1 The Sun Also Sets: Trending Away Exceptionalism from Japanese in Merger Control and Closer to Global Standards Etsuko Kameoka Mel Marquis & Bellis Van European University Institute Bael & University of Verona For more articles and information, visit Copyright © 2012 . Competition Policy International, Inc www.competitionpolicyinternational.com
2 The Also Sets : Trending Away from Sun Exceptionalism in Merger Control Japanese Closer and Global Standards to * ** Marquis Mel & Kameoka Etsuko two lost decades, Japan Having has little appetite for a third. But a s an endured driven country, there are limits to Japan ’ s export to will itself back to - ability given limp global demand and bleak forecasts. The implicit economic health, term strategy — seems evident in just staying afloat the Cabinet’s - — medium 1 June 18, 2010 decision pursue a “ Ne w Growth Strategy ” . of to interesting offshoot of the One Strategy is a package of merger control 2 1, 2011. reforms, effective These took the form of an amendment to the July ’s “ JFTC ”) n otification rules and a revised set of Japan Fair Trade Commission ( 3 the developments highlighted here are: abolition of the prior guidelines. The system; enhanced procedural transparency; confirmation of greater consultation openness to wider geographic markets , and ; early signs of how the reforms seem influencing the JFTC ’ s merger practice. be to PRIOR OF I. THE END CONSULTATION Prior to the 2011 merger control reforms , parties to a merger notifiable in Japan had option of consulting with the JFTC before filing. Such informal the , consultations presented advantages such as confidentiality pending discussions . has now been abolished From the JFTC’s This system with case handlers. the main perspective, benefit of prior notification was the possibility to obtain quickly and to head off problems information an early stage , thereby reducing at * . Bael & Bellis Van * * University Institute and University European of Verona . The authors are grateful to Tadashi Shiraishi for kindly commenting on a previous draft. 1 details, see For http://www.meti.go.jp/english/policy/economy/growth/index.html ; Randall Jones & Byungseo Yoo, Japan ’ s New Growth Strate gy to Create Demand and Jobs , ( OECD Economics Department Working Papers , No. 890 ) , available at - http://dx.doi.org/10.1787/5kg58z5z007b en. 2 See JFTC Press Release (14.06.2011), available at http://www.jftc.go.jp/en/pressreleases/uploads/110620.pdf. 3 For translations of the Rules on Applications for Approval, Reporting and Notification ( “ Notification Rules ” ), the Guidelines on the application of the Policies Concerning Procedural Procedures Review of Business Combination ( “ of Guidelines ” ), and the re vised Guidelines on the Application of Antimonopoly Act Concerning Review of Business ” Combination “ Revised Guidelines ( ), see http://www.jftc.go.jp/en/policy_enforcement/mergers/pdf/110713.2.pdf ; http://www.jftc.go.jp/en/policy_enforcement/mergers/pdf/rule s_on_applications.pdf ; and http://www.jftc.go.jp/en/pressreleases/uploads/110620attach2.pdf .
3 the to resort later to more drastic measures . T his m ay also have seemed need 4 the parties if it led to quicker approval. to In practice , according t o the attractive community , prior consultation sometimes bogged down the procedure business 5 a de facto circumvention of statutory timelines. allowed and for prior system consultation appears to It is probably for that reason that the used only infrequently in recent years . In 2008, 1008 notifications en have be filed with the JFTC, y et prior consultation was used in just 28 of those were 6 2009, prior consultation was used only 24 times as compared to 985 cases. In 2010, when only 265 notifications n were filed, prior consultation . I notifications used 13 times. The figures just recited (which was do not take account of aborted never filed) imply that, at least that were with regard to garden - variety deals the impact of the reform may be limited. On the other hand, notifications, merging parties generally did avail themselves inasmuch of prior consultation as large and complex cases, the statistics to some extent belie the qualitative in 7 procedural an additional informal having tool . of importance the absence of prior consultation, the JFTC will have fewer opportunities In engage in informal , possibly opaque manoeuvring . Moreover, by bringing the to framework, squarely under the more formal the JFTC may be procedure more often obliged to int roduce detailed economic analysis when presenting more its concerns to the parties. Under the previous system, in cases where competitive less discussed off the record, it was imperative f or the JFTC to concerns were up sophisticated economic evidence to convince the parties and the public . build II. REINFORCED RECOGNITION OF WORLDWIDE MARKETS The “ old ” Merger Guidelines of 2007 already envisage d relevant geographic . than the domestic market wider Furthermore, the JFTC in fact accepted markets international markets, as it did, for example , in Sony/NEC (2005) , a merger of optical drive business es. I n the E uropean U nion , by comparison, the parties disc for a worldwide market ( given low transportation cost s, no trade barriers, argued trade flo ws, global product standards and globally active suppliers and important 4 the 1970s to the 1990s, the JFTC resolved competition problems informally and From parties were quite content to have matters handled confidentially. merging S ee, e.g. , Toshiaki Takigawa, The Prospect of Antitrust Law and Policy in the Twenty - First Century: In Fair the Japanese Antimonopoly Law and Japan Reference Trade Commission , 1 W ASH . U . to EV LOB L EG . S TUD . L AW R . . 275, 288 (2002 ). However, following changes made in 2002, G general satisfaction with prior consultation seems to have declined. 5 In theory, time should have been running according to “ phase 1 ” and “ phase 2 ” of the prior phase (note: these periods bore no c orrespondence to the familiar Phase I consultation the II in other jurisdictions). However, the and JFTC was criticized for holding up Phase process, in particular by insisting that documents were incomplete and imposing submitted vast data requirements. See, e.g ., Kao ri Nakano, The Recent Developments in Merger Inve 320 R IPPO TO C HOSA [Legislation and Investigation ] 79, , 81 (2011). stigation 6 1.pdf JFTC, www.jftc.go.jp/kenkyukai/dk - kondan/110404/188 (in Japanese). - 7 For the impact of the end of prior consul tation, see, e.g., Masahiro Murakami, Review of the merger procedure of 2011 , 1357 H ANREI T IMES 36, 44 (2011).
