JFTC MAY LOOK AT MANUFACTURING SUPPLIER RELATIONSHIPS IN

UNCLAS NAGOYA 000027 SENSITIVE SIPDIS STATE PASS FEDERAL TRADE COMMISSION FOR INTERNATIONAL ANTITRUST FOR DSHANAHAN STATE PASS USTR FOR BEEMAN JUSTICE FOR ANTITRUST DIVISION - CHEMTOB E.O. 12958: N/A TAGS: ECON PGOV JA SUBJECT: JFTC MAY LOOK AT MANUFACTURING SUPPLIER RELATIONSHIPS IN CENTRAL JAPAN ¶1. (SBU) Newly arrived Japan Fair Trade Commission (JFTC) Central Japan Director Toshihiro Hara paid a courtesy call on Nagoya PO on July 2. Looking beyond the recently concluded Nagoya Subway bid-rigging case, Hara said his office plans to focus on buyer-supplier relationships in the manufacturing sector -- specifically whether major producers are using their monopsony status to illegally squeeze their small and medium-sized suppliers. Hara said he did not have any evidence of wrongdoing, but the issue was of particular concern given the apparent economic slowdown and the rapid increase in the price of raw materials. ¶2. (U) Hara said his office is also looking closely at misrepresentations in promotional materials for nursing homes, a key concern and continuing source of complaints in light of Japan's aging population. ¶3. (SBU) Hara said, that considering its workload and the detailed work involved in investigations, his office is far short of the optimal number of staff. The JFTC's Nagoya office covers six Central Japan prefectures but has only 32 staff members. He noted that overall there are about 150 people working at the JFTC's seven regional offices and around 600 at Tokyo headquarters. Hara explained JFTC strategy as having Tokyo handle major issues drawing national attention, regardless of where they occur in Japan, as a means of deterring cartel activity nationwide. Despite the ongoing personnel shortage, he said he appreciated the central government's policy of increasing national JFTC staffing at the rate of about five percent per year over the past five years, especially in the face of government-wide staff reductions. ¶4. (SBU) Hara expressed an interest in increased exchanges with USG officials and the American private sector on common antitrust concerns. He added that he found the work of the American Chamber of Commerce in Japan in highlighting market access issues to be useful. Comment -------------- ¶5. (SBU) Although we are aware of no specific illegal activity, based on our understanding of manufacturing sector supplier relationships and discussions of the issue with many regional firms, this is a matter that may be ripe for JFTC investigation. Nevertheless, we expect the regional JFTC would be very circumspect in taking on any of the Central Japan automotive (or other sector) manufacturing kingpins in the absence of an open-and-shut case. ROCHMAN