information gathering.
Even at the initial stages of individual investigations, the JFTC intends to widely publicise
the overview of cases and solicit informationand opinions from third parties, while carefully considering the potential impact of such
publicity on the review process.
• Secondly, for merger cases, especially thoserelated to digital markets, the JFTC will now
publicly disclose and invite opinions, regardless of whether the Phase II review process
has commenced or not. In 2022, the JFTC
solicited opinions in the case of Google LLC
and Mandiant, Inc and in the case of Microsoft Corporation and Activision Blizzard Inc.
• Thirdly, in the assessment of whether toinitiate an investigation in both antitrust andmerger cases, where information collection
has traditionally been conducted on a voluntary basis, the JFTC will exercise its investigative authority under Article 40 of the AMA
as needed.

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Contributed by: Tsuyoshi Ikeda, Aya Yasui, Muneharu Yamamoto and Myongwon Lee, Ikeda & Someya• Fourthly, to gain insights into the intentions,objectives, effects on stakeholders and future
market prospects of companies involved inmerger cases, particularly in digital market
contexts, the JFTC will request the submission of internal documents from the companies at the early stages of the examination. In
June 2022, the JFTC published a documentthat explains its practice regarding the scope,timing and manner of submission of suchinternal documents.
• Lastly, the JFTC emphasises the utilisation of
economic appraisal not only in merger cases
but also in investigations of suspected violations. In 2021, regarding a merger case ofstock acquisition in the silicon wafer market,
the JFTC found it appropriate to focus ona model based on the Cournot competition
model. On 31 May 2022, the JFTC publisheda document on the points to heed in submitting the reports and data for economic
appraisal.

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In summary, the JFTC aims to strengthen theeffectiveness of advocacy by exercising investigative powers when voluntary information collection becomes challenging. The JFTC also
intends to enhance enforcement effectivenessby increasing transparency in the examination
process, soliciting public input, requesting internal documents from companies, and utilising
economic analysis in both merger and violation
cases, particularly in the digital market context.