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2016 (Gyo-Hi) 233

2017.12.12
2016 (Gyo-Hi) 233
Minshu Vol. 71, No. 10
Judgment regarding a case where a provision related to a surcharge payment order of the Antimonopoly Act of Japan applies to a business operator who conducted a cartel pertaining to sales prices of cathode-ray tubes for televisions agreed upon outside of Japan
Case to seek revocation of a trial decision
Judgment of the Third Petty Bench, dismissed
Tokyo High Court, Judgment of January 29, 2016
1. In the case where a cartel conducted by business operators engaged in the manufacturing and selling of cathode-ray tubes for televisions in relation to the sales prices of cathode-ray tubes for televisions for subsidiary companies, etc. of business operators engaged in the manufacturing and selling of televisions in Japan that were located outside of Japan was agreed upon outside of Japan, under the circumstances held in the judgment, such as the following (1) to (3), such cartel infringed on the order of the free-competition economy in Japan, and therefore a provision related to a surcharge payment order of the Antimonopoly Act of Japan applies to a business operator who conducted such cartel.

(1) The business operators engaged in the manufacturing and selling of televisions in Japan controlled the business of the manufacturing and selling of cathode-ray tube televisions conducted by them and their subsidiary companies, etc., and instructed subsidiary companies, etc. that were located outside of Japan and that were manufacturing cathode-ray tube televisions to conduct manufacture, etc., and all or most of cathode-ray tube televisions manufactured by such subsidiary companies, etc. in accordance with the said instruction were purchased and sold by such business operators or their subsidiary companies, etc.

(2) As part of conducting the business of manufacturing and selling cathode-ray tube televisions as mentioned in (1), the business operators engaged in the manufacturing and selling of televisions in Japan determined important trade terms and conditions, such as suppliers, purchase prices, and purchase volumes, for cathode-ray tubes, which are key parts of the televisions; instructed subsidiary companies, etc. that were located outside of Japan and that were manufacturing cathode-ray tube televisions to purchase such cathode-ray tubes; and had such subsidiary companies, etc. purchase cathode-ray tubes from business operators who conducted such cartel.

(3) While the business operators engaged in the manufacturing and selling of televisions in Japan conducted negotiations directly by themselves pertaining to trade terms and conditions for cathode-ray tubes for televisions with business operators who conducted such cartel, sales prices presented in the negotiations by business operators who conducted such cartel were bound by such cartel.

2. In the case where a cartel conducted by business operators engaged in the manufacturing and selling of cathode-ray tubes for televisions in relation to the sales prices of cathode-ray tubes for televisions for subsidiary companies, etc. of business operators engaged in the manufacturing and selling of televisions in Japan that were located outside of Japan was agreed upon outside of Japan, and cathode-ray tubes for televisions that were the subject of such cartel were sold and delivered from such business operators to such subsidiary companies, etc. outside of Japan, under the circumstances held in the judgment, such as the following (1) to (3), the sales amount of such cathode-ray tubes falls under the sales amount of such commodities prescribed in Article 7-2, paragraph (1) of the Antimonopoly Act.

(1) The business operators engaged in the manufacturing and selling of televisions in Japan controlled the business of manufacturing and selling cathode-ray tube televisions conducted by them and their subsidiary companies, etc., and instructed subsidiary companies, etc. that were located outside of Japan and that were manufacturing cathode-ray tube televisions to conduct manufacture, etc., and all or most of the cathode-ray tube televisions manufactured by such subsidiary companies, etc. in accordance with the instruction were purchased and sold by such business operators or their subsidiary companies, etc.

(2) As part of conducting the business of manufacturing and selling cathode-ray tube televisions as mentioned in (1), the business operators engaged in the manufacturing and selling of televisions in Japan determined important trade terms and conditions, such as suppliers, purchase prices, and purchase volumes, for cathode-ray tubes, which are key parts of the televisions; instructed subsidiary companies, etc. that were located outside of Japan and that were manufacturing cathode-ray tube televisions to purchase such cathode-ray tubes; and had such subsidiary companies, etc. purchase cathode-ray tubes from business operators who conducted such cartel.

(3) While the business operators engaged in the manufacturing and selling of televisions in Japan conducted negotiations directly by themselves pertaining to trade terms and conditions for cathode-ray tubes for televisions with business operators who conducted such cartel, sales prices presented in the negotiations by business operators who conducted such cartel were bound by such cartel.
(Regarding 1 and 2) Article 7-2, paragraph (1) of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Antimonopoly Act)

(Regarding 1) Article 1, Article 2, paragraph (6), and Article 3 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Antimonopoly Act)

(Regarding 2) Article 5 and Article 6 of the Enforcement Order of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade



Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (Antimonopoly Act)

Article 1 The purpose of this Act is to promote fair and free competition, stimulate the creative initiative of enterprise, encourage business activity, heighten the level of employment and actual national income, and thereby promote the democratic and wholesome development of the national economy as well as secure the interests of general consumers by prohibiting private monopolization, unreasonable restraint of trade and unfair trade practices, preventing excessive concentration of economic power and eliminating unreasonable restraints on production, sale, price, technology, etc. , and all other unjust restrictions on business activity through combinations, agreements, etc. ,.

Article 2

(6) The term "unreasonable restraint of trade" as used in this Act means such business activities, by which any enterprise, by contract, agreement or any other means irrespective of its name, in concert with other enterprises, 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 counterparties, thereby causing, contrary to the public interest, a substantial restraint of competition in any particular field of trade.

