Silviase/jgov_v1.4_full_ann huggingface dataset:
founding the joint investment company, if measures are taken to prevent a coordinated relationship from developing between these investing companies through the operation of the joint investment company, there will be much less impact on competition. (See 3 $ ^{(1)} $ D, infra)

D. Market Share Differences from Competitors

The larger the difference of the combined market share of the company group from the market shares of competitors, the more difficult it is for the competitors to maintain a sufficient supply of goods at the same price in place of the company group, in response to the company group’s attempt to raise the price. The ability of the competitors to constrain the company group’s price rise is therefore weaker.

In other words, the larger the differences in market share between the company group and the competitors, the bigger the impact of the business combination on the competition.

On the other hand, if there are competitors with market shares equal to or greater than those of the company group even after the business combination, these competitors could be factors that prevent the company group from controlling the price and other factors to a certain extent. Concurrently, in considering the market share differences from the competitors, the excess capacity of competitors and the degree of substitutability between goods sold by the company group and those by the competitors are considered. (See E, infra)

E. Competitors’ Excess Capacity and Degree of Differentiation

When the company group increases the price of goods, if the excess capacity of the competitors is not sufficient, it is not easy for the competitors to expand the sales of goods without increasing the price. The ability of the competitors to constrain the company group’s price rise could therefore be weakened. As a consequence, even though the market share differences between the company group and the competitors are not large, it could be considered that the business combination’s impact on competition would be significant when the excess capacity of competitors is not sufficient.

On the other hand, if demand for the product is continuously and structurally declining and if competitors’ excess capacity is sufficient, it can act as a rein on attempts to raise prices by the company group. When goods are differentiated by brands and there is high substitutability between goods sold by the parties, the degree of substitutability between goods sold by competitors and the company group is considered. When the
substitutability is small, even though the market share differences between the company group and competitors are not large, it could be considered that the business combination’s impact on competition would not be small. F. Research and development

If each party is engaged in the research and development of competitive goods or SERVICE, the JFTC will determine the effects of the relevant business combination on competition in consideration of the actual condition of such research and development.

For instance, in a case where one of the parties supplies certain goods or SERVICE(hereinafter referred to as “α”) to the market and the other party is engaged in the research and development of certain other goods or SERVICE (hereinafter referred to as “β”) that compete with α, if β of the other party is found to be highly competitive with α after β is supplied to the relevant market, then the relevant business combination will greatly affect competition compared to a situation in which α and β is found not to be highly competitive because the combination will cause the competition between α of a party and β of the other party that would be realized were it not for the combination to decrease. On the other hand, when β of the other party is expected to be highly competitive with α of another party, after it is supplied to the relevant market, a business combination between the two parties is deemed likely to cause such other party to be less willing to be dedicated to research and development thereby greatly affecting competition between the two parties compared to a situation in which α and β is expected not to be highly competitive. In the same manner, if the two parties are mutually engaged in research and development of competing goods and SERVICE, the JFTC will determine how a business combination between the two parties will affect competition in consideration of the extinction of competition between the goods or SERVICES that are provided by the two parties to the relevant market because of business combination or in consideration of the parties’ diminished willingness to be dedicated to research and development.

G. Characteristics of the market

In some cases, the JFTC determines how a business combination affects competition in a particular field of trade in consideration of the network effect and economies of scale, etc. on the relevant field of trade. For instance, in a case where two companies engage in a business combination and then see their products increase in value as the result of securing a certain number of users subsequent to the combination and thereby expect
to see a further increase in the number of users of the products supplied by the company group (i.e., a case where the so-called direct network effects work), the JFTC will determine how the relevant business combination will affect competition also considering such direct network effects. Particularly in a case where many of the users use only one service (single-homing), direct network effects are considered to affect competition to a greater extent than when many of the users use multiple services (multi-homing).

Further, in a case where in a platform-based multi-sided market after a business combination, the company group secures a certain number of users in one of their two markets thereby causing as the result the value of their product to increase in the other market (by means of the so-called indirect network effects), then the JFTC will determine how a business combination affects competition also considering such indirect network effects.

H. Treatment of Products When Their Geographic Range Is Defined across National Borders

As a result of the examination of the criteria of a particular field of trade described in Part II, products whose geographic range may be defined across national borders would include those products with only small differences in domestic and international systems and transportation, so that domestic and overseas products are highly substitutable in terms of quality and there is an established international price indicator through a commodity exchange, equivalent to that for mineral resources like nonferrous metal. For such products, market shares and the position of the company group, competition among parties in the past, market share differences from competitors, and competitors' excess capacity and the degree of differentiation in the defined geographic range are considered together, to determine the impact on competition

## (2) Import

When there is sufficient competitive pressure from imports, the possibility that the effect of business combinations may be substantially to restrain competition in a particular field of trade is usually considered to be small (Note 8).

If the users have the ability to easily switch from a product of the company group to an imported product and the switchover becomes more likely if the company group raises the price of the product, the company group would be unlikely to raise the price on the grounds of a potential loss of sales.
to the imported goods.

