Japan ICN NP Revised Template

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Japan ICN NP Revised Template

  1. 1. MERGER NOTIFICATION AND PROCEDURES TEMPLATE Japan Fair Trade Commission January 2006 IMPORTANT NOTE: This template is intended to provide initial background on the jurisdiction’s merger notification and review procedures. Reading the template is not a substitute for consulting the referenced statutes and regulations. 1. Merger notification and review materials (please provide title(s), popular name(s), and citation(s)/web address) Article 10, 15, 15-2 and 16 of the Act Concerning Prohibition A. Notification provisions of Private Monopolization and Maintenance of Fair Trade (AMA) (http://www.jftc.go.jp/e-page/legislation/ama/amended_ama.p df) They are available on the website of the Japan Fair Trade B. Notification forms or Commission information requirements (http://www.jftc.go.jp/ma/index.htm) Article 10, 13, 14, 15, 15-2, 16 and 17 of AMA C. Substantive merger review provisions The Rules Concerning Application for Authorization and D. Implementing regulations 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 Guidelines to Application of the Antimonopoly Act Concerning E. Interpretive guidelines Review of Business Combination and notices (http://www.jftc.go.jp/e-page/legislation/ama/MAreview.pdf) 2. Authority or authorities responsible for merger enforcement. 1
  2. 2. The Japan Fair Trade Commission (JFTC) A. Name of authority. If there is more than one authority, please describe allocation of responsibilities. 1-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8987 Japan B. Address, telephone and Tel : +81-3-3581-3719 (Mergers and Acquisitions Division) fax (including country Fax : +81-3-3581-1945 code), e-mail, website E-mail : icn@jftc.go.jp address and languages Website : http://www.jftc.go.jp available. Yes. C. Is agency staff available for pre-notification Contact Points : Mergers and Acquisitions Division consultation? If yes, please provide contact points for questions on merger filing requirements and/or consultations. 3. Covered transactions They are provided in the AMA according to the types of M&As. A. Definitions of potentially Stockholding (Article 10), merger (Article 15), division (Article 15 - covered transactions (i.e., 2) and acquisition of business (Article 16). concentration or merger) The transaction is subject to review by the JFTC if the joint B. If change of control is a relationship between the parties is formed, maintained or determining factor, how strengthened by the transaction. is control defined? (See the above Guidelines) Yes. In the following cases, a joint relationship is formed, C. Are partial (less than maintained or strengthened by partial stock acquisitions. 100%) stock 1) the case that the holding rate of the voting rights (the rate of acquisitions/minority shares possessed by the acquiring company to the total voting shareholdings covered? rights of the acquired company, hereinafter the same) At what levels? exceeds 50% 2) the case that the holding rate of the voting rights exceeds 25% and the acquiring company is the sole leading holder 3) the case that the holding rate of the voting rights exceeds 10% and the acquiring company is ranked among the top 3 holders (in this case, the joint relationship is judged to be formed, maintained or strengthened under the comprehensive consideration). (See the above Guidelines) Yes. Regardless of the types of the joint capital companies. D. Do the notification 2
  3. 3. requirements cover joint ventures? If so, what types (e.g., production joint ventures)? 4. Thresholds for notification Notification thresholds are set according to the types of M&As. A. What are the general Stockholding (Article 10), merger (Article 15), division (Article 15- thresholds for 2) and acquisition of business (Article 16). notification? e.g. Thresholds for notification of stockholding (Article 10) 1) When a company whose assets exceed 2 billion yen and whose total assets exceed 10 billion yen 2) acquires or holds more than 10%, 25% or 50% of the voting rights 3) of other companies in Japan whose total assets exceed 1 billion yen, or of other foreign companies whose net sales in Japan exceeds 1 billion yen. Thresholds for notification of merger (Article 15) 1) When a company in Japan whose total assets exceed 10 billion yen, or a foreign company whose net sales in Japan exceed 10 billion yen 2) merges with a company in Japan whose total assets exceed 1 billion yen, or with a foreign company whose net sales in Japan exceed 1 billion yen note1: “total assets” means the sum of the total amount of assets of the said company, subsidiaries in Japan of the said company, and a company in Japan which holds more than 50 percent of the total voting rights of all stockholders of the said company. Note2: “net sales in Japan” means sales of the said company’s business offices (including the business offices of its subsidiaries) in Japan In case of stockholding, division and acquisition of business : B. To which entities do the both acquiring and acquired parties. (See A. above) merger notification thresholds apply, i.e., In case of merger (Article 15) : which entities are both parties (See A. above) included in determining relevant undertakings/firms for threshold purposes? If based on control, how is control determined? No. C. Are the thresholds subject to adjustment: 3