4 customers), but he European Commission left the question open because it did t affect its competitive assessment. not perhaps Nevertheless, quell lingering doubts, t he revised Merger to add a clarity with regard to when the JFTC will recognize worldwide or Guideli nes Section Asian) market . According to (i.e., 2.3 (2), such instances regional East those where d omestic or overseas suppliers are selling include in the products East As ian) market for almost same price, and buyers are worldwide (or mainly . from worldwide (or East Asian) sellers purchasing TRANSPARENCY III. MORE PROCEDURAL reform s were also designed The to achieve more transparen t procedure s, a perpetual concern in Japan . Under the new framework , when seemingly JFTC the requests a report from the parties , it should indicate the purpose of its request , 8 the parties a better understanding of what precisely is needed . giving At the thus 9 the JFTC should also explain its , concerns . request This was already a parties ’ of informal practice but it is now made explicit. Furthermore, an approval matter decision ( which previously was not announced in written form) should be provided 10 to the parties . l Yet another helpfu in feature, found in the revised writing 11 Guidelines, is a description of case s falling outside the jurisdiction of the JFTC. On substantive analysis, t he revised Guidelines also provide more detailed explanations the elements that de termine whether a merger wil l substantially of competition The se include, among other things, the supply posture of restrain . producers s, competitive pressure from neighboring market and competitive other , 12 exerted by customers. pressure FOLLOWING ’ S IV. THE EARLY PRACTICE JFTC THE REF ORMS impact of the r eforms will be felt mostly The in mega - mergers and otherwise complex transactions . The news of the moment concerns not a cross - border deal NSC/Sumitomo Steel merger , approved but conditionally on December 14, the 13 is Japan 2011 s revised framework . This under a headline merger of the number ’ one and number three Japan ese producers an d, if consummated, it will spawn , next to ArcelorMittal, world ’ s largest steel producer . Notably, the JFTC ’ s new the is mergers on speedier procedur es played a significant role. Whereas emphas of 8 See supra Note 3, Notification Rules, Article 8; Procedural Guidelines, Section 6(1) . 9 Section Id. Procedural Guidelines, , 4. 10 Id. , Notification Rules, Article 9; Procedural Guidelines, Sections 3, 5 and 6. 11 , Revised Guidelines, Section 1.1 (1) . Id. 12 I . , d 4.2. Section 13 See http://www.jftc.go.jp/en/pressreleases/uploads/2011 - Dec - 14.pd f. As of this writing, review of the transaction i s still pending in certain jurisdictions.
5 14 comparable might have previously taken up to a year to gain clearance, size approval was granted in just over six months. One hopes that brisk here will not be reserve d exclusively for cases involving Japanese ‘ clients ’ procedures remains an industrial policy subtext , although this hope to be tested . with V. CONCLUSION Merger control is one area of competition policy, like cartel busting, in which states of convergence matter greatly because its effects redound, in the consumers. both domestic and foreign Ideas and practices aggregate, upon of course, not toward a fictitious converge, state but toward common, end indefinite trajectories. The years 2010 - 2011 have been marked by significant refinements of merger policy in several jurisdictions, partly motivated by the convergence , often transmitted through the work of the I nternational bug 15 to . ompetition The reforms discussed above seem etwork confirm that Japan , C N , is pa rticipating in a nascent ius too quasi - universalis — one that must be commune flexible enough to accommodate, where appropriate, informed divergence and other tensions. creative 14 See Naoyuki Fukuda citing an unnamed JFTC official , in FTC gives green light to Nippon available at Steel, Metal merger , A SAHI S HIMBUN , Dec . 15 2011 , Sumitomo http://ajw.asahi.com/article/economy/business/AJ201112150041. 15 of these Many are discussed in developments E UROPEAN C OMPETITION L AW A NNUAL 2010: M ERGER C ONTROL IN E UROPEAN AND G LOBAL P ERSPECTI VE ( Publishing, Philip Lowe & Mel Marquis, eds. , Hart forthcoming 2012 ) .