The Japanese Television Cartel was a cartel formed by the seven largest Japanese television manufacturers. It operated from the 1950s until at least 1974. During that time period it engaged in illegal activities such as dumping, as well as price and output manipulation with the goal of taking control over the Japanese and American TV markets. Its operation halted in the aftermath of a series of investigations conducted by the authorities of the two countries.
In 1950, the Japanese economy entered a phase of rapid growth which would last until 1973. This period was characterized by a number of protectionist policies including but not limited to the enactment of discriminatory laws towards foreign trade partners, the insulation and oligopolization of capital markets, the bureaucratic allocation of foreign exchange as well as state coordinated acquisition of foreign technology. The adoption of large scale production techniques and foreign know-how, led to a reduction in unit cost, which allowed large companies to expand their operations with the aid of loans from the country's largest banks which were given at sub-equilibrium interest rates. Nevertheless, Japan's leap into industrialization was not matched by the development of its product distribution systems, which remained largely unchanged. Companies reacted to the resulting bottleneck effect in sales by vertically integrating their sales systems, through the creation of informal business groups known as keiretsu. The formation of keiretsu, enabled manufacturers to enter into collusion with distribution companies by fixing the price of the product at an artificially low level, while the distributors' losses were secretly refunded through a system of rebates. Distributors were accordingly rewarded or punished for their cooperation and loyalty. [1]
Beginning its rise in the mid-1950s the Japanese home appliance production increased 25-fold by 1968. Pioneered in Europe and the United States, television technology spread to Japan by means of licensing arrangements and technical assistance from companies such as Westinghouse, Philips, General Electric, Zenith Electronics and Western Electric. The Japanese television market was dominated by seven companies, namely Hitachi, Toshiba, Matsushita, Sony, Sanyo, Sharp and Mitsubishi, who controlled a combined 99.9% of the market share. Facing the aforementioned distribution bottlenecks, television producers began dividing Japan into territories, thereafter assigning wholesalers to each one. With the wholesale industry under their complete control, television companies went on to create an undercover "Market Stabilization Group" which included the six of the biggest players in the industry excluding Sony. An investigation by the Fair Trade Commission of Japan (FTCJ) uncovered a series of monthly, clandestine meetings, conducted by the higher management echelons of the industry over a period of 15 years. The group admitted to intentionally limiting the profit margin of retailers, minimizing sales to non-affiliated retailers, horizontal price and output manipulation. A further investigation also revealed the existence of a vertical price-fixing scheme between Sony and Matsushita. Despite the findings the FTCJ did not impose major fines or structural adjustments to those involved until the Matsushita Electric Industrial Co. v. Zenith Radio Corp. lawsuit was launched in the United States in 1985. [2]
Investigation within the US revealed the presence of five interconnected working groups involving all seven of the major Japanese companies, which met from 1964 until at least 1974. The groups, actively shared data on topics such as production, inventory, and shipment sizes. The information was then in ways similar to the ones already implemented in Japan. The cartels maintained an economic policy of increasing prices at the Japanese market while also dumping their products abroad, in an effort to damage their American competitors through predatory pricing. American companies failed to exploit their sudden competitive advantage on the Japanese market, while also suffering heavy losses domestically. The restructuring of the American television market resulted in the exit of 21 companies and the fall of numerous others into Japanese hands. Dumping and the aggressive use of rebates were determined to be forms of customs fraud under the 1921 U.S. Anti-Dumping Act, however. The U.S. Federal agencies such as the International Trade Commission conducted dozens of investigations, resulting in the Japanese-American Orderly Marketing Agreement, which limited the import of Japanese TV sets. In April 1980, the companies involved in the cartel were ordered to pay $66 million; however the collection of the fine was delayed for a significant time period as litigation continued. [3] [4]
A keiretsu is a set of companies with interlocking business relationships and shareholdings that have dominated the Japanese economy since the second half of the 20th century. In the legal sense, it is a type of informal business group that is loosely in an organized alliance within the social world of Japan's business community. It rose up to replace the zaibatsu system that was dissolved in the occupation of Japan following the Second World War. Though their influence has shrunk since the late 20th century, they continue to be important forces in Japan's economy in the early 21st century.
