Fujifilm's views on Kodak's procedure under the section 301 petition
Fujifilm Releases More Evidence Refuting Kodak's Allegations on Price Fixing (Released from Fujifilm New York)
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FUJIFILM'S REBUTTAL REGARDING VERTICAL AND HORIZONTAL PRICE FIXING
Kodak alleges that -- at least outside of major cities like Tokyo and Osaka -- price competition in Japan has been systematically suppressed by a massive price fixing conspiracy masterminded by Fujifilm. According to Kodak, this pervasive price fixing prevents Kodak from underselling Fujifilm at the retail level and thereby picking up market share. Kodak's main "evidence" of this conspiracy consists of dozens of trade press articles from the past 25 years that purportedly document price fixing by Fujifilm and its wholesalers and retailers.
In this submission, Fujifilm blows Kodak's allegations out of the water. The key facts presented here are as follows:
- Kodak's own manufacturer's suggested retail prices show that it has not been trying to undersell Fujifilm. For the past 10 years, Kodak's suggested retail prices have been generally identical to Fujifilm's. In other words, Kodak's official pricing policy has been to tell retailers to charge the same for Kodak as for Fujifilm. Since Kodak has not been trying to undersell Fujifilm, price collusion -- even assuming it existed -- has not burdened or restricted U.S. exports and therefore is not actionable under Section 301.
- The average unit values of Kodak's exports to Japan show that Kodak has not been trying to undersell Fujifilm. From 1985 to 1994, the yen appreciated against the dollar by a whopping 234 percent -- giving Kodak a golden opportunity to slash yen-denominated prices without sacrificing revenue in dollar terms. When presented with this massive free lunch, Kodak decided to eat a big portion itself rather than pass it along to Japanese consumers. Kodak's average unit export values steadily increased in dollar terms over the course of the decade.
- Kodak's own officials have stated publicly on numerous occasions that Kodak had no intention of trying to gain market share in Japan by underselling Fujifilm. On one occasion, a press article documents Kodak's refusal to price more aggressively even in the face of retailer demands that it cut prices -- the exact opposite of Kodak's allegation that retailers are refusing to pass through Kodak's wholesale price cuts to consumers.
- Kodak claims that retailers are collusively refusing to pass through Kodak price cuts to consumers, but Kodak fails to cite a single real-life example. Kodak has not provided any documentation of concerted refusals by retailers to pass through wholesale discounts because such refusals never happened. The truth is that retailers are freely pricing Kodak products in accordance with independent, competitive business strategies.
- Actual pricing patterns in the Japanese market demonstrate that price competition is alive and well throughout the country. For example, ISO 400 film -- the biggest selling film speed in Japan -- is cheaper in high-priced photo stores in Japan than in low-priced discount stores in the U.S. The same can be said of multipack film, which now accounts for roughly 40 percent of total film sales. Meanwhile, private and dual brand film at rock bottom prices is carried in over 10,000 outlets in every prefecture of Japan.
- Kodak's 948-page "Evidentiary Appendix" accompanying its November 6, 1995 submission includes 31 articles purportedly documenting both vertical and horizontal price fixing. In fact, many of the articles are concerned with either camera prices or prices for photofinishing, and thus have nothing to do with the products subject to this Section 301 investigation: color film and paper. Many others date back to the 1970s, and are therefore far too old to be of value in documenting current anticompetitive conduct. Once the irrelevant articles are dismissed, only 10 remain, and not one reports evidence of any anticompetitive conduct. There is zero documentation of any attempt by Fujifilm to control retailers' pricing, nor is there any documentation of any concerted action by wholesalers or retailers to suppress competition.
- We reviewed another 30 articles cited by Kodak in "Privatizing Protection" but not included in the Evidentiary Appendix. Twelve of the 30 are completely irrelevant; none of the others documents a single instance of vertical or horizontal price collusion.
In sum, this submission shows that Kodak's charges of price fixing are both irrelevant and untrue. They are irrelevant because -- even if true -- Kodak could not have been harmed by inflated price levels, for the simple reason that it has not been trying to gain market share in Japan by underselling Fujifilm. They are untrue because the verifiable facts about pricing patterns in the Japanese market show that price competition is alive and well, and thus that there is no widespread price collusion. Kodak's "evidence" to the contrary -- its massive "Evidentiary Appendix" -- may make an excellent doorstop, but it is completely worthless as documentation of anticompetitive conduct.
TABLE OF CONTENTS
A．Kodak's Theory Of How Price Collusion Injures Its Exports To Japan Is Demonstrably Untrue
- Kodak's own manufacturer's suggested retail prices for its film show that it has not been trying to undersell Fujifilm
- Kodak's pricing shows that it has not taken advantage of the devaluation in the dollar versus the yen
- Kodak officials have publicly stated that Kodak does not intend to seek market share through price cutting
- Kodak presents no evidence of retailer refusal to pass through Kodak price cuts
B. Pricing Patterns In Japan Disprove Kodak's Claim Of Widespread Price Collusion
- Price competition exists throughout Japan, and has been intensifying over time
- Fuji brand film is discounted all over Japan
- Kodak film is discounted all over Japan
C. Kodak's "Evidence" Of Vertical And Horizontal Price Collusion Cannot Withstand Critical Scrutiny
1.Kodak has provided no evidence that Fujifilm has engaged in resale price maintenance
a. Text of November 6 submission
b. Evidentiary Appendix of November 6 submission
c. Other articles cited by Kodak
- (i) Statements supporting price stability
(ii) Strong relationships with distributors
(iii) Responding to competitor's price cuts
(iv) Existence of MSRPs
(v) Fair Trade Promotion Council
2.Kodak provides no evidence of horizontal price fixing
- a. Zenren
- (i) 1983 VR campaign
(ii) Reverse-imported Lotte film
(iii) Free film with cameras
(iv) Private brand film
- b. Shashoren
c. Tomo-no Kai (Friends of Fuji Color)
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