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JFTC investigation into LNG Supply Agreements may set precedent for Antitrust Scrutiny in Asia

Media Alert
BRUSSELS/LONDON, 7 March 2017 - The Japan Fair Trade Commission (“JFTC”) has recently launched an investigation into whether destination clauses in long-term LNG supply contracts with Japanese buyers violate Japanese competition law. 

If the JFTC formally objects to these arrangements, then this may result in the forced renegotiation of LNG SPAs, a complicated renewals process and/or trigger price review procedures. Furthermore, it cannot be excluded that other antitrust enforcement agencies in the Asia region will follow suit and subject LNG supply agreements involving buyers in their jurisdiction to the same level of antitrust scrutiny as well.

The JFTC’s investigation presents a myriad of potential implications for LNG sellers against the backdrop of a global glut and a current energy over-supply of the Japanese market; analysts estimate that Japanese buyers will face a surplus of 12.2 billion cubic meters of LNG in 2017 and 8.6 billion cubic meters in 2019.

Now is the right time for LNG sellers to review their contracts, so that they can be best prepared to navigate the hurdles created by the JFTC investigation.

Baker Botts has a wealth of experience in LNG related transactions, disputes and government investigations and its experts are available to discuss the impact of the JFTCs investigation and its potential implications for LNG sellers against the background of current Japanese market conditions and trends.

To schedule an interview with Paul Lugard, a competition law partner in Brussels or Jay Alexander, a London based senior trial partner, who leads the International Arbitration and Disputes Resolution practice, or receive a contributed article, please contact Louisa Williams or Brecke Boyd


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