3. Assessment under the AMA(1) Subs

3. Assessment under the AMA
(1) Substantial restraint of competition by unilateral conduct
With the Merger, the parties will have a total market share of approximately 55%. Ther is one effective competitor, however it does not have sufficient excess capacity. It is therefore considered that, when the parties increase their prices, it will be difficult to increase the volume of supply sufficiently.
As to high-grade products, the Overseas Makers do not manufacture products with the high quality required by the Domestic Users at their domestic bases, and import pressure is not recognized. Some low-grade products are imported. There is a certain number of Domestic Users that would change to the Overseas Makers’ Products if domestic prices rose. However, the Domestic Users showed concern that, as compared with domestic makers products, the Overseas Makers’ Products do not have sufficient quality that the Domestic Users would require at domestic bases, and there are uncertainties regarding stable procurement due to significant changes in prices. It it therefore acknowledge that import pressure is not necessarily strong.
In addition, it is not easy for the Domestic Users to change supplier makers, and competitive pressure from users is not recognized.
Accordingly, with the Merger, in terms of high-grade products, a situation could easily arise in which the corporate group may solely determine prices, etc. to a certain extent. It is therefore considered that the Merger may substantially restrain competition.
(2) Substantial restraint of competition through coordinated conduct
With the Merger, the number of companies in the domestic market for non- oriented electrical steel sheets will decline from three to two. It is recognized that it will be easier to conduct business in a coordinated manner than before the Merger.
SMI differs in the handling or non-handling of grain-oriented electrical steel sheets and the strength or weakness of the production base from NSC and Company A. The actual price strategy of SMI is recognized to differ from that of NSC and Company A. After the Merger, two companies with the same nature will divide the market almost in two. It is therefore considered that the behavior of both companies can be predicted with a high degree of probability.
Under such a situation, import pressure on high-grade products is not recognized. Import pressure on low-grade products is not necessarily strong. Competitive pressure from users is not recognized.
Accordingly, after the Merger, in terms of high-grade products, a situation could easily arise in which the corporate group may have some latitude to determine prices, etc. through coordinated conduct with their competitors. It is therefore considered that the Merger may substantially restrain competition.