Recommendation to Manufacturers of Modifiers for Polyvinyl Chloride Resin December 11, 2003 Fair Trade Commission of Japan The Fair Trade Commission of Japan (JFTC), after conducting an investigation in accordance with the provisions of the Antimonopoly Act on manufacturers of modifiers for polyvinyl chloride resin, today issued a recommendation to Kaneka Corporation and Mitsubishi Rayon Co., Ltd. (the “Two Firms”) under the provision of Section 48(2) of the Act for violating Section 3 (prohibition of unreasonable restraint of trade) of the Act (See appended Recommendation): In this case the JFTC made an on-site inspection almost simultaneously with the US Department of Justice, the Canadian Competition Bureau, and the European Commission on February 12, 2003. 1. Parties concerned Of the parties concerned, the following two are to receive recommendation: Name Address Representative Kaneka Corporation 3-2-4, Nakanoshima, Kita-ku, Osaka Masatoshi Takede Mitsubishi Rayon Co., Ltd. 1-6-41, Konan, Minato-ku, Tokyo Yoshiyuki Sumeragi In addition to the above firms, Kureha Chemical Industry Co., Ltd. was also concerned, but is excluded from the parties to receive recommendation since it transferred all business concerning modifiers on January 1, 2003 to Rohm and Haas Company, and no longer carries out business concerning modifiers. 2. Products in question The products in question in this case are modifiers for polyvinyl chloride resin, which are added to polyvinyl chloride resin for the improvement of impact-resistance, weather resistance, workability, etc. 3. Outline of violation The Two Firms and Kureha Chemical Industry Co., Ltd. substantially restricted the competition in the Japanese market of modifiers for polyvinyl chloride resin by making agreements as follows: (1) To raise the selling prices of their products shipped on or after November 21, 1999. (2) To raise the selling prices of products shipped on or after November 21, 2000 for Kureha Chemical Industry Co., Ltd., the selling prices of products shipped on or after December 1, 2002 for Mitsubishi Rayon Co., Ltd., and the selling prices of products shipped on or after December 21, 2002 for Kaneka Corporation. 1 4. Elimination Measures (1) The Two Firms shall confirm the practical elimination of the agreement described in 3 above on and after January 1st, 2003. (2) The Two Firms shall give adequate notification to partner distributors and consumers of the measures taken in accordance with 4(1) above and that it will not commit conduct similar to that described in 3 above. (3) The Two Firms shall not repeat conduct similar to that described in 3 above in the future. (4) The Two Firms shall not exchange information on the increase of selling prices of modifiers for polyvinyl chloride resin with each other, or any other business entity in the future. (5) The Two Firms shall take necessary measures for providing training concerning the Antimonopoly Act for salespeople, have regular audits by people in charge of legal affairs, and shall make their executives and employees thoroughly implement the measures. 5. Due date for acceptance of recommendation December 22, 2003 (If the firms accept the recommendation, the JFTC will issue a decision in line with the recommendation. If either of them does not accept it, the JFTC will initiate hearing procedures.) For more information contact: Speical Investigation Division, Speical Investigation Department, Investigation Bureau, General Secretariat, JFTC Tel: 03-3581-3382 (direct-dial) Website http://www.jftc.go.jp 2 Reference 1 Modifiers for Polyvinyl Chloride Resin There are three types of modifiers for polyvinyl chloride resin: MBS resin, acrylic reinforcement, and acrylic processing material. [Applications] · MBS resins are added for remedying the poor impact-resistance of polyvinyl chloride resins, and are used for products such as pipes, sheets, and films. · Acrylic reinforcements are added for preventing stains and deterioration by outdoor exposure that are said to be the weakness of MBS resins and other conventional reinforcements, and are used for window frames and other profile extrusion products. · Acrylic processing materials are added for improving the workability in molding. · MBS resins and acrylic reinforcements are added in the proportions of about 5 to 15 parts per 100 parts of polyvinyl chloride resin. Acrylic processing materials are added about 5 or less parts per 100 parts of polyvinyl chloride resin. [Structure] · MBS resins, acrylic reinforcements, and acrylic processing materials are all provided in the form of fine particles. · MBS resins and acrylic reinforcements have a “core-shell structure” with a rubber core and a vinyl polymer shell, as shown below. The core rubber disperses into polyvinyl chloride resin so that impact-resistance (MBS resins) or weatherability (acrylic reinforcements) is improved. Shell Rubber Vinyl polymer Butadien rubber (MBS resins) Core Acrylic rubber (Acrylic reinforcements) Etc. · Acrylic processing materials are copolymers made mostly of methylmethacrylate (MMA). [Distribution channel of modifiers] (Resin molding manufactures, etc.) Trading companies Modifier manufactures Approx. Commercial Distribution Consum 44% ers Approx. 