Article 3 An enterprise must not effect private monopolization or unreasonable restraint of trade.

Article 7-2 (1) If an enterprise unreasonably restrains trade or enters into an international agreement or an international contract containing particulars that fall under unreasonable restraint of trade in a category under any of the following items, the Fair Trade Commission must order the enterprise, pursuant to the procedures as provided in Section 2 of Chapter VIII, to pay to the national treasury a surcharge of an amount equivalent to ten percent (three percent for a retail business, or two percent for a wholesale business) of the amount of sales from the relevant goods or services (or of the purchase amount of the goods or services, calculated using the method provided by Cabinet Order, if the relevant act involves being supplied goods or services), calculated using the method provided by Cabinet Order, for the period from the date on which the enterprise began implementing the act in violation in its business activities to the date on which it stopped implementing the act in violation in its business activities (if the period exceeds three years, during the three years preceding the date on which the business activities constituting the relevant act were discontinued; hereinafter referred to as "Period of Implementation"); provided, however, that if the amount thus calculated is less than one million yen, the Commission may not order the payment of such a surcharge.

Enforcement Order of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade

Article 5 The method for calculation of the sales amount prescribed in the cabinet order referred to in Article 7-2, paragraph (1) of the Act (including the case where it applies mutatis mutandis pursuant to Article 8-3 of the Act following the deemed replacement of terms; the same shall apply hereinafter) shall, except for what is prescribed in paragraph (1) and paragraph (2) of the following Article, be a method in which amounts of considerations of commodities or services delivered or provided within a period of implementation are totalized. In this case, and in the case of falling under any of the following items, the amount prescribed in each of the relevant items shall be deducted:

(i) In the case where all or part of the amounts of considerations were deducted on the grounds of a shortfall in volume, defective quality, or damage of commodities, shortfall or defect of services or other reasons in the period of implementation, the deducted amounts;

(ii) In the case where commodities were returned in the period of implementation, amounts of considerations of the returned commodities; or

(iii) In the case where a written agreement exists, and it is apparent from the agreement that a person who conducts the delivery of commodities or provision of services should pay rebates of sales according to the performance of delivery and provision (excluding an agreement containing a provision to the effect that rebates of sales are not paid if the performance in a certain period does not reach a certain amount or quantity), amounts of rebates of sales calculated pursuant to provisions of such agreement with regard to the performance in the period of implementation (in the case where the amounts should be calculated by different percentages or amounts according to the performance in a certain period, amounts calculated by the lowest percentage or amount among them).

(2) The method for calculation of the purchase amount prescribed in the cabinet order referred to in Article 7-2, paragraph (1) of the Act shall, except for what is prescribed in paragraph (3) and paragraph (4) of the following Article, be a method in which the amounts of considerations of commodities or services delivered or provided within the period of implementation are totalized. In this case, and in the case falling under any of the following items, the amount prescribed in each of the relevant items shall be deducted:

(i) In the case where all or part of the amounts of considerations were deducted on the grounds of a shortfall in the volume, defective quality, or damage of commodities, shortfall or defect of services or other reasons in the period of implementation, the deducted amounts;

(ii) In the case where commodities were returned in the period of implementation, amounts of considerations of the returned commodities; or

(iii) In the case where a written agreement exists, and it is apparent from the agreement that a person who conducts delivery of commodities or provision of services should pay rebates of sales according to the performance of delivery and provision (excluding an agreement containing a provision to the effect that rebates of sales are not paid if the performance in a certain period does not reach a certain amount or quantity), amounts of rebates of sales calculated pursuant to the provisions of such agreement with regard to the performance in the period of implementation (in the case where the amounts should be calculated by different percentages or amounts according to the performance in a certain period, amounts calculated by the lowest percentage or amount among them).

Article 6 If a consideration of a commodity or service pertaining to an act of violation prescribed in Article 7-2, paragraph (1) of the Act is specified at the time of entering into an agreement pertaining to the sale or provision of said commodity or service, and if it is found that there are circumstances causing a significant difference between the total amount of considerations of products or services delivered or provided within the period of implementation and the total amount of considerations of the sale of commodities or provision of services stipulated by an agreement entered into in the period of implementation, the method for calculation of the sales amount prescribed in the same paragraph shall be a method in which the amounts of considerations of the sale of commodities or provision of services stipulated by an agreement entered into in the period of implementation are totalized.

(2) A provision in item (iii) of paragraph (1) of the preceding Article shall apply mutatis mutandis to cases where the sales amount is calculated by a method prescribed in the preceding paragraph.

(3) If a consideration of a commodity or service pertaining to an act of violation prescribed in Article 7-2, paragraph (1) of the Act is specified at the time of entering into an agreement pertaining to the purchase or provision of the said commodity or service, and if it is found that there are circumstances causing a significant difference between the total amount of considerations of products or services delivered or provided within the period of implementation and the total amount of considerations of the purchase of commodities or provision of services stipulated by an agreement entered into in the period of implementation, the method for calculation of the purchase amount prescribed in the same paragraph shall be one in which the amounts of considerations of purchase of commodities or provision of services stipulated by an agreement entered into in the period of implementation are totalized.

(4) A provision in item (iii) of paragraph (2) of the preceding Article, shall apply mutatis mutandis to cases where the purchase amount is calculated by a method prescribed in the preceding paragraph.
The final appeal is dismissed.