Whether import pressure is sufficient can be determined. Regardless of whether imports are currently been conducted or not, by considering all of the conditions (i)–(iv) concerning imports, as described below. Whether the group can manipulate the price to a certain extent when an increase in imports occurs over a certain period (Note 9) is considered.

(i) Degree of institutional barriers

When assessing import pressures, what needs to be considered is whether or not institutional and legislative regulations such as tariffs and other import-related tax system are in place and whether they will operate as a barrier to import the product in the future. If there is no institutional barrier, import pressure tends to play a stronger role. However, even if there is an institutional barrier and the current level of imports is low, if the barrier is scheduled to be eliminated in the near future, importing will become easier and import pressure is likely to intensify.

In contrast, if the institutional barrier will be maintained, imports are less likely to increase and import pressure will remain low even if the company group raises the product price.

If the current import quantity is significant, the institutional barrier can usually be considered low enough to import products. However, it must be noted that if an import quota system limits any increase in imports, the effect of the import pressure will remain limited.

ii) Degree of Import-Related Transportation Costs and Existence of Problems in Distribution

If import-related transportation costs are low and there is no distribution problem for importing, it is considered a favorable environment for imported goods when there is an increase in the price of the domestic product.

For products with high transportation costs such as heavy products with little added value, it is possible that the incentive to purchase imported goods will be small for users. When a stable supply of imported goods cannot be expected because the distribution network and other import-related necessities such as storage facilities inside Japan remain underdeveloped for the import of specific products, users may also refrain from purchasing imported goods. In these cases, import quantity does not increase when the company group raises the price of the products, and hence import pressure is unlikely to work.

An import volume that is currently large is considered to indicate that
only a few problems exist regarding transportation and/or distribution.

(iii) Degree of Substitutability between the Imported Product and the Company Group’s Product

If the substitutability of the company group’s product with imported products is high, it can provide a stronger incentive for users to purchase and use the imported product.

In contrast, if there is a quality difference between the company group’s product and the imported product, and there are issues of quality or product range with the imported goods, or if users lack familiarity with the use of imported products, users may not choose imported goods. In these cases, it is considered that imports will not increase and import pressure will remain low even if the company group tries to raise a price.

To assess the degree of substitutability of the company group’s product with an imported product, price difference between the company group’s product and imported product as well as the history of price and quantity changes may be taken into account.

For instance, in a case in which there is a previous record of sales growth of imported goods when the company group increased the price of its product, the imported product can be considered to have substantial substitutability.

There are also cases in which the degree of substitutability can be determined from the experiences of main users in purchasing and using imported products, their evaluation of the imported products, and their intentions with respect to adopting imported goods.

(iv) Potential for Supply from Overseas

It is necessary to assess the likelihood of an increase in imports in the case of an increase in the price of the product by the company group.

If a foreign supplier has sufficient excess capacity with low production costs, an increase in imports is considered probable in response to the increase in domestic prices. If there is already a specific plan to import foreign products and/or export products to Japanese users by the foreign supplier, an increase in imports is more likely compared to a situation in which there is no specific plan. In addition, if a competitive foreign supplier already has a significant share of the market or has a specific and feasible plan to establish a distribution and marketing point to supply products in the near future, the effect of import pressure is considered to be strong. In other cases, such as when there is either a foreign supplier who is ready to switch the export of products currently supplied to other
foreign markets to Japan or a potential foreign supplier who is likely to enter the market by improving its facility capacity, depending on the domestic price, there is a strong possibility that imports will increase with a rise in domestic prices and this can become a factor for import pressure. Moreover, when there is an increase in supply abroad as a result of the expansion of production capacity by competitive foreign suppliers, there will be a fall in the overseas market price that creates an international price difference between domestic and overseas prices. This can also serve as import pressure.

(Note 8) “Import” refers to product supply from outside the geographic range defined by Section 3 of Part II. If an area across national borders is determined as the geographic range, product supply from outside the geographic range to the relevant geographic range can be regarded as “imports” in this Section.

(Note 9) The period is generally considered to be two years, but it can be shorter or longer depending on the characteristics of the industry. This note also applies in subsection (3), below.

## (3) Entry

When market entry is easy and it is likely that new entrants will appear and will generate profits by selling the products at a lower price if the company group raises the price, the company group will refrain from increasing the price on the grounds of a potential loss of sales to the new entrants. Therefore, if the entry pressure is sufficient, it will serve as a factor to prevent the company group from controlling the price and other factors to a certain extent.

To determine whether there is sufficient entry pressure, as in the analysis related to imports in subsection (2), all entry-related conditions (i)-(iv) must be taken into account to assess whether entry would occur in a certain period of time and become a factor to prevent the company group from controlling the price and other factors to a certain extent.

(i) Degree of Institutional Barriers to Entry

It is necessary to consider whether there is legislation regulating entry into the market for the product, whether these regulations work as an entry barrier and whether these regulations will persist. If there are none, then entry pressure is more likely to work. Moreover, even in cases in which the entry regulations are creating an entry barrier, if the regulations are expected to be removed in the near future, entry will become easier and the entry pressure will be more effective.
However, if the entry regulations are in fact preventing entry and this condition is likely to be sustained, a price increase by the company group would not encourage entry and the entry pressure will remain low.

