June 5, 1995 in Nation/World

Eastman Kodak Attacks Japanese Trade Practices Allegations Of Market Control Similar To Automakers’ Complaints

Steve Dryden Bloomberg Business News
 

An Eastman Kodak Co. trade complaint is aimed at winning market share in Japan that is “significantly above” the company’s current share of less than 10 percent, Kodak Chairman George Fisher says

Fisher said last week he did not think U.S. government sanctions would be necessary to conclude an agreement with Japan on removing barriers to imports of film and photo paper.

“Both governments working together have it within their power to open the market. I have seen it happen before,” Fisher said at a press conference today.

Fisher was commenting on the trade complaint his company filed in mid-May seeking a U.S. government investigation of the Japanese photo market. The case is aimed chiefly at Kodak rival Fuji Photo Film Ltd.

The trade complaint alleges that there is a highly controlled distribution system in the Japanese market that includes price-fixing by trade associations, cash payments to wholesalers and retailers to exclude outsiders, and boycotts of foreign companies.

The Clinton administration has until the beginning of July to decide whether to accept the complaint and begin an inquiry and negotiations with Japan.

Kodak’s trade complaint comes in the midst of a U.S.-Japan confrontation over auto trade. Some of Kodak’s allegations are similar to those made by U.S. car companies about the distribution system for Japanese autos.

Though Fisher was optimistic about the possibility of a negotiated settlement, talks over the photo market might also founder, as they have in the auto dispute, over the question of whether Japan’s government should get involved in private business practices.

Japanese officials, concerned that their promises could be turned into treaty-like commitments, have resisted U.S. pressure to prod their auto companies to increase purchases of foreign auto parts.

Kodak’s Fisher charged that Japan government officials helped set up the exclusive system for distributing photographic film and photo paper in the 1970s when Japan dismantled traditional trade barriers such as tariffs and quotas.

“These activities have deprived Kodak of about $6 billion in revenue,” Fisher said. “I would hope they (the Japanese officials) would be equally effective in taking it apart,” he added, responding to a question about how the Japanese government was to intervene in the private market.

Fuji rejected Kodak’s charges, saying in a statement that the Japanese market was highly competitive. “In a competitive market such as this, it is difficult for any company to expand its market presence,” the statement said.

Fuji also noted that in the U.S., it has about a 10 percent market share, while Kodak enjoys 70 percent.

Fisher, for his part, pointed to Europe, where Kodak has a market share above 40 percent, as an example of how well Kodak can do when barriers to entry are low.

He said Kodak was not seeking a specific market share in Japan, but noted that his company had put about $750 million into efforts to break into the Japanese market over the last decade. “How could we invest so much money and only have 7 percent to 8 percent market share?” he asked.

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