The cost of the final appeal shall be borne by the appellant of the final appeal.
I. Outline of the case, etc.

1. The appellee issued a surcharge payment order pursuant to Article 7-2, paragraph (1) of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (hereinafter referred to as the “Antimonopoly Act”) to the appellant (Fair Trade Commission, 2010 (No) No. 23; hereinafter referred to as the “Surcharge Payment Order”) on the grounds that business operators including the appellant conducted “unreasonable restraint of trade” (price cartel) prescribed in Article 2, paragraph (6) of the same Act by agreeing outside of Japan with regard to sales prices for cathode-ray tubes for televisions. The appellant made a hearing request to seek revocation of the Surcharge Payment Order, alleging that the Antimonopoly Act cannot apply to such agreement, but received a trial decision to the effect that the request was dismissed (Fair Trade Commission, 2010 (Han) No. 7; hereinafter referred to as the “Trial Decision”). In this case, the appellant seeks revocation of the Trial Decision against the appellee.

2. The outline of the facts, etc. that duly became final and binding in the judgment of prior instance is as follows:

(1) a. The appellant is a business operator engaged in the manufacturing and selling of cathode-ray tubes for televisions, whose head office is located in Malaysia, and a subsidiary company of Samsung SDI Company Limited, a business operator whose head office is located in the Republic of Korea (hereinafter referred to as “South Korea”).

b. MT Picture Display Co., Ltd. is a business operator whose head office is located in Japan. PT. MT Picture Display Indonesia, whose head office is located in the Republic of Indonesia (hereinafter referred to as “Indonesia”), MT Picture Display (Malaysia) Sdn. Bhd., whose head office is located in Malaysia, and MT Picture Display (Thailand) Company Limited, whose head office is located in the Kingdom of Thailand (hereinafter referred to as “Thailand”), are subsidiary companies of MT Picture Display Co., Ltd. and had been engaged in the manufacturing and selling of cathode-ray tubes for televisions at least until March 30, 2007.

c. Chunghwa Picture Tubes Company Limited is a business operator whose head office is located in Taiwan. Chunghwa Picture Tubes (Malaysia) Sdn. Bhd., whose head office is located in Malaysia, is a subsidiary company of Chunghwa Picture Tubes Company Limited and had been engaged in the manufacturing and selling of cathode-ray tubes for televisions at least until March 30, 2007.

d. LG Philips Displays Korea Company Limited, whose head office is located in South Korea, had been engaged in the manufacturing and selling of cathode-ray tubes for televisions at least until March 30, 2007. PT. LP Displays Indonesia, whose head office is located in Indonesia, is an affiliated company of LG Philips Displays Korea Company Limited and had been engaged in the manufacturing and selling of cathode-ray tubes for televisions at least until the same day.

e. Thai CRT Company Limited, whose head office is in Thailand, had been engaged in the manufacturing and selling of cathode-ray tubes for televisions at least until March 30, 2007.

(2) a. ORION ELECTRIC Co., LTD., SANYO Electric Co., Ltd., Sharp Corporation, Victor Company of Japan, Limited, and FUNAI ELECTRIC CO., LTD. (hereinafter referred to collectively as the “Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan”), with their head offices in Japan and having subsidiary companies or affiliated companies that manufacture cathode-ray tube televisions or companies for the outsourcing of such manufacturing in Southeast Asia (hereinafter referred to collectively as the “Local Manufacturing Subsidiary Companies, etc.”), had been engaged in the manufacturing and selling of cathode-ray tube televisions at least until March 30, 2007.

b. The Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan respectively selected one or several business operator(s) from business operators engaged in the manufacturing and selling of cathode-ray tubes for televisions, including Samsung SDI Company Limited, MT Picture Display Co., Ltd., Chunghwa Picture Tubes Company Limited, LG Philips Displays Korea Company Limited, and Thai CRT Company Limited (hereinafter referred to collectively as “Samsung SDI and the Other Four Companies”), and negotiated with such business operator(s) on the specifications of cathode-ray tubes for televisions purchased by the Local Manufacturing Subsidiary Companies, etc., as well as the outlines of scheduled purchase volumes generally for one year and purchase prices and purchase volumes generally for each quarter, etc. (the above-mentioned selection and negotiations are hereinafter referred to as the “Negotiations, etc.”). For information purposes, the Negotiations, etc. were conducted on the premise that in the case where Samsung SDI Company Limited is selected, the appellant will sell cathode-ray tubes for televisions to the Local Manufacturing Subsidiary Companies, etc.; and in the case where MT Picture Display Co., Ltd. is selected, PT. MT Picture Display Indonesia, MT Picture Display (Malaysia) Sdn. Bhd., and MT Picture Display (Thailand) Company Limited (hereinafter referred to collectively as “MT Indonesia and the Other Two Companies”) will sell cathode-ray tubes for televisions to the Local Manufacturing Subsidiary Companies, etc.; and in the case where Chunghwa Picture Tubes Company Limited is selected, Chunghwa Picture Tubes (Malaysia) Sdn. Bhd. will sell cathode-ray tubes for televisions to the Local Manufacturing Subsidiary Companies, etc.; and in the case where LG Philips Displays Korea Company Limited, the same company and PT. LP Displays Indonesia will sell cathode-ray tubes for televisions to the Local Manufacturing Subsidiary Companies, etc., and in the case where Thai CRT Company Limited is selected, the same company will sell cathode-ray tubes for televisions to the Local Manufacturing Subsidiary Companies, etc.

c. Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan determined trade terms and conditions, such as suppliers, purchase prices, and purchase volumes, for cathode-ray tubes for televisions purchased by the Local Manufacturing Subsidiary Companies, etc., after the Negotiations, etc., and the Local Manufacturing Subsidiary Companies, etc., being respectively instructed by the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan, purchased cathode-ray tubes for televisions stated in Appendix 3 of the judgment in prior instance mainly from the appellant, MT Indonesia and the Other Two Companies, Chunghwa Picture Tubes (Malaysia) Sdn. Bhd., LG Philips Displays Korea Company Limited, PT. LP Displays Indonesia, and Thai CRT Company Limited (hereinafter referred to collectively as the “Appellant and the Other Seven Companies”) (the above-mentioned cathode-ray tubes purchased by the Local Manufacturing Subsidiary Companies, etc. after the Negotiations, etc., hereinafter referred to as the “Cathode-ray Tubes”).

(3) The conduct status of manufacturing and selling of cathode-ray tube televisions by the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan, the relationships with the Local Manufacturing Subsidiary Companies, etc., the purchase process of the Cathode-ray Tubes, etc. are as follows:

a. ORION ELECTRIC Co., LTD.

(a) ORION ELECTRIC Co., LTD. previously manufactured cathode-ray tube televisions in Japan, but from around 1995 at the latest, the company outsourced its manufacturing to WORLD ELECTRIC (THAILAND) LTD. and KORAT DENKI LTD. (hereinafter referred to collectively as “WORLD, etc.”), which were the Local Manufacturing Subsidiary Companies, etc. founded in Thailand as manufacturing bases for cathode-ray tube televisions outside Japan. ORION ELECTRIC Co., LTD. did not invest capital in WORLD, etc. but positioned WORLD, etc. as its group companies that manufacture its products, and had dispatched its employees as representatives, officers, and employees of WORLD, etc. since the foundation of WORLD, etc. ORION ELECTRIC Co., LTD. entered into technical assistance agreements with WORLD, etc. and outsourced the manufacturing of cathode-ray tube televisions, giving instructions on designs and specifications.

(b) With the aim of strengthening its price-negotiating power and managing sales prices, ORION ELECTRIC Co., LTD. calculated the cost, based on which selected cathode-ray tubes and other parts used in cathode-ray tube televisions, the manufacture of which was outsourced to WORLD, etc., determined the purchase prices and purchase volumes, and conducted other business operations. For information purposes, the above-mentioned technical assistance agreements contained provisions to the effect that WORLD, etc. shall be cooperative in purchasing necessary materials through ORION ELECTRIC Co., LTD.

ORION ELECTRIC Co., LTD. purchased all televisions manufactured by WORLD, etc. using the Cathode-ray Tubes and sold them in and outside of Japan. For information purposes, WORLD, etc. manufactured products as outsourcing from companies other than ORION ELECTRIC Co., LTD., but the ratio accounted for less than 10 percent of their sales amount.

(c) From around May 22, 2003, to March 29, 2007, ORION ELECTRIC Co., LTD. selected one or several business operator(s) mainly from Samsung SDI and the Other Four Companies, determined the specifications of the Cathode-ray Tubes after negotiations and determined the outline of the scheduled purchase volume of the Cathode-ray Tubes generally on an annual basis, based on which purchase prices and purchase volumes of the Cathode-ray Tubes generally on a quarterly basis after negotiations were determined. Moreover, by sending parts lists and specification sheets in which the specifications, purchase prices, purchase volumes, etc. of the Cathode-ray Tubes were indicated, ORION ELECTRIC Co., LTD. instructed WORLD, etc. to purchase the Cathode-ray Tubes from business operators selected by ORION ELECTRIC Co., LTD. or their subsidiary companies, etc. Following the given instruction, WORLD, etc. ordered the Cathode-ray Tubes for business operators selected by ORION ELECTRIC Co., LTD. or their subsidiary companies, etc. (in relation to the Appellant and the Other Seven Companies, MT Picture Display (Malaysia) Sdn. Bhd., MT Picture Display (Thailand) Company Limited, Chunghwa Picture Tubes (Malaysia) Sdn. Bhd., LG Philips Displays Korea Company Limited, and Thai CRT Company Limited) and purchased the Cathode-ray Tubes from them.

b. SANYO Electric Co., Ltd.

(a) SANYO Electric Co., Ltd. used to manufacture cathode-ray tube televisions in Japan, but in 1996, founded P. T. SANYO Electronics Indonesia, which was one of the Local Manufacturing Subsidiary Companies, etc., in Indonesia, and transferred its manufacturing operations to the same company. A wholly owned subsidiary company of SANYO Electric Co., Ltd. located in the Republic of Singapore (hereinafter referred to “Singapore”) held 82 percent of the voting rights in P. T. SANYO Electronics Indonesia from April 2002 to March 2004, and all voting rights from April 2004.

