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What legislation applies to the control of mergers?
The Anti-monopoly Law governs merger cases.
The main Japan Fair Trade Commission (JFTC) guidelines for business combinations such as mergers and acquisitions of business or stock (the acquisition of stock of less than 10% is not usually subject to JFTC review) are the Merger Guidelines, introduced in May 31 2004 and amended as necessary to reflect developments in the area.
Mergers between financial institutions (eg, banks and insurers) are subject to the regulation under the applicable business laws (eg, the Banking Law and the Insurance Business Affairs Law), as well as the Anti-monopoly Law. Moreover, the acquisition of shares in broadcasting companies, major airlines and Nippon Telephone and Telegraph companies by foreign entities is restricted under the applicable business laws.
Do thresholds apply to determine when a transaction is caught by merger control legislation?
There are no de minimis rules (specific thresholds) for the application of the substantive law with regard to a prohibition of the specific concentration under the Anti-monopoly Law. However, the Merger Guidelines provide that the acquisition of a non-important business (ie, a business with a turnover of less than Y100 million and a turnover which represents 5% or less of the total turnover of the transferring company) is not usually subject to Japan Fair Trade Commission (JFTC) review. If a part of the business to be combined through a company split satisfies these criteria, such split is not usually subject to the JFTC review.
The substantive law applies to a specific concentration (ie, business combination), regardless of whether filing is required under the Anti-monopoly Law. If filing is not required under the Anti-monopoly Law because the filing requirements are not met, it is still possible that the business combination may still be prohibited if it would substantially restrain competition in the relevant market in Japan. In such cases the JFTC may issue a cease and desist order under the Anti-monopoly Law.
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