FTC raids suspected PP price fixing cartel

05 June 2000 00:00  [Source: ICB]

Seven Japanese polypropylene producers were raided by Japan's Fair Trade Commission (FTC) last week. The companies, which include the Montell joint venture Montell SDK Sunrise, are under suspicion of operating a cartel in the domestic Japanese polypropylene market.

Kyohe Sakai, director of management and planning at the Fair Trade Commission's investigation department, confirmed that Sumitomo Chemical, Tokuyama, Japan Polychem, Grand Polymer, Idemitsu Petrochemical, Chisso and Montell SDK Sunrise were raided on 30 May. These companies account for around 90% of Japan's 3m tonne/year domestic polypropylene market. There has been considerable consolidation in the Japanese polypropylene market over the past five years as players have either formed joint ventured or left the arena.

Sakai said: 'We are investigating price control in polypropylene.' Although Sakai declined to confirm the reasons for the FTC's interest in the polypropylene market, Japanese sources suggest that there were two attempts to control the price of polypropylene in the autumn of last year and spring of this year.

Yukio Muakami, of Chem Systems in Japan, said that if this is the case it marks a significant reduction in the tolerance of price fixing in the Japanese polymer processing industries. Historically, processors have been more tolerant of possible price collusion. 'It took seven or eight months' before someone complained about the situation this time, he said. 'In the past it took over several years.'

Under Japanese trade law, the FTC can 'recommend' to companies it believes to be operating a cartel to stop and pay a fine equivalent to around 6% of sales during the operation of the cartel, said Sakai. If the companies reject this, then the FTC can take them court in an attempt to enforce the penalty.

PP CAPACITIES, JAPAN 1999, '000 TONNE/YEAR

Sumitomo

240

Tokuyama

140

Japan Polychem

782

Grand Polymer

598

Idemitsu

370

Chisso

316

Montell SDK

285

Others

350

Total

3050

Source: Chem Systems

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