Sony Group Corporation, formerly known as Tokyo Tsushin Kogyo K.K. and Sony Corporation (ソニー株式会社), commonly known as Sony, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. The Sony Group comprises entities such as Sony Corporation, Sony Semiconductor Solutions, Sony Entertainment, Sony Interactive Entertainment, Sony Financial Group, and others.
A cartel is a group of independent market participants who collude with each other as well as agreeing to compete with each other in order to improve their profits and dominate the market. A cartel is an organization formed by producers to limit competition and increase prices by creating artificial shortages through low production quotas, stockpiling, and marketing quotas. Cartels can be vertical or horizontal but are inherently unstable due to the temptation to defect and falling prices for all members. Additionally, advancements in technology or the emergence of substitutes may undermine cartel pricing power, leading to the breakdown of the cooperation needed to sustain the cartel. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Most jurisdictions consider it anti-competitive behavior and have outlawed such practices. Cartel behavior includes price fixing, bid rigging, and reductions in output. The doctrine in economics that analyzes cartels is cartel theory. Cartels are distinguished from other forms of collusion or anti-competitive organization such as corporate mergers.
Toshiba Corporation is a Japanese multinational electronics company headquartered in Minato, Tokyo, Japan. Its diversified products and services include power, industrial and social infrastructure systems, elevators and escalators, electronic components, semiconductors, hard disk drives (HDD), printers, batteries, lighting, as well as IT solutions such as quantum cryptography which has been in development at Cambridge Research Laboratory, Toshiba Europe, located in the United Kingdom, now being commercialised. It was one of the biggest manufacturers of personal computers, consumer electronics, home appliances, and medical equipment. As a semiconductor company and the inventor of flash memory, Toshiba had been one of the top 10 in the chip industry until its flash memory unit was spun off as Toshiba Memory, later Kioxia, in the late 2010s.
In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses in order to promote competition and prevent unjustified monopolies. The three main U.S. antitrust statutes are the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. These acts serve three major functions. First, Section 1 of the Sherman Act prohibits price fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that may substantially lessen competition or tend to create a monopoly. Third, Section 2 of the Sherman Act prohibits monopolization.
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.
Panasonic Holdings Corporation is a Japanese multinational electronics company, headquartered in Kadoma, Osaka, Japan. It was founded in 1918 as Matsushita Electric Housewares Manufacturing Works in Fukushima, Osaka by Kōnosuke Matsushita. In 1935, it was incorporated and renamed Matsushita Electric Industrial Co., Ltd. In 2008, it changed its name to Panasonic Corporation. In 2022, it became a holding company and was renamed.
JVC is a Japanese brand owned by JVCKenwood. Founded in 1927 as the Victor Talking Machine Company of Japan and later as Victor Company of Japan, Ltd., the company was best known for introducing Japan's first televisions and for developing the Video Home System (VHS) video recorder.
Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to attain objectives forbidden by law; for example, by defrauding or gaining an unfair market advantage. It is an agreement among firms or individuals to divide a market, set prices, limit production or limit opportunities. It can involve "unions, wage fixing, kickbacks, or misrepresenting the independence of the relationship between the colluding parties". In legal terms, all acts effected by collusion are considered void.
Sanyo Electric Co., Ltd. is a Japanese electronics manufacturer founded in 1947 by Toshio Iue, the brother-in-law of Kōnosuke Matsushita, the founder of Panasonic. Iue left Matsushita Electric Industrial to start his own business, acquiring some of its equipment to produce bicycle generator lamps. In 1950, the company was established. Sanyo began to diversify in the 1960s, launching Japan's first spray-type washing machine in 1953. In the 2000s, it was known as one of the 3S along with Sony and Sharp. Sanyo also focused on solar cell and lithium battery businesses. In 1992, it developed the world's first hybrid solar cell, and in 2002, it had a 41% share of the global lithium-ion battery market. In its heyday in 2003, Sanyo had sales of about ¥2.5 trillion. However, it fell into a financial crisis as a result of its huge investment in the semiconductor business. In 2009, Sanyo was acquired by Panasonic, and in 2011, it was fully consolidated into Panasonic and its brand disappeared. The company still exists as a legal entity for the purpose of winding up its affairs.
