7.M&A

Q5 (Antimonopoly Act Issues)

In general, in what cases will the Antimonopoly Act become a problem in M&A?

A share acquisition, a merger, certain types of corporate splits (such as a joint incorporation-type corporate split (kyoudou shinetsu bunkatsu) or a absorption-type corporate split (kyuushuu bunkatsu),) a business (asset) transfer or other business combination ("Business Combination") that substantially restricts competition in a certain field of trade is prohibited. Whether or not a specific transaction restricts competition is determined on a case-by-case basis. However, in order to ensure the effectiveness of the regulation, a notification must be submitted to the Japan Fair Trade Commission for business combinations of a certain size. In practice, the important issue is to determine whether or not the notification is required.

The specific requirements depend on the type of business combination, but, for example, in the case of a merger, if the total domestic sales of either party or the group to which such party belongs exceeds 20 billion yen, and the total domestic sale of the other party or the group to which such party belongs exceeds 5 billion yen, a notification is required. However, if all of the parties belong to the same group, no notification is required.

(Posted: January 27, 2012)