News Release

Sumitomo Mitsui Banking Corporation Issued Administrative OrdersBy the Financial Services Agency(3/3)

Provisional translation of the original Japanese version



The Method of Making a Judgment on The method Method of Making a Judgment on

for Judgment of Abuse of Dominant Bargaining Position



1. Necessary condition Requirements for ”Abuse of Dominant Bargaining Position”

(1)Following conditions requirements must be met in order to assume that are necessary to apply ”Abuse of Dominant Bargaining Position” under according to the Japanese Antimonopoly Act (“ACT”). (Sec. 2-9-5 , G g eneral D d esignation No. 14) exists in certain transactions :


i Requirement of Position ing Factor

One of the part ies to the transaction person maintain ha s Dominant Bargaining Position to another the other .

ii Requirement of Abuse Factor

Utilizing the dominant bargaining position, one One of the parties to the transaction presum ably took advantage of t he Dominant Bargaining Position over the other to person imposes cause unfair disadvantage s to another the other party . (specifically , taking the actions described in General Designation No 14 item 1 to 5 of the Act.

iii Requirement of Impedi ment ng to Fair Competition Factor

One of the part ies to the transaction presum ably abuse d the Dominant Bargaining Position person treats another in such a n unfair manner that appears unfair from the view point of normal common market practice point of view .


If certain t ransaction fail s to meet any A case lacking of any one of the above requirements above , no  factors does not fall upon “Abuse of Dominant Bargaining Position” is presumed to exist in the transaction .


(2) Requirement of Position ing Factor means is met , in short, when that one party is dependent on the other there is dependence in conducting busine ss es ss” ;   In this the case of SMBC , the criteria to determine if certain transaction meets fulfill the Requirement of Position ing Factor is whether it is deemed difficult for the client of SMBC to substitutive procure ment necessary of fund from other financial institutions instead of other than SMBC is proved difficult . The above availability of procurement necessary funds from other financial institutions as described above should be judged in light of by the client’s business relations with SMBC and other financial institutions, the its business performance and , financial status conditions , and so forth of the relevant client .

3 Requirements of Abuse factor means is met , in short, when Utilizing one party took advantage of the the stronger position (=dominant bargaining position) , one person to force imposes unfair disadvantage on the other his counterparty . In this the case of SMBC , the standard criteria to judge determine if whether Requir e ment of Abus e is satisfied ing or not is that whether , in order to force the client to purchase interest rate swap, the officer of SMBC took advantage of the client’s situation that he has no choice but to borrow from SMBC enforced to purchase interest rate swap ,explicitly stating” or “ implying hinting ” that the “ loan is conditioned on the purchase of interest rate swap was a condition ” or the “refusal to purchase the interest rate swap would result in unfavorable lending conditions worse than usual utilizing the condition that his client had to borrow from SMBC .

In order T t o check determine whether there was the existence of such an explicit stat ement ing ” or an hinting implication ”, such factors shall be taken into consideration as details of the background process of making entering into an interest rate swap contract agreement , the frequency number of meeting s with the client, attendance of including meeting accompanied by his senior officer of SMBC at the meetings , and the rationale for the client to purchase effectiveness of the interest rate swap to the client .


(4) Requirement of Impedi ment ng to Fair Competition Factor means is met when the violation of free and fair competition is deemed undermined due to lack of in voluntary transaction s . Normally, t T his requirement factor is usually satisfied regarded as fulfilled where if both of Requirement of Position ing Factor and Requirement of Abuse Factor are both deemed satisfied fulfilled .


2. Actual Method of Judgment E e mployed

(1) Upon judgment in this In the process of investigation, the Committee made a judgment determined on the fulfillment of Requirement of Position ing Factor and Requirement of Abuse in every case Factor for each case .

However, t T he Committee gave a priority to examin ed the fulfillment of Requirement of Position ing Factor in priority because , taking into account that a buse of d ominant p osition without fulfillment of Requirement of Position ing Factor is impossible must be met in order to meet Requirement of Abuse   a buse of Dominant Bargaining Position and it is possible to make a judgment on Requirement of Position ing Factor can be determined to considerable extent by examining objective data information such as on business re lation s lations , business performances and , financial status conditions, etc.

It should be noted that the Committee took a conservative approach in   making a judgment on Requirement of Position because took a prudent stance in determination of fulfillment of Positioning Factor as the possibility of the fulfillment may in case whether the requirement is met or not can be a crucial factor to in the final judgment , and , accordingly, . A a ll the case s that could where the possibility of fulfillment possibly meet R equirement of Position was not able to denied were proceeded referred to the following step (2).


(2)The Committee examined Requirement of Abus e ing Factor when it recognized the case satisfied the Requirement of Position was deemed or could possibly be satisfied ing Factor or the possibility to satisfy it .


(3)The Committee judged as the categorized such case s into of The Cases of Abus e ing of Dominant Bargaining Position” or the case of concern of The Cases of Possible Abus e ing of Dominant Bargaining Position , that when the Committee recognized satisfied or could possibl y satisf y the possibility or existence of Requirement of Position ing Factor and Requirement of Abus ing Factor e .

Also, the Committee categorized the such case s as into T t he C c ase s of concern of Possible other l L egal Liabilities r esponsibility ( The Cases Requiring Further Investigation ) that presumably failed to meet Requirement of Position but, as a result of when it further  investigation examined the of the process of entering into interest rate swap agreement background situation of the agreement of interest rate swap and then , turned out it found the to be in violation of any laws or regulations such as breach of duty to make possibility of lack of the sufficient explanation to the client , even if the Committee admitted there was no possibility to satisfy the Positioning Factor .


(4)In the flow of judgment mentioned above foregoing process , two lawyers of the Committee were responsible for each case examined and made a judgment on every s ingle case . When If the conclusion s of the two lawyers  was not the same differ from each other , they argued to become the same conclusion made a final judgment after thorough discussion . Also, in the case that the lawyers felt they need more additional information or material to make judgment , they asked Antimonopoly Monitoring Office , of SMBC to do conduct an additional research to collect them and made a judgment based on the result of the research .



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