Procedual Issues

The International Competition Network (ICN) offers a joint network for addressing antitrust enforcement and policy issues of common concern for competition authorities from different countries. The ICN's work is project-oriented and one of the projects involves the merger control process in the multi-jurisdictional context. Related to the topic is the following template for merger notification and procedures, which was instigated by the ICN in August 2002; below, you will find it supplied with information concerning the FTC.

ICN Merger Notification and Procedures Template

Important note: This template is intended to provide introductory material. Reading the template is not a substitute for consulting the referenced statutes and regulations. If you are analyzing a particular transaction, this template should be a starting point only.

1. Merger notification and review materials (please provide title(s), popular name(s) and citation(s))

A. Notification provisions	Article 10, 15, 15-2 and 16 of the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade (AMA)
B. Notification forms or information requirements	They are available on the website of the Fair Trade Commission of Japan (http://www.jftc.go.jp/ma/index.html)
C. Substantive merger control provisions	Article 10, 13, 14, 15, 15-2, 16 and 17 of AMA
D. Implementing regulations	The Rules Concerning Application for Authorization and Approval, Report and Notification as provided for in Article 9 to Article 16 Inclusive of the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade
E. Interpretive guidelines and notices	Guidelines for Interpretation on the Stipulation that "the Effect May Be Substantially to Restrain Competition in a Particular Field of Trade" Concerning M&As (http://www2.jftc.go.jp/e-page/guideli/maGL.pdf)
F. Annual report	http://www.jftc.go.jp/e-page/report/annual/index.html

2. Authority or authorities responsible for merger enforcement

A. Name of authority. If there is more than one authority, please describe allocation of responsibilities.	The Fair Trade Commission of Japan (JFTC)
B. Address, telephone and fax (including country code), e-mail, website address and languages available.	1-1-1 Kasumigaseki, Chiyoda-ku, Tokyo, Japan 100-8987 Tel: +81-3-3581-3719 (Mergers and Acquisitions Division) Fax: +81-3-3581-1945
C. Is agency staff available for pre-notification consultation? If yes, please provide contact points for questions on merger filing requirements and/or consultations.	Yes. Mergers and Acquisitions Division

3. Notification requirements

A. Is notification mandatory pre-merger?	Article 15 (merger), 15-2 (division) and 16 (acquisition) of the AMA
B. Is notification mandatory post-merger?	Article 10 (stockholding) of the AMA
C. Can parties make a voluntary pre- or post- merger filing even if filing is not mandatory?	No.

4. Covered transactions

A. Definitions of potentially covered transactions	They are provided in the AMA according to the types of M&As. Stockholding (Article 10), merger (Article 15), division (Article 15-2) and acquisition of business (Article 16).
B. If change of control is a determining factor, how is control defined?	The control is based on the view whether the competition in the market would be affected by the formed, maintained or strengthened relationship where more than one company conducts business activities in a unifiled form, fully or partially through stockholding, mergers or other transactions (this relationship is hereinafter referred to as a "joint relationship"). (See the above Guidelines)
C. Are partial (less than 100%) stock acquisitions/minority shareholdings covered? At what levels?	Yes. In the case that a joint relationship is formed, maintained or strengthened. For example, 1) the case that the holding rate of the voting rights (the rate of shares possessed by the acquiring company to the total voting rights of the acquired company, hereinafter the same) exceeds 50%, 2) the case that the holding rate of the voting rights exceeds 25% and the acquiring company is the sole leading holder, and 3) the case that the holding rate of the voting rights exceeds 10%, the acquiring company is ranked among the top 3 holders are the joint relationship is judged to be formed, maintained or strengthened under the comprehensive consideration. (See the above Guidelines)
D. Do the notification requirements cover production joint ventures or any other type of joint venture?	Yes. Regardless of the types of the joint capital companies.
E. Are any sectors excluded from notification requirements? If so, which sectors?	There is no sector excluded from the merger control of the AMA.
F. Are transactions that do not meet merger notification thresholds subject to substantive merger control?	Yes.

