Japan: Shrinking market doctrine for aging stagnant economies? The JFTC 2019 revision of merger guidelines

While Japan is aging rapidly and the local communities in rural areas are struggling to maintain their essential societal function, the Japan Fair Trade Commission (JFTC) has revised the merger guidelines to allow for mergers that create a monopoly. Under the new approach, which the author calls the shrinking market doctrine, such a merger is deemed to lack an anti-competitive effect if the market is no longer large enough to hold multiple companies. The article examines the precedent of the doctrine (a regional bank merger case), the logic behind it (counterfactual analysis and minimum efficient scale argument) and the way the JFTC is likely to apply the doctrine. The author then concludes that the careless application of the doctrine would lead to harm on the local community and that the doctrine should not add much to the already existent efficiency defence and failing company doctrine.

1. The Japan Fair Trade Commission (JFTC) revised its merger guidelines on 17 December 2019. [1] The Antimonopoly Act (AMA) prohibits mergers “likely to substantially restrict competition in a particular field of trade.” [2] While the jurisprudence clarifies this means establishing, maintaining or enhancing a company’s market power in the relevant market, [3] neither the AMA nor the case law indicated how this effect should be assessed. The JFTC’s merger guidelines fill this gap. The primary purpose of the 2019 revision was to adapt the guidelines to the digital economy, [4] a change that would require another paper’s worth of information to outline. This article instead focuses on one new paragraph [5] that addresses the situation that occurs where the scale of the market has shrunk or is

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  • Kyoto University


Masako Wakui, Japan: Shrinking market doctrine for aging stagnant economies? The JFTC 2019 revision of merger guidelines, May 2020, Concurrences N° 2-2020, Art. N° 93541,

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