(b) Until September 30, 2006, by setting specifications of cathode-ray tubes for televisions used by, and specifications of cathode-ray tube televisions manufactured by P. T. SANYO Electronics Indonesia and other subsidiary companies (hereinafter referred to as “SANYO Electronics Indonesia, etc.”), and standards and inspection rules related to manufacturing methods, etc., by giving business instructions to and conducting management of SANYO Electronics Indonesia, etc. through annual business plans, quarterly checking, monthly reports, etc., and by taking other measures, SANYO Electric Co., Ltd. controlled the business pertaining to cathode-ray tube televisions conducted by SANYO Electric Co., Ltd. and SANYO Electronics Indonesia, etc. Moreover, regarding cathode-ray tubes for televisions used by SANYO Electric Co., Ltd. and SANYO Electronics Indonesia, etc., with the aim of improving efficiency of purchasing operations along with other aims, SANYO Electric Co., Ltd. conducted purchasing in bulk and conducted negotiations en bloc.

Sales subsidiary companies of SANYO Electric Co., Ltd. located in Japan and Indonesia purchased televisions manufactured by P. T. SANYO Electronics Indonesia using the Cathode-ray Tubes according to business plans approved by SANYO Electric Co., Ltd., and sold them outside of Japan.

(c) From around May 22, 2003 to September 30, 2006, SANYO Electric Co., Ltd. selected one or several business operator(s) mainly from Samsung SDI Company Limited, MT Picture Display Co., Ltd. and LG Philips Displays Korea Company Limited, determined specifications of the Cathode-ray Tubes after negotiations and determined the outline of the scheduled purchase volume of the Cathode-ray Tubes generally on an annual basis, based on which purchase prices and purchase volumes of the Cathode-ray Tubes generally on a quarterly basis after negotiations were determined. Moreover, SANYO Electric Co., Ltd. communicated the trade terms and conditions, such as purchase prices and purchase volumes, for the Cathode-Ray Tubes determined as above to P. T. SANYO Electronics Indonesia, and instructed P. T. SANYO Electronics Indonesia to purchase the Cathode-Ray Tubes from business operators selected by SANYO Electric Co., Ltd. or their subsidiary companies, etc. Following the instruction, P. T. SANYO Electronics Indonesia ordered the Cathode-ray Tubes to business operators selected by SANYO Electric Co., Ltd. or their subsidiary companies, etc. (in relation to the Appellant and the Other Seven Companies, the appellant, PT. MT Picture Display Indonesia, MT Picture Display (Thailand) Company Limited, LG Philips Displays Korea Company Limited and PT. LP Displays Indonesia) and purchased the Cathode-ray Tubes from them.

c. Sharp Corporation

(a) Sharp Corporation used to manufacture cathode-ray tube televisions in Japan, but from around 2001 at the latest, Sharp-Roxy Electronics Corporation (M) Sdn. Bhd. located in Malaysia, Sharp (Philippines.) Corporation located in Philippines, Sharp Manufacturing Thailand Co., Ltd. located in Thailand, P. T. Sharp Electronics Indonesia located in Indonesia, and Sharp Electronics (Malaysia) Sdn. Bhd. located in Malaysia, which were the Local Manufacturing Subsidiary Companies, etc., (hereinafter referred to as “SREC, etc.”) manufactured the televisions.

Sharp Corporation held 50 percent of the voting rights in Sharp-Roxy Electronics Corporation (M) Sdn. Bhd., the majority of the voting rights in Sharp (Philippines.) Corporation, 33 percent of the voting rights in Sharp Manufacturing Thailand Co., Ltd. until the end of March 2005, and all of the voting rights from April 2005, the majority of the voting rights in P. T. Sharp Electronics Indonesia, and all of the voting rights in Sharp Electronics (Malaysia) Sdn. Bhd.

(b) Sharp Corporation gave approval in advance to the management plans of the Local Manufacturing Subsidiary Companies, etc. that comprise production plans, sales plans, etc. developed by the Local Manufacturing Subsidiary Companies, etc. and containing purchase volumes of major parts. Moreover, with the aim of strengthening its price-negotiating power, regarding cathode-ray tubes necessary for the manufacturing of cathode-ray tube televisions manufactured by the Local Manufacturing Subsidiary Companies, etc., Sharp Corporation controlled the business pertaining to cathode-ray tube televisions conducted by Sharp Corporation, SREC, etc., and other subsidiary companies and affiliated companies, by selecting suppliers, by coordinating negotiations on trade terms and conditions, such as purchase prices and purchase volumes, by managing the purchase of such cathode-ray tubes in a unified way, and by using other methods.

Sharp Corporation and its sales subsidiary companies, etc. outside of Japan purchased most of the televisions manufactured by the SREC, etc. using the Cathode-ray Tubes, and sold them in and outside of Japan.

(c) From around May 22, 2003 to March 29, 2007, Sharp Corporation collected information, etc. on sales prices, etc. of cathode-ray tubes for televisions from Samsung SDI and the Other Four Companies, and consulted with the design section and the development section of Sharp Electronics (Malaysia) Sdn. Bhd., and SREC, etc., and based on the results, negotiated by itself with business operators selected mainly from Samsung SDI and the Other Four Companies and coordinated trade terms and conditions on purchase prices, purchase volumes, etc. of the Cathode-ray Tubes traded on a biannual basis for all of SREC, etc., collecting specifications and other technical information from business operators who were counterparties of the negotiations. Sharp Corporation communicated the trade terms and conditions coordinated by the above-mentioned negotiations, and SREC, etc. sometimes further negotiated on payment currency and other payment conditions but basically accepted the prices in the trade terms and conditions communicated from Sharp Corporation as the purchase prices of the Cathode-ray Tubes, and ordered the Cathode-ray Tubes to business operators selected by Sharp Corporation or their subsidiary companies, etc. (in relation to the Appellant and the Other Seven Companies, all of them) and purchased the Cathode-ray Tubes from them.

d. Victor Company of Japan, Limited

(a) Victor Company of Japan, Limited founded JVC Manufacturing (Thailand) Co., Ltd. and JVC Electronics (Thailand) Co., Ltd. in Thailand and JVC Vietnam Limited in the Socialist Republic of Vietnam (hereinafter referred to as “Vietnam”) as the Local Manufacturing Subsidiary Companies, etc. for the manufacturing of cathode-ray tube televisions sold by Victor Company of Japan, Limited or its subsidiary companies or affiliated companies, and had them manufacture cathode-ray tube televisions, giving instructions for designs and specifications.