5. Thresholds for notification

A. What are the general thresholds? Are the thresholds subject to adjustment: (e.g. annually for inflation)? If adjusted, state on what basis and how frequently?	They are provided in the AMA (including Rules) according to the types of M&As. Stockholding (Article 10), merger (Article 15), division (Article 15-2) and acquisition of business (Article 16).
B. To what period(s) of time do the thresholds relate (e.g., most recent calendar year, fiscal year; for assets-based tests, calendar year-end, fiscal year-end, other)?	Fiscal year of the notifying party.
C. Describe methodology for identifying and caculating any values necessary to determine if notification is required, including:
i. The methodology for identifying and calculating the value of the transaction, if applicable,	The profit and loss statement which is made with the latest balance sheet.
ii. The methodology for identifying and calculating relevant sales or turnover, if applicable,	The profit and loss statement which is made with the latest balance sheet.
iii. The methodology for identifying and calculating the value of relevant assets, if applicable,	The latest balance sheet.
iv. Methodology for calculating exchange rates.	There is no methodology for calculating exchange rates.
D. Do thresholds apply to worldwide sales/assets, to sales/assets within the jurisdiction, or both?	Both of the worldwide and within the jurisdiction are provided in the AMA.
E. How is the nexus to the jurisdiction determined? If based on an "effects doctrine," please describe how this is applied.	The thresholds are defined by the assets or sales.
F. If national sales are relevant, how are they allocated geographically (e.g., location of customer, location of seller)?	It is provided that the sales in the profit-and-loss statement made with most recent balance sheet correspond to the domestic sales. It means that the seller is in Japan.
G. If there are market share tests, are there guidelines for calculating market shares?	We don't use the market share as the threshold.
H. If there are market share tests, do they apply even if there is no horizontal overlap in the parties' activities, either in the jurisdiction or worldwide?	We don't use the market share as the threshold.
I. Describe the methodology for determining relevant undertakings/firms for threshold purposes (e.g., group-wide? only the acquired entity? If based on control, how is control determined?).	Total assets of parent and subsidiary company may be used as the threshold under the AMA.
J. Are there special threshold calculations for joint ventures?	No.
K. Are there special threshold calculations for particular sectors (e.g., banking, airlines) or particular types of transactions (e.g., partnerships, financial investments)?	No.

6. Transactions in which the acquiring and acquired parties are foreign
Are there special rules or exemptions

A. With respect to application of jurisdictional thresholds?	No.
B. With respect to information required (e.g. information submitted or document legalization)?	In principle, information on the matters inside jurisdiction is required.
C. With respect to waiting periods?	No.

7. Simplified procedures

Describe any special procedures for notifying transactions that do not raise competition concerns (e.g., short form, simplified procedures, advanced ruling certificates, waivers, etc.)

There is no special procedures for simplification.

8. Timing of notification

A. What is the earliest that a transaction can be notified (e.g., is a definitive agreement required; if so, when is an agreement considered definitive?)?	Stockholding: after stockholding by a company Merger: after the contract of merger and the decision of the shareholders' meeting Division: after the contract of division Acquisitions of business: after the contract of acquisitions of business and the decision of the shareholders' meeting
B. Must notification be made within a specified period following a triggering event? If so, describe the triggering event (e.g., definitive agreement) and the deadline following the event.	No, according to the AMA.

9. Documents to be submitted

A. Describe the types of documents that parties must submit with the notification (e.g., agreement, annual reports, market studies, transaction documents).	The copy of contract, business report, the balance sheet, the profit-and-loss statement, the copy of the record of the decision of the shareholders' meeting, and so on.
B. Are there any document legalization requirements (e.g., notarization or apostille)?	The documents to be required are provided in the Rules.

10. Translation

Describe any requirements to submit translations of documents with the initial notification, or later in response to requests for information, including the categories or types of documents for which translation is required, requirements for certification, language(s) accepted, and whether selected excerpts are accepted in lieu of complete documents.

The notification needs to be conducted in Japanese.

