Silviase/jgov_v1.4_full_ann huggingface dataset:
If there is competitive pressure from customers deriving from the fact that the quantity of the product demanded is continuously and structurally falling well under the quantity supplied as a result of a decrease in demand for the product, it is possible that this will work as a factor to prevent the company group from freely exerting an influence on the price of the product, etc. to some extent.

## (6) Overall Business Capabilities

After the business combination, if the overall business capabilities of the company group-including its ability to procure raw materials, technical capabilities, marketing capabilities, creditworthiness, brand popularity, and advertising capability-increases, and if the competitiveness of the company increases substantially as a result of the combination and competitors are expected to experience difficulty in taking competitive action as a result, this should also be taken into consideration when determining the company’s impact on competition.

## (7) Efficiency

When improvements in efficiency, whether through economies of scale, integration of production facilities, specialization of factories, reduction in transportation costs or efficiency in research and development, is deemed likely to make the company group take competitive action after the business combination, this factor will also be considered to determine the impact of the business combination on competition.

Efficiencies to be considered in this case are determined from three aspects: (i) efficiencies should be improved as effects specific to the business combination; (ii) improvements in efficiencies should be materialized; and (iii) improvements in efficiency contribute to the interests of users.

Business combinations that create a state of monopoly or quasi-monopoly are hardly ever justified by their efficiency.

(i) Improvements in Efficiency Should Be Specific to the Business Combination

Improvements in efficiency should be specific to the business combination. Therefore, such factors related to the expected efficiency as economies of scale, integration of production facilities, specialization of factories, reduction in transportation costs, or efficiency in research and development such as next-generation technology and environmentally friendly capabilities cannot be achieved by other means that are less restrictive on competition.
(ii) Improvements in Efficiency Should Be Materialized

Improvements in efficiency should be materialized. This is analyzed, for example, using documents of internal procedures leading to the decision of the business combination, explanatory materials for shareholders and financial markets regarding the expected efficiency, and studies by external specialists concerning the improvement in efficiency.

(iii) Improvements in Efficiency Contribute to the Interests of Users The outcome of improvements in efficiency through the business combination must be returned to users through reduced prices of products and services, improved quality, the supply of new products, or efficiencies in research and development, such as next-generation technology and environmentally friendly capabilities. In this regard, in addition to the materials listed in (ii), these are to be analyzed, for example, as information related to improved capabilities that will bring effects such as a price reduction and of the history of actual price reductions, quality improvement and supply of new products being realized through competitive pressure from the demand and supply side.

(8) Financial Conditions of the Company Group

A. Poor Results, etc.

To evaluate the business ability of the company group, the financial conditions, such as whether the results of part of the company group or the business section in question are poor or not, are also taken into consideration.

B. When the Possibility that the Business Combination May Be Substantially to

Restrain Competition Is Usually Thought to Be Small

Whether or not a business combination has the potential to substantially restrain competition in a particular field of trade is determined by taking into comprehensive consideration all relevant determining factors in each of the specific cases. In the following cases, however, the possibility that the effect of a horizontal business combination may be substantially to restrain competition in a particular field of trade by unilateral conducts is usually thought to be small.

(a) A party to the combination has recorded continuous and significant ordinary losses or has excess debt or is unable to obtain finance for working capital and it is obvious that the party would be highly likely to go bankrupt and exit the market in the near future without the business combination.
Moreover, it is difficult to find any business operator that can rescue the party with a combination that would have less impact on competition than the business operator that is the other party to the combination.

(b) The performance of a business department of a party to the combination is extremely poor such as recording continuous and significant losses and it is obvious that the party would be highly likely to exit the market in the near future without the business combination. Moreover, it is difficult to find any business operator that can rescue the business department with a combination that would have less impact on competition than the business operator that is the other party to the combination.

(9) Size of a Particular Field of Trade

In a case where a particular field of trade is not large enough for multiple efficient business operators to engage in profitable business activities and therefore it is difficult to maintain competition by multiple business operators even without a business combination, such business combination normally may not be substantially to restrain competition in a particular field of trade even when such multiple business operators are reduced to only one operator as the result of such combination.