If there was a recent entry to some extent, it is generally considered that there is no entry regulation or the regulations did not work as an entry barrier in spite of their existence.

(ii) Degree of Barriers to Entry in Practice

If the scale of capital necessary for entry is small and there is no problem with technical issues, conditions for the purchase of raw materials and sales conditions, it is considered to be an environment conducive to entry. Also, companies that can supply goods without a significant change in the production facilities will find it easier to enter the market.

In contrast, if a considerable amount of capital is required for entry, this would be taken into account in evaluating whether companies would be likely to enter the market if the company group raises the product price. Moreover, if potential entrants are placed in a relatively disadvantageous situation for entry in terms of location, technical issues, purchasing conditions for raw materials or sales conditions, this will be considered to discourage entry.

If certain entries have recently been successful, it generally indicates that entry barriers are low in practice.

(iii) Degree of Substitutability between Entrants’ Products and the Company Group’s Products

If the product that the entrant is planning to supply and the company group’s products are highly substitutable, users can purchase and use the entrants’ product with less hesitation.

In contrast, if it is difficult for the entrant to produce and sell products with a quality and range equivalent to those of the group’s products, or if the entrant’s products confront familiarity issues, market entry is less likely, and even if it did occur, it is unlikely to apply sufficient competitive pressure against the group’s products.

(iv) Potential for Market Entry

It is necessary to assess the potential for market entry when the company group increases the price of their product.

If other suppliers are already planning to enter the market with sufficient scale or if there are potential entrants who could build new facilities or renovate facilities and who are highly likely to become suppliers in the particular field of trade, depending on the price, entry pressure is
considered to be higher.

Generally, products with a dynamic market structure—such as products supplied to a growing market with a high likelihood of significant demand expansion in the future, products subject to frequent technological innovation, products with short lifecycles, and products subject to active investment in the development of new replacement technologies—are subject to stronger entry pressure than products without a dynamic market structure.

## (4) Competitive Pressure from Related Markets

Competitive conditions in markets related to the particular field of trade determined in Part II are also considered. Such markets are, for example, those geographically neighboring the defined particular field of trade and markets of the products that provide similar utility to users as the goods (hereinafter referred to as “similar goods”).

For instance, if there is vigorous competition in neighboring markets, or when the probability of competitive products replacing demand for such goods is high in the near future, it will be evaluated as a factor stimulating competition in the particular field of trade.

The same is true when the probability of a similar good replacing demand for a product whose market is shrinking due to decreasing demand.

### A. Similar Goods

When similar goods provide utility to users similar to that offered by the product but comprise a separate market, these similar goods can be a factor that partly prevents the company group from controlling the price and other factors to a certain extent, depending on the comparability of utility with the product from the perspectives of users, price and distribution networks.

### B. Geographically Neighboring Market

When a particular field of trade is limited geographically and there is another geographically neighboring market where the same goods are supplied, competition in the neighboring market can be a factor that partly prevents the company group from controlling the price and other factors to a certain extent, depending on the proximity of the location, distribution style, transportation and scale of the competitors.

## (5) Competitive Pressure from Users

Competitive pressure in a particular field of trade may emerge from users who are positioned in the next stage. If users have a countervailing
bargaining power against the company group through business relations, it can be a factor that partly prevents the company group from controlling the price and other factors to a certain extent. To determine whether there is competitive pressure from the users, the conditions listed below concerning business relations between the company group and users need to be considered.

### A. Competition among Users

If competition in a user's product market is active, users would be likely to demand from suppliers the lowest prices possible to purchase the product. For business combinations between raw materials producers, for instance, when the competition in the finished goods' markets is vigorous, the producers of finished goods—who are the users of the raw materials—try to purchase them as cheaply as possible to reduce the price of the finished goods. As the company group is likely to lose substantial sales if it raises the price in this situation, the competition in the next stage can be a factor that partly prevents the company group from controlling the price and other factors to a certain extent.

### B. Ease of Changing Suppliers

If users can easily switch from one supplier to another and can gain bargaining power in price negotiations by raising the possibility of switching suppliers, it may be said that there is competitive pressure from users. For instance, when the bargaining power of users is strong in terms of the ways of procuring the product, the dispersion of suppliers or ease of switching, for example when users select suppliers through competitive means such e-commerce or bidding, when they can easily switch to a self-manufacturing alternative, when buyer pressure is created by the ease of changing among a broad range of suppliers, including suppliers of other products, or when the user purchases a large volume and deals with multiple suppliers, as large-scale mass merchandise stores do, it can be a factor that partly prevents the company group from controlling the price and other factors to a certain extent.

On the other hand, in a case of an Internet-based service, for instance, where a user finds it difficult to switch from the company group to any other supplier because of the existence of network effects or switching cost, etc. that builds a high barrier for the user when switching from the company group to another supplier, it is considered difficult for competitive pressure from users to work.

### C. Market Shrink