11. Review and waiting periods/Suspensive effects

A. Describe any applicable review and/or waiting periods following notification, including whether closing is suspended during any initial review or waiting period and/or further review periods (i.e., second-phase proceedings).	30 days from accepting the notification.
B. Are there different rules for public tenders (e.g. open market stock purchases or hostile bids)?	Nothing is provided about it in the AMA.
C. Are the applicable waiting periods limited to aspects of the transaction that occur within the jurisdiction (e.g., acquisition or merger of local undertaking/business units)? If not, to what extent do they apply to the parties' ability to proceed with the transaction outside the jurisdiction? Describe any procedures available to permit consummation outside the jurisdiction prior to the expiration of the local waiting period and/or clearance. (e.g. request for a derogation from the bar on closing, commitment to hold separate the local business operations.)	Nothing is provided about it in the AMA.
D. Describe any provisions or procedures available to the enforcement authority, the parties and/or third parties to extend the waiting period. Is there a statutory maximum for extensions of the review period by the authority.	Nothing is provided about it in the AMA. The court may, upon application of the JFTC, when it finds the matter to be one of urgent necessity, order a urgent injunction against the party concerned. (Article 67 of the AMA)
E. Describe any procedures for obtaining early termination of the applicable waiting period, and the criteria and timetable for deciding whether to grant early termination.	The JFTC may, when it find it necessary, shorten the waiting periods. The shortening of the waiting period is permitted, in principle, under the condition that 1) it is evident that the effect may not be substantially to restrain competition in any particular field of trade; and 2) there is the rational reason or reasons for the shortening the waiting period.
F. Describe any provisions or procedures allowing the parties to close at their own risk before waiting periods expire or clearance is granted (e.g., allowing the transaction to close if no "irreversible measures" are taken).	Nothing is provided about it in the AMA.

12. Responsibility for notification / representation

A. Who is responsible for notifying - the acquiring person(s), acquired person(s), or both?	Stockholding: The stockholding party Merger: The parties concerned Division: The parties concerned Acquisitions of business: The acquiring party
B. Do different rules apply to public tenders (e.g. open market stock purchases or hostile bids)?	Nothing is provided about it in the AMA.
C. Are the parties required to appoint a joint representative?	Nothing is provided about it in the AMA.
D. Are there any rules as to who can represent the notifying parties (e.g., must a lawyer representing the parties be a member of a local bar)?	There is no rule as to who can represent the notifying parties.
E. How does the validity of the representation need to be attested (e.g., power of attorney)? Are there special rules for foreign representatives or firms? Must a power of attorney be notarized, legalized or apostilled?	Power of attorney. There is no rule for foreign representatives or firms. A power of attorney must not be legalized.

13. Filing fees

A. Are any filing fees assessed for notification? If so, in what amount and how is the amount determined?	Any filing fee is not required.
B. Who is responsible for payment?	---
C. When is payment required?	---
D. What are the procedures for making payments (e.g., accepted forms of payment, proof of payment required, wire transfer instructions)?	---

14. Confidentiality

A. To what extent, if any, does your agency make public the fact that a pre-merger notification filing was made or the contents of the notification?	The party concerning the secret of companies is not published.
B. Do notifying parties have access to the authority's file? If so, under what circumstances can the right of access be exercised?	Nothing is provided about it.
C. Can third parties or other government agencies obtain access to notification materials? If so, under what circumstances?	The party concerning the secret of companies is not disclosed.
D. Are procedures available to request confidential treatment of the fact of notification and/or notification materials? If so, please describe.	The parties concerned may require not publishing nor disclosing to the third parties the part concerning the secret of companies. The extent of the secret of companies is identified under the provisions of the Information Disclosure Law.
E. Is the agency or government a party to any agreements that permit the exchange of information with foreign competition authorities? If so, with which foreign authorities? Are the agreements publicly available?	Yes. The Agreement Between the Government of Japan and the Government of the United States of America Concerning Cooperation on Anticompetitive Activities (October 1999). It is available at the website of the JFTC; (http://www.jftc.go.jp/e-page/about/agree/usagree.html)

15. Sanctions / penalties

A. What are the sanctions/penalties for failure to file a notification and/or failure to observe any mandatory waiting periods?	The AMA provides the fine of not more than 2 million yen. (Article 91-2 of the AMA)
B. Which party/ies are potentially liable?	The party(s) who ought to notify.

16. Judicial review

Describe the provisions and timetable for judicial review or other rights of appeal/review of agency decisions on merger notification and review.

The party who is dissatisfied with administrative disposition by the JFTC may appeal to the court for the cancellation of it under the Administrative Case Litigation Law.

17. Additional filings

Are any additional filings/clearances required for some types of transactions, e.g., foreign investment or regulated sectors?

No banking company, in principle, shall acquire or hold the voting rights of other companies in Japan if by doing so it holds in excess of 5% (10% in the case of an insurance company) of the total voting rights. It is only granted if the JFTC authorizes. (Article 11 of the AMA)

18. Closing deadlines

When a transaction is cleared or approved, is there a time period within which the parties must close for it to remain authorized?

Nothing is provided about it in the AMA.