In an effort to strengthen its oversight of mergers and acquisitions that threaten competition in Japanese markets, the JFTC plans to propose broadening its premerger review jurisdiction to include triangular mergers and stock purchases by investment funds. The agency has drafted a proposed amendment to the Antimonopoly Act to change the premerger notification rules, and plans to submit a final version during next year’s ordinary session of the Diet.
Current provisions of the Antimonopoly Act require firms of a certain size to report stock acquisitions that amount to more than 10 percent, 25 percent and 50 percent of another firm within 30 days of the acquisition. Under the current regime, the JFTC’s remedies are limited to post-acquisition divestitures. The JFTC proposes to change the law to require firms that plan to acquire more than 20 percent of another firm to report to the JFTC prior to the acquisition, to allow the JFTC to take preemptive action if needed. The JFTC also seeks to apply premerger notification rules to investment funds and other entities that do not issue securities, which are currently exempted from notification requirements.
The JFTC also plans to revise the Antimonopoly Act’s treatment of foreign parent companies in acquisitions of Japanese subsidiaries. Specifically, the draft legislation would take into account sales into Japanese markets by both the foreign parent company and Japanese subsidiaries when an acquisition is accomplished by the Japanese subsidiary.