Sumitomo Electric GroupGLOBALANTITRUST AND
COMPETITIONPOLICYThe terms “antitrust” and “competition” are generally used interchangeably to refer to laws prohibiting unfair(anticompetitive) conduct. However, in general, the term “antitrust” is used in the United States (the U.S.), and“competition” is used in most other jurisdictions. For simplicity, the term “competition” will be used to refer toboth “antitrust” and “competition” unless U.S. specific laws are referred to.

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LETTER FROM PRESIDENT
Dear Colleagues,
In our Code of Conduct, I discussed the Sumitomo Electric Group’s (“SEG”)
proud history spanning over 120 years. I mentioned the Sumitomo Spirit, which
encompasses our goal to strive for excellence in our work, and integrity in our businessconduct. In all of our business affairs, we operate not only within the letter and spiritof laws and regulations, but also in accordance with the highest ethical standards.
Part of those standards is to ensure that we vigorously compete where we dobusiness in an ethical way. To “vigorously compete” in an ethical way means that wewill strive to win business and orders but we must do so without colluding, conspiring,or agreeing to anything illegal with our competitors. In other words, we must always
determine our pricing and business independently.
This SEG Global Antitrust and Competition Policy supplements our Code of
Conduct. It is here to remind all of our employees, wherever they are, to be aware ofand to follow the various competition laws worldwide. The management of all SEG
companies shall implement this Policy and ensure that our employees comply with thisPolicy.
Our Legal Department and Compliance & Risk Management Office preparedthis Policy to assist employees in understanding basic issues and identifying situations
that may raise concerns. Our regional Legal Departments are available worldwide toassist you in ensuring that you understand and comply with these laws. SEG has acomprehensive antitrust and competition compliance program and this Policy is an
important part of that program. We have training available, in person and on-line. You
all should take time to attend these trainings regularly. Further, it is your responsibility
to understand how competition laws can affect our business and you.
I ask each of you to make a personal commitment to do business in accordance with
the Sumitomo Spirit and this Policy.

Osamu Inoue
President & COO
Sumitomo Electric Industries, Ltd.

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STATEMENT OF SEG GLOBAL ANTITRUST AND COMPETITION POLICY
Competition laws are intended to promote competition between businesses and ensure
fairness and a free marketplace.
SEG has adopted an antitrust and competition compliance program (a supplement to
our Code of Conduct) with two objectives. First, to set out and communicate SEG’s
policies concerning compliance with competition laws. Second, to prevent violationsof these competition laws.
This compliance program covers the following key principles:

It is the individual responsibility of all employees, managers, directors andofficers of SEG to comply with all applicable competition laws;

SEG employees must not engage in, permit other employees to engage in,approve or tolerate any conduct that violates applicable competition laws or
SEG Global Antitrust and Competition Policy;

Employees in management positions are personally accountable not only for
their own actions but also for the conduct of their subordinates. Therefore, eachmanager should take particular care to implement appropriate internal controls
to reduce the risk of competition law violations;

Any employee who violates SEG Global Antitrust and Competition Policy may
be subject to disciplinary action, up to and including dismissal; and

SEG will provide materials and education programs as needed that explain in apractical manner what is expected of employees who are likely to facecompetition issues in connection with their day-to-day responsibilities.

SEG will not condone any conduct that could give rise to a competition law violationand no manager or supervisor shall issue any instruction to the contrary.

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A.

COMPETITION AND ANTITRUST LAW OVERVIEW

1. Introduction
Over 120 countries around the world have adopted competition laws. Amongst thesecountries’ various laws exist some common principles. SEG must comply with thecompetition laws in the places in which it does business. In many countries,
competition authorities apply their rules to competition law breaches which have takenplace outside of their respective jurisdiction if they consider that the conduct harms
consumers in their country. In some countries, such as the U.S., certain actions, suchas price fixing by competitors, are always considered illegal regardless of the harm tothe consumer. Always consult with the regional Legal Department to determine which
competition laws are applicable.
Competition laws generally share the same objectives:
1) Ensure that markets operate efficiently by companies providing competitive
prices, product choice, and innovation. This means, for example, thatpurchasers should have a range of independent competing sellers who have notacted together to reduce the degree to which they compete. Likewise, a seller
should be faced with competing buyers who are acting in their individual bestinterests to reduce costs;
2) Ensure that where a business dominates a market such that the business canoperate without taking much account of any impact on competitors andcustomers (for example, a monopoly or an oligopoly), that business does notdamage competition through anticompetitive behavior; and
3) Ensure that companies may not complete mergers or acquisitions if such deals
would substantially reduce competition and disadvantage consumers.
2. Dealing with Competitors (Horizontal Restraints)
Competitors operate at the same level of the supply chain – so agreements between
competitors are referred to as ‘horizontal restraints’ (the following red arrows).

