Indeed, with exports declining after the yen appreciated dramatically three years ago, the domestic market has been flooded. Last year it absorbed nearly 50% more Japanese-made VCRs than in 1984, according to data released by the Electronic Industries Assn. of Japan. The average factory price per unit declined by 52% in yen terms during the same period.
But it is precisely under such troublesome conditions that Japanese industries have repeatedly shored themselves up with informal agreements aimed at defusing "excess competition," critics say. Just as "confusion" in the domestic market is a euphemism for competitive pricing, the evil of "excess competition" implies that there will be winners and losers.
"I try to tell companies that the whole concept of 'excess competition' is wrong," said Shogo Itoda, deputy secretary general of the Fair Trade Commission. "In a free economy, there's either competition or there isn't."
Itoda laments, however, that it is extremely difficult for his agency to gather evidence of collusion in price cartel cases. It lacks the subpoena powers used by investigators in the U.S. Justice Department's antitrust division. It also must contend with the powerful economic bureaucracies, such as the Ministry of International Trade and Industry, which sponsor legal industrial cartels.
"They are a well-meaning bureaucracy that doesn't have much pull in the Japanese government," one knowledgeable foreign observer in Tokyo said of the commission.
Most daunting, perhaps, the commission must deal with a cultural group dynamic that was not anticipated or fully understood by the American drafters of the 1947 anti-monopoly law.
"There's a Japanese style, a mood of tacit communication," Itoda said. "When two people of the same industry get together, the first thing they do is form an association, and they quickly become very intimate. But we think it's still possible to compete within that framework."
The native instinct to form cartels during uncertain times was manifested when the government got ready to implement, at the beginning of April, a 3% consumption tax on all goods and services. The first thing that it did was take steps to avoid "confusion" in the marketplace by allowing small businessmen to form temporary cartels--4,533, at last count.
The concern was that a lack of coordination among vendors might result in volatile prices, perhaps even cut-throat competition. As a sop to the outraged consumer, the Fair Trade Commission installed a "cartel hot line" to take reports of opportunistic price hikes. Makers of \o7 tofu\f7 , or bean curd, were admonished to clean up their acts under the agency's non-legally binding "administrative guidance" procedures.
By coincidence, Setsuo Umezawa, chairman of the Fair Trade Commission, is a former career bureaucrat in the Finance Ministry's tax division who assumed the top trust-busting post in 1987, when the ministry was drafting the package of tax reforms containing the highly controversial consumption levy.
Umezawa took office declaring his commitment to more aggressive enforcement of the anti-monopoly law. But so far under his tenure, the agency has continued a trend toward less frequent activity. In fiscal 1988, which ended March 31 of this year, the commission initiated 178 investigations, compared to 329 in fiscal 1983.
Formal and informal sanctions taken by the agency also steadily declined during the six years. Last year it issued six legally binding recommendations, similar to cease-and-desist orders, and settled 82 cases with informal warnings and cautions.
The agency has filed only one criminal complaint in its 42-year history, against participants in a cartel found to have rigged gasoline prices after the first oil shock of the 1970s. In that case, the Supreme Court eventually upheld convictions and suspended sentences for 13 company executives.
Nor is the agency making full use of the enforcement teeth granted by a revision of the law in 1977. Although it has taken advantage of the power to levy surcharges on cartels, it has not once exercised its expanded authority to order the break up of monopoly enterprises.
Umezawa, in a speech last month, attributed the decline in anti-monopoly investigations over the past decade to more stable economic conditions, effective deterrence and better attitudes among companies, not lax enforcement. Asked if he is sympathetic to calls to toughen the law, he said "there's no need to strengthen it beyond this."
Dunlap of Go-Video, meanwhile, has found a way around the alleged VCR cartel while pursuing his antitrust lawsuit. He has settled out of court with several defendants for a total of about $2 million and has worked out an arrangement with Samsung, one of South Korea's \o7 zaibatsu\f7 -style conglomerates, to manufacture his dual-deck machine later this year.
Samsung was originally named in the suit for abiding by a Japanese "voluntary restraint" agreement not to make dual-head VCRs. Dunlap's lawyer, Joseph Alioto of San Francisco, contends that this was part of a "conspiracy" aimed at keeping American companies out of consumer electronics.
"The name of the game of the Japanese isn't market share, it's market control," Alioto said. "They want to have it all."