Newsletter
PROPOSED MAJOR CHANGES TO MERGER APPROVAL SYSTEM
The Fair Trade Commission (FTC) has decided to investigate the desirability of relaxing Fair Trade Law (FTL) regulation on business combinations. Matters to be considered include whether merger control should be changed from the present system of prior approval to that of filing.
Under the present system, parties to a proposed business combination have to seek prior approval from the FTC, and may only implement the transaction after receiving such approval. The FTC is now considering switching to a system whereby parties will file their plan to combine; if the FTC does not object within a specified period, the regulatory authority will not then be able to prohibit it retroactively if the parties go ahead with the transaction.
The FTC states that adopting such a system would reduce government interference in the market. The need for the FTC to decide within a relatively short time whether it objects to a combination will prevent commercial opportunities being lost due to slow processing of applications.
Moreover, under the new system, the FTC need not make substantive examinations of applications where there are grounds for believing that competition is likely to be restricted. This will allow the FTC to better concentrate its efforts on cases closely relevant to competition issues.
The FTC also intends to simplify the threshold for combination approvals from the present system, which considers both the market share and sales turnover of each party, to only considering sales turnover. In the future, if the sales turnover of enterprises wishing to combine with mother does not exceed a figure announced by the FTC, even if their market share is high, it would not be necessary to apply for an approval.