Victor Company of Japan, Limited held 100 percent of the voting rights in JVC Manufacturing (Thailand) Co., Ltd. and JVC ASIA Pte. Ltd., JVC ASIA Pte. Ltd. held 50 percent of the voting rights in JVC Sales and Service (Thailand) Co., Ltd. and 70 percent of the voting rights in JVC Vietnam Limited, and JVC Sales and Service (Thailand) Co., Ltd. held 99 percent of the voting rights in JVC Electronics (Thailand) Co., Ltd.

Moreover, JVC Electronics Singapore Pte. Ltd., a wholly owned subsidiary company of Victor Company of Japan, Limited located in Singapore, (JVC Manufacturing (Thailand) Co., Ltd., JVC Electronics (Thailand) Co., Ltd., JVC Vietnam Limited, and JVC Electronics Singapore Pte. Ltd., hereinafter referred to collectively as “JMT, etc.”) procured part of the cathode-ray tubes used by subsidiary companies conducting the manufacture of cathode-ray tube televisions of Victor Company of Japan, Limited.

(b) Victor Company of Japan, Limited conducted management related to the production, sales, and stocking of cathode-ray tube televisions by coordinating orders from sales bases in various regions, by giving instructions on production to JMT, etc. based on orders, by selling completed cathode-ray tube televisions, and by using other methods, and with the aim of strengthening its price-negotiating power, controlled the business pertaining to cathode-ray tube televisions conducted by Victor Company of Japan, Limited, JMT, etc. and other subsidiary companies, etc., by procuring cathode-ray tubes used by JMT, etc.

Televisions manufactured by JMT, etc. using the Cathode-ray Tubes were sold according to business plans coordinated by Victor Company of Japan, Limited. Televisions manufactured by JVC Vietnam Limited were sold by JVC Vietnam Limited in Vietnam; almost all televisions manufactured by JVC Manufacturing (Thailand) Co., Ltd. were bought by Victor Company of Japan, Limited and sold in and outside of Japan; and all televisions manufactured by JVC Electronics (Thailand) Co., Ltd. were bought by JVC Sales and Service (Thailand) Co., Ltd. and sold in Thailand.

(c) From around May 22, 2003 to April 30, 2005, regarding cathode-ray tubes with specifications that conform with cathode-ray tube televisions designed by the design section of Victor Company of Japan, Limited, Victor Company of Japan, Limited selected one or several business operator(s) mainly from Samsung SDI and the Other Four Companies, and after negotiations with the selected business operators, determined the outline of the scheduled purchase volume for one year to secure cathode-ray tubes appropriate for production volumes of cathode-ray tube televisions in manufacturing bases in various regions, such as JMT, etc. and determined trade terms and conditions, such as purchase prices, etc., for the Cathode-ray Tubes generally on a quarterly basis.

Victor Company of Japan, Limited communicated the trade terms and conditions, such as purchase prices, purchase volumes, etc., for the Cathode-ray Tubes determined as above to JMT, etc. and instructed JMT, etc. to purchase the Cathode-ray Tubes from business operators selected by Victor Company of Japan, Limited or their subsidiary companies, etc. Following the instruction, JMT, etc. ordered the Cathode-ray Tubes to business operators selected by Victor Company of Japan, Limited or their subsidiary companies, etc. (in relation to the Appellant and the Other Seven Companies, all of them excluding PT. MT Picture Display Indonesia) and purchased the Cathode-ray Tubes from them.

e. FUNAI ELECTRIC CO., LTD.

(a) FUNAI ELECTRIC CO., LTD. used to manufacture cathode-ray tube televisions at plants in Japan but ceased to do so from around 1993 at the latest, and FUNAI ELECTRIC (MALAYSIA) SDN. BHD. located in Malaysia and FUNAI (THAILAND) CO., LTD. located in Thailand, which were the Local Manufacturing Subsidiary Companies, etc. (Both were wholly owned subsidiary companies.), (hereinafter referred to collectively as “FUNAI ELECTRIC (MALAYSIA), etc.”) manufactured the televisions.

(b) Even after the transfer of the manufacturing of cathode-ray tube televisions to FUNAI ELECTRIC (MALAYSIA), etc., FUNAI ELECTRIC CO., LTD. continued to control the business pertaining to cathode-ray tube televisions conducted by FUNAI ELECTRIC CO., LTD., FUNAI ELECTRIC (MALAYSIA), etc. and other subsidiary companies, by handling and conducting various operations, such as research and development of cathode-ray tube televisions, management of technology and production, marketing, and procurement. FUNAI ELECTRIC CO., LTD. prepared product specification sheets, etc. for cathode-ray tube televisions manufactured by FUNAI ELECTRIC (MALAYSIA), etc. and sent them to FUNAI ELECTRIC (MALAYSIA), etc.