The videotape format war was a period of competition or "format war" of incompatible models of consumer-level analog video videocassette and video cassette recorders (VCR) in the late 1970s and the 1980s, mainly involving the Betamax and Video Home System (VHS) formats. VHS ultimately emerged as the preeminent format.
Marubeni Corporation is a sōgō shōsha headquartered in Nihonbashi, Chuo, Tokyo, Japan. It is one of the largest sogo shosha and has leading market shares in cereal and paper pulp trading as well as a strong electrical and industrial plant business. Marubeni is a member of the Mizuho keiretsu.
Ketan Parekh is a former stockbroker from Mumbai, who was convicted in 2008 for involvement in the Indian stock market manipulation scam that occurred from late 1998 to 2001. During this period, Parekh artificially rigged prices of certain chosen securities, using large sums of money borrowed from banks including the Madhavpura Mercantile Co-operative Bank, of which he himself was a director.
Quasar is an American brand of electronics, first used by Motorola in 1967 for a model line of transistorized color televisions. These TVs were marketed as containing all serviceable parts in a drawer beside the picture tube. It was then established as a subsidiary brand, with all Motorola-manufactured televisions being sold as Quasar by Motorola. In 1974, Motorola sold its television business to Matsushita Electric, now Panasonic, which continued producing and marketing televisions under the Quasar brand until 2005. In 2013, Panasonic re-registered the Quasar trademark.
Bid rigging is a fraudulent scheme in a procurement action which enables companies to submit non-competitive bids. It can be performed by corrupt officials, by firms in an orchestrated act of collusion, or by officials and firms acting together. This form of collusion is illegal in most countries. It is a form of price fixing and market allocation, often practiced where contracts are determined by a call for bids, for example in the case of government construction contracts. The typical objective of bid rigging is to enable the "winning" party to obtain contracts at uncompetitive prices. The other parties are compensated in various ways, for example, by cash payments, or by being designated to be the "winning" bidder on other contracts, or by an arrangement where some parts of the successful bidder's contract will be subcontracted to them. In this way, they "share the spoils" among themselves. Bid rigging almost always results in economic harm to the agency which is seeking the bids, and to the public, who ultimately bear the costs as taxpayers or consumers.
The main elements of Japan's financial system are much the same as those of other major industrialized nations: a commercial banking system, which accepts deposits, extends loans to businesses, and deals in foreign exchange; specialized government-owned financial institutions, which fund various sectors of the domestic economy; securities companies, which provide brokerage services, underwrite corporate and government securities, and deal in securities markets; capital markets, which offer the means to finance public and private debt and to sell residual corporate ownership; and money markets, which offer banks a source of liquidity and provide the Bank of Japan with a tool to implement monetary policy.
Japan's major export industries include automobiles, consumer electronics, computers, semiconductors, copper, and iron and steel. Additional key industries in Japan's economy are petrochemicals, pharmaceuticals, bioindustry, shipbuilding, aerospace, textiles, and processed foods.
The Japanese economic miracle refers to Japan's record period of economic growth between the post-World War II era and the end of the Cold War. During the economic boom, Japan rapidly became the world's second-largest economy. By the 1990s, Japan's population demographics had begun to stagnate, and the workforce was no longer expanding as quickly as it had in the previous decades despite per-worker productivity remaining high.
This is a partial list of notable price fixing and bid rigging cases.
The JVC HR-3300 VIDSTAR is the world's first VHS-based VCR to be released to the market, introduced by the president of JVC at the Okura Hotel on September 9, 1976. Sales started in Japan under the name Victor HR-3300 on 31 October 1976. Foreign sales followed in 1977 with the HR-3300U in the United States, and HR-3300EK in the United Kingdom.
{{cite journal}}: Cite journal requires |journal= (help)