A merger of two regional banks in Kyushu put on hold by the Fair Trade Commission over monopoly concerns is raising a larger question: Should the competitive policy be reviewed when the market is shrinking under the nation's declining population?
Businesses are expected to operate in an adequately competitive environment. If a company dominates the market in the absence of competitors, consumers will have no choice but to buy the firm's goods or services irrespective of their price or quality, thus putting the company in a position of overwhelming advantage. The FTC's job under the antimonopoly law is to keep vigil against the emergence of such a condition.
On the other hand, declining demand for financial services in Japan's depopulated areas is shaking the business foundation of regional banks — key institutions that underpin the nation's regional economies. The Financial Services Agency, which seeks to promote realignment of banks for their survival amid their shrinking markets, is at loggerheads with the FTC over whether antimonopoly principles should be strictly applied to mergers of these financial institutions.