Japan: PP price fixing inquiry

05 June 2000 00:00  [Source: ACN]

Japan's Fair Trade Commission (FTC) has launched investigations into suspected price-fixing by all seven domestic PP producers.

On 30 May, the FTC raided more than 20 offices belonging to Sumitomo Chemical, Tokuyama Corp, Japan Polychem, Grand Polymer, Idemitsu Petrochemical, Chisso Petrochemical and Montell Sunrise SDK, confirmed Kyohei Sakai, an FTC director close to the investigations.

'Investigations are expected to take six months to a year,' Sakai said. He declined to say what had triggered the investigations, but indicated that the FTC is not planning to initiate similar investigations on other chemical products at this time. Another FTC official indicated that the commission will scrutinise the seized documents, including electronic mail and hard copy, to ascertain if there is any proof of a 'concerted intention' to raise prices, and evidence of a coordinated effort to do so. Officials from the producer companies confirmed to ACN that the raid had taken place, but most declined to comment on the investigations.

It was unclear as ACN went to press what immediate impact the investigations will have on the PP market, or how the investigations will influence producers' future pricing strategies. It is also unclear what penalties could be levied if the producers are found to have fixed prices. ACN understands that in another similar investigation conducted last year on the petroleum industry, the Japanese court has yet to decide if criminal charges will be brought against guilty parties. It is unclear, however, whether these parties are individuals or companies. The investigations are viewed as a severe blow to the PP producers, which have been aggressively restructuring and reducing costs in a bid to boost their competitiveness.

Over the past two years, the Japanese chemical sector has seen the merger of players such as that between Japan Polyolefins, Nippon Petrochemical and Montell. Several players have shut down part of their operations to reduce costs.

In the past month, Japan Polychem also recently announced plans to reduce its credit period for trading houses from 90 days to 60 days, as part of is bid to increase its cash flow.

This is the first time in 25 years that Japan's PP producers have been investigated for suspected price-fixing. In February 1974, PP producers were forced to retract two price hikes from November 1973 after they were found guilty of price fixing.

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