Basic Framework for Merger Analysis

Basic Framework for Merger Analysis Japan Fair Trade Commission Mergers and Acquisitions Division Yuji Kimura Yuji_Kimura@jftc.go.jp

Merger Analysis Framework • 0. Identifying Type of Merger • 1. Market Definition, and Market Share and Concentration • 2. Competitive Analysis • 2.1 Unilateral Effects • 2.2 Coordinated Effects • 3. Entry and Expansion • 4. Efficiency • 5. Failing Firm

0. Identifying Type of Merger • Type of Merger • Horizontal Merger (*) • Vertical Merger • Conglomerate Merger

1. Market Definition, and Market Share and Concentration • Relevant Market • Product Market • Geographic Market • Market Definition • Demand-side Substitutability • Supply-side Substitutability • Market Share and Concentration • Market Share and HHI • Safe Harbor

2. Competitive Analysis • 2.1 Unilateral Effects • Entry and Expansion • Buyer Power • Product Differentiation • Competitors’ Characteristics • Alternative Products • etc.

2. Competitive Analysis • 2.2 Coordinated Effects • Number of Firms • Frequency of Trade • Product Homogeneity • Market Transparency • Existence of Maverick firms • Market Stability • Cross-shareholding • Multi-market Contact and Symmetry • etc.

3. Entry and Expansion • Entry • Likelihood of Entry • Sufficiency of Entry • Timeliness of Entry • Expansion

4. Efficiency • Efficiency Criteria • Verifiability • Benefit to Consumers • Merger Specificity

5. Failing Firm • Failing Firm Criteria • Financial Difficulties without the Merger • Inevitability of Exit in the absence of a Merger • No Less Anti-Competitive Alternative to the Merger

Basic Framework for Merger Analysis