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Business Articles Awards > Asian Antitrust

Japanese Antitrust Scrutiny of LNG Supply Agreements

Paul Lugard, Jay Alexander, Baker Botts Firm Thought Leadership, 06 March 2017

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The Japanese competition enforcement agency, the Japan Fair Trade Commission (“JFTC”), has recently begun investigating whether destination clauses in long-term LNG supply contracts with Japanese buyers violate Japanese competition law. The JFTC’s investigation, which may affect both DES and FOB contracts, could have significant consequences. The investigation may result in the forced renegotiation of LNG SPAs. It may also complicate the renewal of SPAs expiring in the near future and the negotiation of new SPAs. In addition, the JFTC investigation may trigger price review procedures or other dispute resolution mechanisms generally included in LNG SPAs. Finally, the Japanese Antimonopoly law provides the JFTC with powers to impose administrative sanctions on the parties to anti-competitive agreements.2

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