FUNAI ELECTRIC CO., LTD. purchased all televisions manufactured by FUNAI ELECTRIC (MALAYSIA), etc. using the Cathode-ray Tubes and sold them in and outside of Japan through wholly owned subsidiary companies in and outside of Japan.

(c) From around May 22, 2003 to March 29, 2007, after negotiations with business operators selected mainly from Samsung SDI and the Other Four Companies, FUNAI ELECTRIC CO., LTD. determined the specifications and outline of the scheduled purchase volume of the Cathode-ray Tubes to be traded in the following year and determined purchase prices and purchase volumes of the Cathode-ray Tubes generally on a quarterly basis. FUNAI ELECTRIC CO., LTD. communicated the trade terms and conditions, such as purchase prices, purchase volumes, etc., for the Cathode-ray Tubes determined as above to FUNAI ELECTRIC (MALAYSIA), etc. and instructed FUNAI ELECTRIC (MALAYSIA), etc. to purchase the Cathode-ray Tubes from business operators selected by FUNAI ELECTRIC CO., LTD. or their subsidiary companies, etc. Following the instruction, FUNAI ELECTRIC (MALAYSIA), etc. ordered the Cathode-ray Tubes to business operators selected by FUNAI ELECTRIC CO., LTD. or their subsidiary companies, etc. (in relation to the Appellant and the Other Seven Companies, all of them excluding LG Philips Displays Korea Company Limited) and purchased the Cathode-ray Tubes from them.

(4) a. To stabilize sales prices of the Cathode-ray Tubes for the Local Manufacturing Subsidiary Companies, etc., by around May 22, 2003 at the latest, Samsung SDI and the Other Four Companies, and the appellant, PT. MT Picture Display Indonesia, Chunghwa Picture Tubes (Malaysia) Sdn. Bhd. and PT. LP Displays Indonesia continuously held meetings by salespersons of the Cathode-ray Tubes outside of Japan, and agreed, generally on a quarterly basis, to set the minimum target price, etc. that was to be presented by Samsung SDI and the Other Four Companies in negotiations with the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan for the following quarter and that should be complied with by each company with regard to sales prices of the Cathode-ray Tubes for the Local Manufacturing Subsidiary Companies, etc. (the agreement, hereinafter referred to as the “Agreement”). By February 16, 2004 at the latest, MT Picture Display (Malaysia) Sdn. Bhd. had participated in, and by April 23, 2004 at the latest, MT Picture Display (Thailand) Company Limited had participated in the Agreement.

b. The total amount of purchases from the Appellant and the Other Seven Companies accounted for about 83.5 percent of the total amount of the Cathode-ray Tubes purchased by the Local Manufacturing Subsidiary Companies, etc. from 2003 to 2007.

(5) Since Chunghwa Picture Tubes Company Limited and Chunghwa Picture Tubes (Malaysia) Sdn. Bhd. represented on March 30, 2007 that they were not going to attend the meeting by salespersons of the Cathode-ray Tubes due to issues on competition laws and for other reasons, the Agreement disappeared de facto on the same day.

(6) On February 12, 2010, the appellee issued a Surcharge Payment Order to the appellant, which ordered the appellant to pay a surcharge of 1,373,620,000 yen calculated on the basis of the sales amount of the Cathode-ray Tubes sold by the appellant to the Local Manufacturing Subsidiary Companies, etc.

II. Reasons 3 and 4 for the petition for acceptance of a final appeal filed by the counsels for the appeal, UCHIDA Harumichi and others

1. The arguments of the counsels for the appeal allege that since the Agreement was agreed upon outside of Japan, and the companies that directly purchased the Cathode-ray Tubes were the Local Manufacturing Subsidiary Companies, etc. located outside of Japan, in addition to other reasons, this case is not within the scope of the Antimonopoly Act of Japan.

2. The Antimonopoly Act does not have specific provisions on whether and how the Act applies to an act conducted outside of Japan. However, considering the fact that the purpose of the same Act is to promote the democratic and wholesome development of the national economy, as well as to secure the interests of general consumers, by promoting fair and free competition (Article 1) and other facts, it is adequate to construe that even in the case of a cartel agreed upon outside of Japan, if the cartel infringes on the order of the free-competition economy in Japan, the same Act allows its provisions on a cease and desist order and surcharge payment order to apply. Therefore, it should be held that the Fair Trade Commission may issue the above-mentioned orders to a business operator, etc. who conducted such cartel if the requirements prescribed in the same Act are satisfied.

Furthermore, it is construed that “causing … a substantial restraint of competition in any particular field of trade” referred to in Article 2, paragraph 6 of the Antimonopoly Act, which prescribes the definition of unreasonable restraint of trade, means to impair the competitive function of the market of the trade in question (see 2010 (Gyo-Hi) No. 278, Judgment of the First Petty Bench of the Supreme Court of February 20, 2012, Minshu Vol. 66, No. 2, at 796). As seen from this point, it can be held that even if a price cartel (unreasonable restraint of trade) as in this case is agreed upon outside of Japan, in the case where Japan is included in the market, the competitive function of which is going to be impaired by the price cartel (e.g., in the case where such cartel restrains competition in which a person in Japan is a counterparty), such cartel infringes on the order of the free-competition economy in Japan.

