TOKYO - Japan's Fair Trade Commission has ordered two Japanese chemical firms to cease anti-competitive practices aimed at blocking sales by a Taiwanese company of epoxy flexibilizers used as an additive in vinyl chloride resin. The landmark ruling repre-sents the first time that the FTC has taken action against a Japanese company that restricted the operations of a foreign competitor.
The FTC determined that Asahi Denka Kogyo K.K. and a second firm, which is partly owned by Asahi, entered into and maintained an unlawfully restrictive contract with the Taiwanese company.
In 1981, an Asahi subsidiary, which later was absorbed by the parent company, supplied technology to the company in Taiwan in order to produce the flexibilizer.
Among the terms of the contract was a requirement that none of the material produced using Asahi's technology could be marketed in Japan, not only for the duration of the 10-year contract that had been signed but even after the contract's expiration.
In 1993, the second firm, partly owned by Asahi, entered into a similar agreement with the same Taiwanese company.
The FTC ruled that such a restrictive agreement could be valid only during the term of the contract, and that to extend it beyond the life of the agreement was an illegally restrictive action.
Both Japanese companies have accepted the FTC ruling without protest and have released the Taiwanese company from the restrictions that were deemed improper.
In the first two months of 1994, the Japanese market for the material was 6.3 billion yen ($5.8 billion). However, the prices have been up to 40 percent higher than those prevailing in Taiwan, evidence that the restrictions effectively closed the market to foreign competition.
