Merger Control 2019: Japan
IFLR is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX
Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Merger Control 2019: Japan

Sponsored by

Beautiful landmark of Fuji mountain and Chureito Pagoda with cherry blossoms at sunset, Japan. Spring in Japan.

Tatsuo Yamashima and Saori Hanada, Atsumi & Sakai


The principle legislation governing merger control in Japan is the Act on Prohibition of Private Monopolisation and Maintenance of Fair Trade (the Anti-Monopoly Act – AMA). In addition to this, the Japan Fair Trade Commission (JFTC) has its Guidelines on the Application of the Anti-Monopoly Act Concerning Review of Business Combinations (the Merger Guidelines) and Policies Concerning Procedures for Review of Business Combinations. The JFTC is the competent national government authority and has exclusive jurisdiction to review and control transactions that meet merger control review thresholds. Filings are mandatory when the relevant thresholds are met, closing must be suspended pending clearance, and sanctions may be enforced for failing to comply with the filing obligations.

The JFTC received to 306 merger filings during the 2017 fiscal year (from April 1 2017 to March 31 2018), down 4% from 319 filings in the 2016 fiscal year (from April 1 2016 to March 31 2017). In the 2017 fiscal year, 299 cases were cleared after Phase I review, and only one case advanced to Phase II review with six cases voluntarily withdrawn before Phase I reviews were completed. Filings for transactions involving foreign based firms remained at roughly the same level, with 43 filings for the 2017 fiscal year, which decreased from 59 for the 2016 fiscal year.

The number of filings for transactions involving foreign based firms has been strong in recent years, and the JFTC is actively cooperating in merger reviews with foreign competition authorities. Econometric analysis has increasingly been used during the review process in recent years. The JFTC will continue with these policies over the coming 12 months.

An amendment to the AMA to adopt the commitment procedure came into force on December 30 2018 as a part of the Trans-Pacific Partnership Agreement. This amendment introduced a procedure to resolve alleged violations of the AMA, such as private monopolisation and unfair trade practices, as well as violations of the merger control regulations, by voluntary consent between the JFTC and the party subject to the JFTC's enforcement action (the commitment procedure). To clarify the details of the commitment procedure, the JFTC enacted the Rules on the Commitment Procedure of the JFTC in January 2017. Additionally, to ensure transparency in the enforcement of the amended act and provide certainty for businesses, the JFTC published its Policies Concerning Commitment Procedures in September 2018.


Merger control under the AMA covers a wide range of business combinations including mergers, divestitures, acquisitions of shares, joint share transfers to a holding company, business assignments and concurrent directorships in multiple companies. The legislation catches joint-ventures of any kind. Business combinations within the same corporate group are exempt from the notification requirement.

The term "control" is not used in the context of laying out what types of transactions are covered by the merger control rules in the AMA. However, the Merger Guidelines indicate that a transaction is subject to review by the JFTC if a joint relationship between the parties is formed, maintained or strengthened by the transaction. A joint relationship is defined as a relationship in which multiple companies operate a business in a unified manner or to some extent through share acquisition, merger etc.

The AMA clearly stipulates the notification thresholds applicable to each type of business combination. In the case of share acquisitions, for example, notification is required where all of the following three conditions are met: the aggregate turnover in Japan by all companies in the corporate group to which the acquiring company belongs exceeds ¥20 billion ($220 million); the aggregate turnover in Japan by the acquired company and its subsidiaries exceeds ¥5 billion; and after the share transfer, the ratio of the aggregate number of voting shares held by all companies in the corporate group to which the acquiring company belongs, to the aggregate number of issued voting shares of the acquired company exceeds 20% or 50%.

The JFTC may initiate its review of a business combination regardless of whether the relevant thresholds are met.

Foreign-to-foreign mergers

The JFTC has also expressed its intention to take aggressive measures against foreign-to-foreign mergers which may have a substantial negative impact on competition in the market in Japan. In the BHP Billiton vs Rio Tinto case, for example, the JFTC launched a second-phase review in 2010 and raised concerns about the deal. In the 2017 fiscal year, two foreign-to-foreign transactions (Qualcomm/ NXP, Broadcom/Brocade) were cleared subject to remedies proposed by the applicants during Phase I review. The number of notifications involving foreign-to-foreign transactions decreased, from 47 in the 2016 fiscal year to 31 in the 2017 fiscal year.


Filing is mandatory for business combinations that meet the thresholds. The notified transaction cannot close until 30 calendar days have passed after the JFTC receives and accepts the filing, although this period may be shortened if the JFTC considers it necessary.

Any party failing to notify the JFTC of transactions which meet the thresholds may be subject to a penalty of up to ¥2 million. In practice, such penalties are rarely imposed. The JFTC may issue a cease-and-desist order against the parties if the transaction may substantially restrain competition in the market.

The acquiring company is responsible for filing in the case of share acquisitions or business assignments, and all parties are responsible for filing in mergers, divestitures or joint share transfers. In the case of joint ventures, it depends on the type of business combination. No filing fees apply.


Filing for transactions that meet the thresholds must be received and accepted by the JFTC 30 calendar days before the closure of the transaction, although this period may be shortened if the JFTC considers it necessary.

There are designated notification forms for each type of business combination that must be prepared in Japanese and submitted to the JFTC, together with a general description of the parties and their position in the market. The forms are long and detailed and completing them is reasonably onerous and time-consuming.