3. Determining Factors in Deeming Substantial Restraint of Competition through Coordinated Conduct

In deciding whether the effect of horizontal business combinations may be substantially to restrain competition in a particular field of trade through the coordinated conduct, comprehensive consideration is given to the following factors.

(1) The Position of the Company Group and Competitors and the Competitive Situation in the Market, etc.

A. Number of Competitors

When there are few competitors in the particular field of trade or the market share is concentrated on a few leading business operators, the behavior of the competitors can be forecast with high probability.

Moreover, when the companies sell homogeneous goods and have similar cost conditions, they tend to take coordinated conduct as they share common interests.

In addition, it is easier to predict with high reliability whether competitors will take coordinated conduct or not.

Therefore, if the business combination creates the situation mentioned above, there will be large impact on competition.

B. Competition among the Parties in the Past, etc.
In cases where the parties have been competing for market share or one of these parties has been aggressive in cutting prices, the fact that the parties have competed vigorously or the fact that their conduct in the market has stimulated competition may be deemed to contribute to a reduction in prices, an improvement in quality or an extension of the range of goods throughout the market. If the business combination eliminates these conditions, it will have a serious impact on competition, even if the combined market share or the rank of the parties is not high.

C. Excess Capacity of Competitors

If a company does not have sufficient excess capacity, the opportunities to expand market share by cutting prices or depriving competitors of their market shares are limited. As a result, the company will not be able to generate substantial profits through such conduct, so that it is likely to commit to coordinated conduct with the competitors.

In contrast, if the excess capacity of a company is large while that of its competitors is small, when it reduces prices to gain sales, the sales it will lose to competitors through their price reduction in the near future is limited. There will therefore be less incentive to commit to coordinated conduct with competitors, since profits from expanded sales are expected through reducing prices.

D. Treatment of Joint Investment Company

If certain business departments of investing companies are completely spun off and consolidated into a joint investment company, the connection between the business of the investing companies and that of the joint investment company would be considered to be weak.

Therefore, when the entire business including the production, sale, research and development of certain goods is spun off and consolidated into a joint investment company, whether the joint investment company itself will commit to coordinated conduct with its competitors is examined.

If, however, only part of certain business departments of each investing companies is transferred to the joint investment company, whether the investing companies are committed to coordinated conduct with their competitors is examined as well.

To determine whether the coordinated conduct of investing companies with their competitors will emerge or not, the details of the investing agreement between the investing companies in terms of the joint investment, the actual conditions of the combination, and the transactions between the investing companies, if any, are considered.
For example, when only the production sections of the goods are integrated into the joint investment company and each of the investing companies continues to sell the goods, even though measures are taken to prevent a coordinated relationship between the investing companies through the operation of a joint investment company, the production costs will be shared. As a result, there will be less room for price competition and they will have the incentive to commit to coordinated conduct with their competitors, including the other investing company. In this case, whether the investing companies are expected to take coordinated conduct with their competitors, including each other, will be examined.

(2) Trade Realities, etc.

A. Conditions of Trade, etc.

When, for example, a trade association collects and provides such information as the sales prices or production quantities of the member companies, and each company can readily obtain information on the competitors' trading conditions, such as price and quantity, it is possible for each company to forecast the behavior of its competitors with a high degree of accuracy, and it is also easy to observe whether the competitors are coordinating their conduct or not. Moreover, under these circumstances, if a company cuts its price to increase its sales, its competitors will quickly be aware of it and will likely try to recover the sales taken by the price cut of the company. As a result, the company has little incentive to take such action.

In contrast, when transactions are not on a regular basis and orders are in large units, significant profits can be expected by cutting prices and obtaining such transactions when opportunities for agreements are limited. Therefore, the party has little incentive to coordinate its conduct with its competitors and it is difficult to anticipate the behavior of competitors.

If, however, transactions are carried out regularly and the volume of orders is small, coordinated conduct with competitors is likely to occur.

