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Japan Antitrust/Competition
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JFTC Merger Review FY2019

During FY 2019, the Japan Fair Trade Commission ("JFTC") received 310 notifications, which is a 3.4 percent decrease from FY 2018. It provided clearance for 300 cases at Phase I review. Two cases were sent to Phase II review. Among cases the JFTC provided clearance during FY 2019, remedies were required for four cases. The JFTC reviewed six cases even though those did not require pre-notifications.  

The JFTC publishes information about merger review cases annually, including number of cases (i) the JFTC received a notification, (ii) the JFTC provided a clearance at Phase I review, (iii) that were sent to Phase II review, and (iv) the parties withdrew before completion of Phase I review. It also publishes its analysis on major cases.1  

 

Chart 1: Number of Merger Review Cases from FY2015 to FY2019

  FY2015 FY2016 FY2017 FY2018 FY2019
Total of Notified Cases2 295 319 306 321 310
Phase I3 281 308 299 315 300
Withdrawal4 8 8 6 4 9
Phase II5 6 3 1 2 1

Under the Japanese Anti-Monopoly Act ("AMA"), business combination that falls into one or more of the following type of transaction would be required to notify the JFTC when it meets turnover thresholds; (i) share acquisition , (ii) merger, (iii) split, (iv) joint share transfer or (v) business/asset transfer. Among 310 cases that were notified with the JFTC during FY2019, there were 264 cases of share acquisitions, 12 cases of mergers, 12 cases of splits, three cases of joint share transfers and 19 cases of business/asset transfers.

 

Chart 2: Type of transactions among cases notified with the JFTC during FY2019

Type of transactions among cases notified with the JFTC during FY2019

The Chart 3 below shows number of cases that the JFTC provided clearances at Phase I or II review during FY2019. Three hundred cases were cleared during Phase I and there was no case a clearance was given at Phase II.

 

Chart 3: Number of cases the JFTC provided clearance at Phase I or II from FY2015 to FY2019

Number of cases the JFTC provided clearance at Phase I or II from FY2015 to FY2019

Among cases the JFTC received notifications during FY 2019, there were 12 cases where Japanese and non-Japanese companies were involved as the parties and 39 cases where only non-Japanese companies were involved as the parties.

 

Chart 4: Number of cases the JFTC received notifications where a non-Japanese company was involved as a party from FY2016 to FY2019

  FY2016 FY2017 FY2018 FY2019
Japanese and non-Japanese companies 12 12 6 12
Non-Japanese companies 47 31 34 39
Total 59 43 40 51

Last December, the JFTC amended the "Guidelines to Application of the Antimonopoly Act Concerning Review of Business Combination" ("Guidelines") and the "Policies Concerning Procedures of Review of Business Combination" ("Policies") in order to conduct review appropriately in accordance with developments in the digital market.  Under the AMA, the JFTC has authority to review business combination cases including for those notifications are not required ("non-notifiable cases). The amended Policies clarified further about it and that the JFTC will conduct review of non-notifiable cases when the transaction value is large (i.e., more than JPY40 billion which is approximately USD370 million) and is expected to affect domestic consumers7.  During FY2019, the JFTC reviewed six of non-notifiable cases.

This year, the JFTC included 10 cases from FY2019 to explain its analysis in the FY2019 Annual Collection of JFTC Major Business Combination Cases. All of them received clearances at Phase I review, including three cases that received clearance with conditions (e.g., remedies). Among those 10 cases, there were four cases where at least one of the parties was a non-Japanese company, including (i) integration of Bristol-Myers Squibb and Celgene, (ii) acquisition of KOKUSAI ELECTRIC's share by Applied Materials, (iii) integration of Danaher and General Electric, (iv) integration of Hewlett-Packard and Cray and (v) transfer of aircraft finance business from DZ Bank AG to MUFG Bank.

 

1 FY2019 Annual Collection of JFTC Major Business Combination Cases is available only in Japanese
2 Number of notified cases that the JFTC received during each fiscal year.
3 Number of cases the JFTC provided clearance at the end of Phase I review during each fiscal year.
4 Number of cases where a notification was withdrawn before the completion of Phase I review.
5 Number of cases that were sent to Phase II review during each fiscal year.
6 A pre-notification is required when an acquirer will be holding more than 20% or 50% of the voting rights of a target as a result of a share acquisition subject to the turnover thresholds.
7 Please see our Client Alert "Amendments to the JFTC Merger Guidelines and Policies in accordance with Digital Economy"

 

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