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The Fair Trade Commission will order seven major petrochemical firms to scrap a polypropylene price cartel and pay billions of yen in penalties, sources familiar with the case said Monday.

The seven companies are Sumitomo Chemical Co., Japan Polychem Corp., Grand Polymer Co., Chisso Corp., Idemitsu Petrochemical Co., Tokuyama Corp., and SunAllomer Ltd., formerly named Montell SDK Sunrise Ltd.

The order follows an FTC investigation last May into allegations that executives of the seven firms met nearly every week during March 2000 in order to lift polypropylene prices via a cartel.

Arrangements of this nature violate the Antimonopoly Law.

Following the meetings, mainly held at a subcommittee of the Japan Petrochemical Industry Association, the seven companies raised polypropylene prices by 10 yen per kg in late March and April last year, citing a surge in the price of naphtha, a raw material used to make polypropylene.

Despite the negative impact the price hike had on people’s lives, the FTC and prosecutors are unlikely to file criminal charges because the increase was relatively small, the sources said.

Polypropylene is a plastic material used in a wide range of home electrical appliances and auto parts. Combined annual sales of the product by the seven companies total 340 billion yen to 360 billion yen.

FTC hits unfair acts

The Fair Trade Commission detected three violations and issued 320 warnings of potential violations in fiscal 2000 of a law prohibiting unfair labeling and excessive gift-giving as a means to spur sales.

The number of warnings had been declining in recent years, but the combined tally of 323 for the year to March 31 was virtually unchanged from the 322 warnings issued the previous year, the fair-trade watchdog said recently.

Including 148 cautions it issued as a preventive measure, the FTC took 471 actions under the law, it said.

Of note in the reporting year were unfair expressions in the new medium of Internet shopping malls, and those aimed at cashing in on consumer concerns over health, the environment and aging.

For example, it warned a computer software developer in March for labeling its antivirus product as being capable of protecting against even unknown viruses, and an Internet service provider in January for expressions that could cause consumers to believe they would get personal computers for free.

A kitchen utensil maker meanwhile drew a warning in December for claiming its sponge will naturally decompose in soil, whereas in fact it contains components that are not biodegradable.

The FTC also said cases of actual double-pricing were still high as retailers try to lure consumers with “discount” prices, while most gift-giving cases involved expensive gifts offered as prizes.

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