B. Trends in Demand, Technological Innovation, etc.

When demand is changing significantly or technological innovation is frequent the product lifecycle is short, substantial profits are more likely to accrue from cutting prices and increasing sales and from taking sales from competitors. As a result, there will be less incentive to coordinate conduct with competitors and it will be difficult to anticipate the behavior of competitors, so that coordinated conduct with competitors
is not likely to occur.

C. Past Competitive Situation

To determine whether coordinated conduct will take place or not, past changes in market shares and prices are also considered.

For example, when these changes are substantial, coordinated conduct with competitors is not likely to occur because it is difficult to forecast competitors' behavior.

In contrast, if these changes are small, it will be easier to forecast competitors' behavior and there is a stronger possibility that coordinated conduct will occur.

And, for example, when there is coordinated conduct regarding the revision of prices of goods, there is a higher possibility that the market conditions for trade will be prone to coordinated conduct.

(3) Competitive Pressure from Import, Entry, Related Markets, etc.

When there is significant import pressure, if companies raise the domestic price through coordinated conduct, they will lose sales to greater imports. There will therefore be less chance of coordinated conduct.

If significant imports are currently flowing into the particular field of trade and production costs and business strategies of overseas suppliers differ from those of domestic suppliers, it will be difficult for them to share common interests, and there will be less likelihood of coordinated conduct. If prices of domestic products are raised in this situation, imports will increase and it would be difficult for the company group and its competitors to control the price and other factors, through coordinated conduct. However, in cases in which the foreign company has already established a position in the domestic market, it may be possible for the foreign company to take coordinated action with its competitors, including the company group.

In addition, even when the current import volume is small, if domestic market participants raise the price of the domestic product in a coordinated manner and imports readily increase as a result at the cost of sales of domestic products, the possibility of coordinated conduct will be less likely.

With respect to whether import pressure will work or not in case of a price increase by domestic companies, the degree of institutional barriers, the degree of import-related transportation costs and the existence of problems in distribution, the substitutability between imported products and domestic products, and the possibility of supply from overseas are examined.
from the same perspectives as those set forth in Section 2 (2) (i)-(iv), to determine whether a coordinated price increase would be prevented or not because users can readily switch from domestic products to imported goods and consequently imports will rise over a certain period of time (Note 9) when the company group and other domestic companies try to raise prices in a coordinated manner.

Entry pressures will have a similar influence on the possibility of coordinated conduct. In terms of the likelihood of entry, the degree of institutional entry barriers, the degree of barriers to entry in practice, the degree of substitutability between entrants' products and existing companies' products, and the potential for market entry are examined from the same perspectives as those set forth in Section

2 (3) (i)-(iv), to determine whether a coordinated price increase would be prevented or not because entries would occur over a certain period of time (Note 9) when the company group and other companies try to raise prices in a coordinated manner.

The competitive pressures from related markets and from users may also be a factor that prevents coordinated conduct from emerging or the company group and its competitors from controlling the price and other factors through coordinated conduct.

For example, when the bargaining power of the users in price negotiations is stronger because of the demand and supply conditions, major users' means of procurement, the degree of diversity of their suppliers and their ease with which they can switch trading partners, it will often be difficult for the company group and its competitors to commit to coordinated conduct.

The efficiency and financial conditions of the company group are evaluated pursuant to Section 2 (7) and (8), above.

### Part V. The Effect of Vertical Business Combination May Be Substantially to Restrain Competition

1. Basic Framework, etc.

(1) Basic Framework

As mentioned in Part III Section 2 above, vertical business combinations do not reduce the number of competitive units. They consequently have less impact on competition than horizontal combinations have, and their effect usually may not be substantially to restrain competition except in cases in which substantial restraint of competition is caused.
by closures of or exclusion from markets or coordinated conduct. Similar to horizontal business combinations, vertical combinations are also reviewed in terms of both unilateral conduct and coordinated conduct.

(2) The Effect May Not Be Substantially to Restrain Competition

Taking into consideration the factors described in Section 2 and 3, be low, a judgment is made as to whether the effect of each vertical business combination may be substantially to restrain competition in a particular field of trade or not.

However, when the market share of the company group after the combination is described by A or B, below, the effect of the vertical business combination may not be substantially to restrain competition in a particular field of trade (Note 10).