  4. 4. (e.g. annually for inflation)? If adjusted, state on what basis and how frequently. Fiscal year of the notifying parties. D. 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)? The latest balance sheet and the profit and loss statement. E. Describe the methodology for identifying and calculating any values necessary to determine if notification is required, including the value of the transaction, the relevant sales or turnover, and/or the revelant assets? Exchange rate of the setting day of the parties’ fiscal year. F. Describe methodology for calculating exchange rates. It depends on the types of M&A etc. (See A. above) G. Do thresholds apply to worldwide sales/assets, to sales/assets within the jurisdiction, or both? No. H. Can a single party trigger the notification threshold (e.g., one party’s sales, assets, or market share)? In case of M&A by foreign companies, notification thresholds are I. How is the nexus to the defined mainly by net sales in Japan. (See A. above) jurisdiction determined (e.g., sales or assets in the jurisdiction)? If based on an “effects doctrine,” please describe how this is applied. Is there a requirement of local presence (local assets/affiliates/subsidiar ies) or are import sales 4
  5. 5. into the jurisdiction sufficient to meet an “effects” test? Location of seller. J. If national sales are relevant, how are they allocated geographically (e.g., location of customer, location of seller)? We do not use market share as a threshold. K. If market share tests are used, are there guidelines for calculating market shares? No. L. Are there special threshold calculations for particular sectors (e.g., banking, airlines, media) or particular types of transactions (e.g. joint ventures, partnerships, financial investments)? No. M. Are any sectors excluded from notification requirements? If so, which sectors? No. (Some notification thresholds for foreign companies are N. Are there special rules defined by net sales in Japan instead of total assets. See A. regarding jurisdictional above.) thresholds for transactions in which both the acquiring and acquired parties are foreign? Yes. O. Does the agency have the authority to review transactions that fall below the thresholds? 5. Notification requirements and timing of notification 5
  6. 6. Yes, in case of merger, division and acquisition of business. A. Is notification mandatory pre-merger? Yes, in case of stockholding. B. Is notification mandatory post-merger? No. C. Can parties make a voluntary merger filing even if filing is not mandatory? If so, when? In case of stockholding : after transaction completed. D. What is the earliest that a transaction can be In case of merger, division and acquisition of business : notified (e.g., is a after the contract of transaction and the decision of the definitive agreement shareholders’ meeting. required; if so, when is an agreement considered definitive?)? In case of stockholding : E. Must notification be made Notification must be made within 30 days from the date of within a specified period stockholding. following a triggering event? If so, describe the In case of merger, division and acquisition of Business : triggering event (e.g., The parties cannot close transaction until the expiration of the 30 definitive agreement) and days waiting period from the date of acceptance of the the deadline following the notification. event. Do the deadline and triggering event depend on the structure of the transaction? Are there special rules for public takeover bids? In case of merger, division and acquisition of business : F. Can parties request an The JFTC may, when it finds it necessary, shorten the waiting extension for the period. notification deadline? If yes, please describe the procedure and whether there is a maximum length of time for the extension. 6. Simplified procedures In case of merger, division and acquisition of business : Describe any special Notification is not required if 6