56% Physical Distribution 3 Reference 2 ? ACT CONCERNING PROHIBITION OF PRIVATE MONOPOLIZATION AND MAINTENANCE OF FAIR TRADE (Act No. 54 of 14 April 1947) [Definitions] Sec.2 6 The term "unreasonable restraint of trade" as used in this Act shall mean such business activities, by which any entrepreneur, by contract, agreement or any other concerted actions, irrespective of its names, with other entrepreneurs, mutually restrict or conduct their business activities in such a manner as to fix, maintain, or increase prices, or to limit production, technology, products, facilities, or customers or suppliers, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade. [Prohibition of private monopolization or unreasonable restraint of trade] Sec.3 No entrepreneur shall effect private monopolization or unreasonable restraint of trade. [Recommendation to the violator to take elimination measures, Recommendation decision] Sec.48 2 The Fair Trade Commission may, if it finds that any act in violation of the provisions of Section 3 [prohibition of private monopolization or unreasonable restraint of trade], Section 8(1) [prohibited acts of a trade association] (i), (iv) or (v) or Section 19 [prohibition of unfair trade practices], has already ceased to exist, and if it finds it particularly necessary, recommend to the person who committed such violation (including the officers and managers of such trade association and its constituent entrepreneurs when the violating act relates the provisions of Section 8(1)(i), (iv) or (v)) to take appropriate measures. 3 Any person who has received a recommendation under the provisions of the preceding subsection shall notify without delay to the Fair Trade Commission whether or not he accepts the said recommendation. 4 The Fair Trade Commission may, when the person receiving the recommendation under the provisions of the preceding two subsections has accepted it, render a decision on the line of the said recommendation without resorting to the hearing procedures. 4 2003 (Recommendation) No. 35 Recommendation 3-2-4, Nakanoshima, Kita-ku, Osaka Kaneka Corporation Masatoshi Takede, President 1-6-41, Konan, Minato-ku, Tokyo Mitsubishi Rayon Co., Ltd. Yoshiyuki Sumeragi, President The Fair Trade Commission of Japan hereby makes the following recommendation to the above parties under the Section 48(2) of the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade (“Antimonopoly Act”): Main Text 1. Kaneka Corporation and Mitsubishi Rayon Co., Ltd. shall confirm the practical elimination of the following agreements since January 1, 2003: (1) To raise the selling prices of their products shipped on or after November 21, 1999. (2) To raise the selling prices of products shipped on or after December 1, 2002 for Mitsubishi Rayon Co., Ltd., and the selling prices of those shipped on or after December 21, 2002 for Kaneka Corporation. 2. Each of the said two firms shall provide adequate notification to partner distributors of the said modifiers and consumers of the following matters in the manner pre-approved by the Commission: (1) The measures it took in accordance with 1 above (2) Their resolution that neither one of them will jointly decide the selling prices of the said modifiers with each other, or any other business entity, and decisions will be made independently in the future. 5 3. Neither of the said two firms shall jointly decide the selling prices of the said modifiers with each other, or any other business entity, and decisions will be made independently in the future. 4. Both of the said two firms shall exchange information on the increase of selling prices of said modifiers with each other, or any other business entity, in the future. 5. Each of the said two firms shall take necessary measures pre-approved by the Commission for providing training concerning the Antimonopoly Act for salespeople and have regular audits by people in charge of legal affairs in order to prevent the joint decision of selling prices of the said modifiers with each other, or any other business entity, exchange information on the increase of selling prices of the said modifiers, and shall make their executives and employees thoroughly implement the measures. 6. The said