A. The market share of the company group after the combination is not more than 10% in all of the particular fields of trade where the company group is involved.

B. The HHI is not more than 2,500 and the market share of the company group after the business combination is not more than 25% in all of the particular fields of trade where the company group is involved.

Even if a vertical or conglomerate business combination does not meet the above standards, it does not immediately indicate that the effect may be substantially to restrain competition. Rather, a decision is made based on the facts of each case. In light of past cases, if the HHI is not more than 2,500 and the market share of the company group after the business combination is not more than 35%, the possibility that a business combination may be substantially to restrain competition is usually thought to be small (see Notes (10) and (5)).

2. Substantial Restraint of Competition through Unilateral Conduct

In some cases, subsequent to a vertical business combination, the parties engage in trade only between their company groups, virtually deprive other business operators of trading opportunities and thereby give rise to the problem of closures of or exclusion from the markets. In the resulting case where conditions that would allow the company groups to manipulate price, etc. to certain extent are likely to emerge, a vertical business combination may be substantially to restrain competition in a particular field of trade. The JFTC determines whether through a unilateral conduct a vertical business combination may be to substantially restrain competition in a
particular field of trade after considering the extent to which the combination will give rise to the closedness or exclusiveness of the market pursuant to (1) and (2) below, and then considering the determining factors described in (3) below.

Note that, in a case where, for instance, the manufacturer of a product and its distributor enter into a vertical business combination, the particular field of trade where such manufacturer belongs is called the upstream market, and the particular field where the distributor belongs, the downstream market.

(1) Cases Where the Problem of Closures of or Exclusion from the Market Arises in the Downstream Market

A. Refusal to supply products

In some cases, subsequent to a vertical business combination, the party operating in the upstream market (Company A in Fig.2) may refuse to supply or may supply on an unfavorable term for competition purposes when compared with a situation in the absence of the vertical business combination its product to a business operator in the downstream market (Competitor Y) other than the party in the downstream (Company B) (such behavior shall hereinafter be referred to as "refusal to supply or disadvantageous supply") and thereby cause the competitor in the downstream market (Company Y) to be less competitive and therefore withdraw from the market or weaken its constraint ability. In such circumstances, potential competitors in the downstream market may face difficulty in entering the market or may become less incentivized to enter the market. In such a manner the refusal to supply or disadvantageous supply may give rise to the problem of closure of or exclusion from the downstream market. We call the "refusal to supply or disadvantageous supply" that leads to such closure of or exclusion from the downstream market "input foreclosure." (Note 11.) (Note 11) Input foreclosure causes closure of or exclusion from the downstream market. As a result, competitors in the upstream market will have limited customers, and therefore become less competitive, which may cause closure of or exclusion from the upstream market.
When determining whether or not input foreclosure will be implemented, the JFTC will consider whether or not the parties to the relevant business combination are capable of implementing input foreclosure or incentivized to do so.

(a) Capability to implement input foreclosure

In a case where the party in the upstream market (Company A in Fig.2) has a large market share, or where a wide gap exists between the share of the party in the upstream market (Company A) and that of its competitor (Company X), or where the competitor in the upstream market (Company X) does not have a sufficient excess capacity, or where for a technological or other reason it is not easy for the competitor in the downstream market (Company Y) to switch its procurement from the party in the upstream market (Company A) to its competitor (Company X), etc., if the party in the upstream market (Company A) engages in refusal to supply or disadvantageous supply to the competitor in the downstream market (Company Y), the competitor (Company Y) will not be able to sufficiently switch its procurement to the business operator (Company X) other than the party in the upstream market (Company A), and thereby become less competitive. Thus, these competitors' constraint ability would be weakened to a greater extent, increasing the probability of closure of or exclusion from the downstream market.

Note that, in a case where data can be traded in the market, a vertical business combination may be entered into by a party in the upstream market (Company A) who has important data for a competition purpose and a party (Company B) who uses such data for the purpose of providing service, and result in the refusal to supply or disadvantageous supply and consequently in closure of or exclusion from the downstream market (Note 12). The JFTC