  7. 7. procedures for notifying 1) Any one of the parties holds more than 50 percent of the total transactions that do not voting rights of all stockholders of each of the other merging raise competition companies concerns (e.g., short form, 2) More than 50 percent of the total voting rights of all simplified procedures, stockholders of each of the parties are held by one company. advanced ruling certificates, discretion to waive certain responses, etc.). 7. Documents to be submitted 1) Memorandum A. Describe the types of 2) Copy of documents of the contract documents that parties 3) Financial statement (if it is made) must submit with the 4) List of stockholders notification (e.g., 5) Copy of a record of general meeting of stockholders held for agreement, annual approval of transaction reports, market studies, transaction documents). No. B. Are there any document legalization requirements (e.g., notarization or apostille)? No. C. Are there special rules for exemptions from information requirements (e.g. information submitted or document legalization) for transactions in which the acquiring and acquired parties are foreign? 8. Translation Japanese. A. In what language(s) can the notification forms be submitted? Only merger-related parts of the documents listed 7.A. above are B. Describe any required to translate. Financial statements do not have to be requirements to submit translated. translations of 7
  8. 8. 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 of the translation, language(s) accepted, and whether summaries or excerpts are allowed in lieu of complete translations. 9. Review periods In case of merger, division and acquisition of business : A. Describe any applicable 1) 30 days from the date of acceptance of the notification. review periods following 2) If the JFTC requires the parties to submit necessary reports notification. within 30 days above, 120 days from the date of acceptance of the notification or 90 days from the date of acceptance of all necessary reports, whichever is later. No. B. Are there different rules for public tenders (e.g. open market stock purchases or hostile bids)? There is no provision for an extension of the review periods. C. What are the procedures for an extension of the review periods, if any (e.g., suspended by requests for additional information, suspended at the authority’s discretion or with the parties’ consent)? Is there a statutory maximum for extensions? In case of merger, division and acquisition of business : D. What are the procedures The JFTC may, when it finds it necessary, shorten the 30 days for accelerated review of waiting period. non-problematic transactions, if any? 8
  9. 9. 10. Waiting periods / suspension obligations In case of merger, division and acquisition of Business : A. Describe any waiting The parties cannot close transaction until the expiration of the 30 periods/suspension days waiting period from the date of acceptance of the obligations following notification. notification, including whether closing is suspended or whether the implementation of the transaction is suspended or whether the parties are prevented from adopting specific measures (e.g., measures that make the transaction irreversible, or measures that change the market structure), during any initial review period and/or further review period. The JFTC may, when it find it necessary, shorten the waiting B. Can parties request a periods. The shortening of the waiting period is permitted, in derogation from waiting principle, under the condition that 1) it is evident that the effect periods/suspension may not substantially restrain competition in any relevant market; obligations? If so, under and 2) there is the rational reason for the shortening the waiting what circumstances? period. The 30 days waiting period are not limited to the transaction that C. Are the applicable waiting occur in Japan. periods/suspension obligations limited to aspects of the transaction that occur within the jurisdiction (e.g., acquisition or merger of local undertakings/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 suspension obligations, commitment to hold separate the local 9
  10. 10. business operations, escrow agents.) Yes. D. Are parties allowed to close the transaction if no decision is issued within the statutory period? The court may, upon application of the JFTC, when it finds the E. Describe any provisions matter to be one of urgent necessity, order a urgent injunction or procedures available against the parties. (Article 70-13 of the AMA) to the enforcement authority, the parties and/or third parties to extend the waiting period/suspension obligation. See B. above. F. Describe any procedures for obtaining early termination of the applicable waiting period/suspension obligation, and the criteria and timetable for deciding whether to grant early termination. There is no provision in the AMA. G. 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). 11. Responsibility for notification / representation Stockholding: The stockholding party A. Who is responsible for notifying – the acquiring Merger: The parties concerned person(s), acquired person(s), or both? Does Division: The parties concerned each party have to make its own filing? Acquisitions of business: The acquiring party 10
