The Japanese competition regulator, the Fair Trade Commission (JFTC), has announced that it plans to resubmit its proposed changes to the merger control regime for legislative approval during the current Diet's session.
The proposed changes to the Anti-Monopoly Law were submitted last year but because of a lack of legislative time failed to pass during the previous Diet session.
Existing regulations require JFTC clearance if the merger combination involves an acquiring company with at least 10 billion yen in assets and a target company or business segment with at least 1 billion yen in assets (if a Japanese company, otherwise 1 billion yen in gross sales in Japan if a foreign company). Having a largely asset-based test rather than turnover-based test has put Japan at odds with merger control systems in many other countries. Also, as a consequence, the asset-based screening picks-up many smaller transactions that do not usually raise substantive anti-competitive concerns, adding to the administrative burden. In the fiscal year 2007, 1,284 deals were apparently filed for screening.
Under the changes proposed last year, the regulations would instead concentrate more on large mergers and acquisitions by calibrating the trigger thresholds to domestic sales of 20 billion yen for the acquiring company and 2 billion yen for the target company or business segment. In the revised legislation to be submitted in the current Diet session, the JFTC is planning to raise the target's sales threshold to 5 billion yen to further concentrate on large deals that could adversely affect competition in Japan.