Fair Trade Law Q&A - Merger

The term "merger" used in Article 10, paragraph 1, of the Fair Trade Act means any one of the following situations:

1. where an enterprise and another enterprise are merged into one;
2. where an enterprise holds or acquires the shares or capital contributions of another enterprise to an extent of exceeding one-third of the total number of voting shares or total capital of such other enterprise;
3. where an enterprise acquires by assignment or lease from another enterprise the whole or the major part of the business or assets of such other enterprise;
4. where an enterprise operates jointly with another enterprise on a regular basis or is entrusted by another enterprise to operate the latter's business; or
5. where an enterprise directly or indirectly controls the business operations or the appointment or discharge of personnel of another enterprise.

In computing the shares or capital contributions referred to in subparagraph 2 of the preceding paragraph, the shares or capital contributions held or acquired by the controlled by or subordinate to the enterprises of the acquiring enterprise, as well as those held or acquired by the enterprises that are under the control of the same enterprise or multiple enterprise as the acquiring enterprises, shall be included.

The scope of term "merger" as defined under the Company Act refers only to two enterprises merged into one, and constitutes one form of "merger" under the Fair Trade Act. Except for that, the term "merger" under the Fair Trade Act also includes other forms, including share acquisitions, transfers of business or assets, joint operations or entrusted operations, and the control of another enterprise's business operations or personnel appointments. Accordingly, the scope of "combination" under the Fair Trade Act is broader than that of a "merger" under the Company Act.