Pre-notification contacts are available but not required. After the AMA amendment in 2010, the pre-consultation system was abolished and an amended system established on July 1 2011, with non-mandatory prefiling consultation and a first and second phase review process. As a result, while the parties to a merger transaction may consult with the JFTC prior to making an official notification, the JFTC will generally only check whether the formality of notification meets the requirements. If the parties request it, the JFTC will explain to them the possible issues that a specific merger transaction may raise, but they will not express any opinion or decision.

Timetable for clearance

At the Phase I review, the JFTC will review the notified transaction during a period of 30 calendar days after the JFTC receives and accepts an officially filed notification. If the JFTC finds no problems during that period, the JFTC will issue a written notice of clearance to the notifying party.

If the JFTC considers a Phase II review to be necessary, it may request that the notifying party submit further information and reports. The JFTC is required to reach a conclusion within 120 days of receipt of the initial notification, or, if later, 90 days after the submission of any supplemental information requested by the JFTC. In practice, the parties may flexibly schedule the timing of completing the submissions required under the Phase II review by discussing with the JFTC in order to avoid a cease-and-desist order being issued due to expiration of the 90-day period.

Substantive test

The JFTC reviews notified transactions for substantial restraint of competition in the relevant market under the Merger Guidelines, which, among other criteria, set out the safe harbour criteria with reference to the market shares of the parties and the Herfindahl-Hirschman Index (HHI).

For example, in the case of horizontal mergers, in order to determine whether a transaction may substantially restrain competition in the relevant market, the JFTC examines possible effects of both unilateral conduct by the company group concerned and coordinated conduct by the company group concerned and its competitors. The factors to be considered in the JFTC's review include: (i) the position of the company group and its competitive situation; (ii) competitive pressure from imports; (iii) ease and likelihood of new entries into the market concerned; (iv) competitive pressure from related markets; (v) competitive pressure from users; (vi) overall business capabilities after the transaction; (vii) improvement in efficiency; and (viii) financial conditions.

Specifically, the Merger Guidelines stipulate that improvements in efficiency are to be considered in determining the effect of merger transactions on competition. The JFTC may consider efficiency from the following three perspectives: efficiency gains should (i) be specific to the transaction; (ii) be materialised; and (iii) contribute to the interests of users. The Merger Guidelines also state that transactions which may create a monopoly or quasi-monopoly are hardly ever justified by their efficiency.

No specific reference is made to noncompetition factors such as industrial policy or the public interest.


The JFTC considers proposed remedies on a case-by-case basis in accordance with the Merger Guidelines, which require that structural measures such as business assignments or reduction of voting rights be considered first, and then non-structural measures such as measures to promote imports or stimulate market penetration be considered next.

Remedies should be completed before the implementation of the transaction. If remedies are to be taken after the implementation of the transaction, an appropriate and definite deadline for them should be imposed. If the remedy is to transfer all or part of the businesses, for example, it is desirable to select the transferee of the business in advance of the transaction. Otherwise, the parties may be required to obtain permission with regard to the transferee in advance from the JFTC.


The 2013 amendment to the Anti-Monopoly Act came into effect in April 2015. It abolished the JFTC hearing system and allows the addressee of a cease-and-desist order to appeal at the Tokyo District Court, which has exclusive jurisdiction over appeals against JFTC orders. In practice, merger control decisions are rarely appealed in Japan because almost all cases have been cleared or voluntarily retracted during the JFTC review.

Action to revoke a cease-and-desist order must be filed within the earlier of six months from the day on which the addressee became aware of the fact that the order was issued or one year from the date when the cease-and-desist order is issued, unless there are justifiable grounds for failing to meet such time limit.


Click on chart to enlarge

About the author



Tatsuo Yamashima

Partner, Atsumi & Sakai

Tokyo, Japan

T: +81 3 5501 2297



Tatsuo Yamashima is a partner in Atsumi & Sakai and works primarily in the fields of antitrust and competition law, government regulations, employment and human resources and other corporate legal affairs. He has represented many Japanese and foreign companies with antitrust and merger cases involving the Japan Fair Trade Commission (JFTC), as well as authorities in many foreign jurisdictions. In particular, Tatsuo has significant experience with leniency applications to the JFTC.

Tatsuo is ranked as a notable practitioner in relation to antitrust and competition law in Chambers Asia-Pacific 2019 and is listed in Who's Who Legal Competition 2019. He was also ranked as highly recommended in GCR 100 2018. He is a graduate of the University of Tokyo (BA, 2002; LLM, 2004) and is admitted to the Bar in Japan. He worked in Brussels at the competition law group of a leading global firm in 2011 as a visiting foreign attorney.

About the author



Saori Hanada

Partner, Atsumi & Sakai

Tokyo, Japan

T: +81 3 5501 1137



Saori Hanada is a partner in Atsumi & Sakai and works in the fields of antitrust and competition law, employment law and other corporate legal affairs. She has advised major manufacturers and retailers on various unfair trade practice issues and represented both Japanese and foreign firms in international cartel investigations and merger cases. Saori is ranked as an up-and-coming lawyer in antitrust and competition law in Chambers Asia-Pacific 2019 and listed in Who's Who Competition 2019. She was admitted to the Japan Federation of Bar Associations in 2000. Saori obtained an LLM from Columbia Law School in 2010 and was admitted to the New York State bar in 2012.

Gift this article