3. According to the above-mentioned facts, etc., based on their capital relationships or close business-cooperation relationships, the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan controlled the entire businesses of the manufacturing and selling of cathode-ray tube televisions conducted by their group companies including the Local Manufacturing Subsidiary Companies, etc., determined production plans and specifications, etc. of cathode-ray tube televisions and had the Local Manufacturing Subsidiary Companies, etc. manufacture the televisions under their instructions. Moreover, the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan or their subsidiary companies, etc. purchased and sold all or most of the televisions manufactured by the Local Manufacturing Subsidiary Companies, etc. that used the Cathode-ray Tubes. As seen from these points, it can be held that there was a relationship in which even though they transferred or outsourced manufacturing of cathode-ray tube televisions to the Local Manufacturing Subsidiary Companies, etc., the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan continued to control the businesses of the manufacturing and selling of cathode-ray tube televisions conducted by them and their subsidiary companies, etc. as the main conductors of such businesses, and the Local Manufacturing Subsidiary Companies, etc. received instructions from the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan. In addition, as part of controlling and conducting the businesses of the manufacturing and selling of cathode-ray tube televisions, the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan determined important trade terms and conditions, such as suppliers, purchase prices, and purchase volumes, for cathode-ray tubes, which are key parts of such televisions, instructed the Local Manufacturing Subsidiary Companies, etc. to purchase such tubes, and had the Local Manufacturing Subsidiary Companies, etc. purchase the Cathode-ray Tubes. Furthermore, while the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan conducted directly by themselves the Negotiations, etc. with Samsung SDI and the Other Four Companies in relation to trade terms and conditions for the Cathode-ray Tubes, prices presented by Samsung SDI and the Other Four Companies in the Negotiations, etc. were bound by the Agreement.

As seen from the above points, under the facts of this case, the trade of the purchasing of the Cathode-ray Tubes can be evaluated as trade conducted by the Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan and the Local Manufacturing Subsidiary Companies, etc. as a unit with regard to economic activities, and therefore it can be held that the Agreement impaired the competitive function of the market pertaining to the trade in which Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan, who were located in Japan, were part of the counterparties.

4. For the above reasons, even though the Agreement was agreed upon outside of Japan, it can be held that the Agreement infringed on the order of the free-competition economy in Japan, and therefore it is adequate to construe that a provision related to a surcharge payment order in the Antimonopoly Act of Japan shall apply to the appellant, who conducted the Agreement. The determination in prior instance pertaining to the arguments can be affirmed.

III. Reasons for the petition for acceptance of the final appeal filed by the counsels for the appeal, UCHIDA Harumichi and others

1. The arguments of the counsels for the appeal allege that since it should be construed that in the case where a business operator conducts unreasonable restraint of trade pertaining to prices of commodities, the sales amount of such commodities that becomes the basis for calculation of the amount of surcharge (Article 7-2, paragraph (1) of the Antimonopoly Act) shall be limited to the sales amount of commodities that caused a specific effect of restraint of competition in Japan, and the sales amount of the Cathode-ray Tubes that were delivered outside of Japan cannot be set as the basis for calculation of the amount of surcharge.

2. The surcharge system under the Antimonopoly Act was introduced in the law for the purpose of reducing economic incentives for operating a cartel by increasing disadvantages suffered from being charged therefor, so as to strengthen the prevention of cartels, as a new punitive measure in addition to the existing criminal penalties (Article 89 of the same Act) and the liability for damages to cover losses arising from a cartel (Article 25 of the same Act), and as an administrative measure to ensure effective prohibition of cartels (see 2002 (Gyo-Hi) No. 72 Judgment of the Third Petty Bench of the Supreme Court of September 13, 2005, Minshu Vol. 59, No. 7, at 1950). Moreover, with regard to Article 7-2, paragraph (1) of the same Act, the Enforcement Order of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade prescribes methods for calculation of the sales amount that becomes the basis for calculation of the amount of surcharge (Article 5 and Article 6); but among these, there are no provisions to the effect that such sales amount is limited to the sales amount of commodities that were delivered in Japan.

As stated in II-3 above, considering the facts in this case, it can be held that the Agreement impaired the competitive function of the market pertaining to the trade in which Business Operators Engaged in the Manufacturing and Selling of Televisions in Japan, who were located in Japan, were part of the counterparties. As seen from this point, in light of the purpose of the surcharge system and the provisions of laws and regulations as mentioned above, even if deliveries of the Cathode-ray Tubes were conducted outside of Japan, there are no reasons to construe that the sales amounts of the Cathode-ray Tubes are not included in the sales amounts of such commodities that becomes the basis for calculation of the amount of surcharge.

3. Therefore, even if the Cathode-ray Tubes, which were the subject of the Agreement, were sold and delivered to the Local Manufacturing Subsidiary Companies, etc. outside of Japan, it is adequate to construe that the sales amount of the Cathode-ray Tubes falls under the sales amount of such commodities referred to in Article 7-2, paragraph (1) of the Antimonopoly Act. The determination in prior instance that goes along this conclusion can be affirmed as justifiable.

IV. Conclusion

For the above reasons, any of the arguments of the counsels for the appeal cannot be accepted.

Accordingly, the judgment has been rendered as set forth in the main text by the unanimous consent of the justices.
Justice TOKURA Saburo

Justice OKABE Kiyoko

Justice KIUCHI Michiyoshi

Justice YAMASAKI Toshimitsu

Justice HAYASHI Keiichi
(This translation is provisional and subject to revision.)