  11. 11. No. B. Do different rules apply to public tenders (e.g. open market stock purchases or hostile bids)? No. C. 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)? Power of attorney. D. How does the validity of There is no special rule for foreign representatives or firms. the representation need A power of attorney does not have to be legalized. 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? 12. Filing fees No fee. A. Are any filing fees assessed for notification? If so, in what amount and how is the amount determined (e.g., flat fee, fees for services, tiered fees based on complexity, tiered fees based on size of transaction)? B. Who is responsible for payment? C. When is payment required? D. What are the procedures for making payments (e.g., accepted forms of 11
  12. 12. payment, proof of payment required, wire transfer instructions)? 13. Confidentiality The JFTC does not announce the fact that a notification filing was A. To what extent, if any, made. does your agency make public the fact that a pre- merger notification filing was made or the contents of the notification? The notifying parties can request to disclose information based on B. Do notifying parties have the Information Disclosure Law. access to the authority’s file? If so, under what circumstances can the right of access be exercised? The third parties can request to disclose information based on the C. Can third parties or other Information Disclosure Law. government agencies obtain access to notification materials? If so, under what circumstances? The parties may require not publishing nor disclosing to the third D. Are procedures available parties the part concerning the secret of companies. The extent of to request confidential the secret of companies is identified under the provisions of the treatment of the fact of Information Disclosure Law. notification and/or notification materials? If so, please describe. Yes. With Unite States, European Community, Canada, Australia, E. Is the agency or Singapore and Mexico. government a party to The agreements are available at the website of the JFTC. any agreements that (http://www.jftc.go.jp/e-page/internationalrelations/index.html) permit the exchange of information with foreign competition authorities? If so, with which foreign authorities? Are the agreements publicly available? Yes. F. Can the agency exchange It needs the consent from the parties. 12
  13. 13. documents or information with other reviewing agencies? If so, does it need the consent from the parties who have submitted confidential information to exchange such information? 14. Transparency Yes. A. Does the agency publish (http://www.jftc.go.jp/e-page/reports/annual/index.html) an annual report? Please provide the web address if available. Yes. B. Does the agency publish (http://www.jftc.go.jp/e-page/pressreleases/index.html) press releases related to merger policy or investigations? Yes. C. Does the agency publish decisions on why it cleared / blocked a transaction? 15. Sanctions/penalties Fine of not more than 2 million yen (Article 91-2 of the AMA) A. What are the sanctions/penalties for failure to file a notification and/or failure to observe any mandatory waiting periods/suspension obligations? The Party/ies who ought to notify. B. Which party/ies are potentially liable? The JFTC cannot impose a fine directly. C. Can the agency impose/order these 13
  14. 14. sanctions/penalties directly, or is it required to bring judicial action against the infringing party? If the latter, please describe the procedure and indicate how long this procedure can take. 16. Judicial review A suit to quash a decision of the JFTC shall be filed within 30 Describe the provisions days from the date on which the decision becomes effective. and timetable for judicial (Article 77 of the AMA) review or other rights of appeal/review of agency decisions on merger notification and review. 17. Additional filings No banking company, in principle, shall acquire or hold the voting Are any additional rights of other companies in Japan if by doing so it holds in filings/clearances required excess of 5% (10% in the case of an insurance company) of the for some types of total voting rights. It is only granted if the JFTC authorizes. transactions, e.g., sectoral (Article 11 of the AMA) regulators, securities regulator? 18. Closing deadlines No. When a transaction is cleared or approved, is there a time period within which the parties must close for it to remain authorized? 19. Post merger review of transactions 14
  15. 15. If remedies which the parties notify are not carried out by the Can the agency reopen an deadline, the JFTC can take action within a year from the investigation of a deadline. transaction that it previously cleared or allowed to proceed with conditions? If so, are there any limitations, including a time limit on this authority? 15

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