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The basic premise of the competition laws is that each company must make its businessdecisions independently of its competitors. Agreements with competitors such as
fixing prices, allocating customers or markets, rigging bids or boycotting other market
participants or potential entrants are considered so harmful to consumers thatcompetition authorities automatically consider them to be illegal.
2.1. What Constitutes an Agreement?
An agreement between competitors in a violation of the competition laws includes not
only a formal contract but also any informal understanding (a handshake, anunderstanding, verbal or otherwise, a chat in the bar, a chat while playing golf etc.
where competitively sensitive information is shared to align market actions). An
agreement can be inferred from conduct and other circumstances. In fact, many illegal
agreements are inferred from circumstantial evidence (i.e. two competitors
communicated with each other – and might not have agreed any course of action - andlater engaged in similar business conduct) or from conduct (i.e. two companies
consistently raise or lower prices at the same time or announce such changes at thesame time). An exchange of competitively sensitive information might not look likean agreement, but it may be considered evidence of an illegal agreement by acompetition authority. And even where no illegal agreement has been reached,communications with a competitor can raise suspicions that an anticompetitive
agreement has been formed that can subject us to an investigation or lawsuit.
Additionally, in some jurisdictions, the exchange of competitively sensitive
information is itself a violation of competition laws.
2.2. What Constitutes a Competitor?
Another company is a competitor if it competes with us in our sales markets (power
cables, fiber cables, wire harnesses etc.), if it competes in the purchase of goods andservices, or if it competes with us for employees in the labor market. Frequently,
customers of one part of our business will be competitors for other parts of our business.
2.3. Types of Anticompetitive Agreements (or Cartels) between Competitors
I)

Price-Fixing Agreements. Entering into any agreement with a competitor
to fix prices or competitive terms is always unlawful. In many countries—
including Japan, the U.S., and the United Kingdom—individuals involvedin price fixing agreements can go to prison. Price fixing relates not only toprices, but also to other terms that affect prices, such as shipping fees,
discounts, finance rates, or services. In addition, in many countries, anagreement with a competitor that limits or otherwise fixes the terms of
employment for current or potential employees is also unlawful. Please
consult with your regional Legal Department in this situation.

II)

Agreements to Allocate Markets or Customers. It is always unlawful toenter into an agreement with a competitor (or competitors) to divide
markets. In these types of agreements, competitors allocate specificcustomers or types of customers, products, or territories among themselves.
A supplier might independently decide not to deal with a particular

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customer, but suppliers cannot agree which customers they will
supply/target.
III)

Bid Rigging. It is always unlawful to enter into any agreement with acompetitor on the value (including approximate value), terms andconditions in a bid or method by which bids will be submitted or determined.
Illegal bid rigging also includes agreements or understandings among
competitors to: (i) rotate projects/jobs or bids between competitors; (ii)determine who will bid and who will not bid, or who will bid to whichcustomers, or who will bid high and who will bid low; or (iii) determine theprices that individual competitors will bid. In some cases, even theexchange of information related to bids or who will bid may be consideredillegal. Please consult with your regional Legal Department in this situation.

IV)

Exchange of Competitively Sensitive Information between
Competitors. In many jurisdictions, exchanging certain types ofcompetitively sensitive information (such as information on future prices orcommercial strategy which are not in the public domain) is punished as acartel. Even sending public information directly to a competitor could bepunished as it would be considered an attempt to influence the competitor’s
strategy (parallelism).

V)

Boycott. A boycott is an agreement between two or more competitors torefuse to do business with a third party, whether it is another competitor, acustomer or supplier, for an anti-competitive purpose. Examples include adenial of goods to a “price-cutter” or discounter, or the exclusion of acompetitor from a trade association or standards setting organization.

2.4. Lawful Agreements with Competitors
There might be legitimate reasons to discuss or agree on matters with a competitor, forinstance:a customer explicitly requests competitors to provide suggestions about how tosolve a technical challenge;
joint development, cooperation, joint R&D, joint venture and consortia
agreements for a project which are too risky for our company to do alone due
to insufficient capacity, where we do not have the technical means or skills, orwhere the customer requests such cooperation; andtransactions with competitors in areas in which the competitor does not competewith our company (for example, the purchase of a good or service (or the sellingof a good or service) in an area in which our company and the buyer/seller does
not compete).

In all instances where there might be reasons to discuss or, potentially agree
matters with a competitor you must consult your regional Legal Department
before engaging in the discussions with your competitor.

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3. Vertical Restraints
Agreements between parties that operate at a different level of the supply chain arereferred to as ‘vertical restraints’ (the following red arrows).

Vertical restraints refer to certain types of practices by manufacturers or suppliers
relating to the resale of their products because there is a restriction on how the otherparty can deal with the products.
3.1. Resale Price MaintenanceAn agreement with distributors and wholesalers about the prices the reseller will charge
its customers is frequently considered illegal. Our company will not extract agreementsfrom customers regarding the price or minimum price at which the customer will resell
a product without prior approval of the regional Legal Department.
3.2. Other Vertical Restraints
In general, the following types of vertical restraints may be illegal, depending on theextent to which they cause injury to competition in the relevant market:

an agreement requiring a supplier to deal exclusively with our company, or
restricting a supplier from selling its goods or services to SEG’s competitors;
an agreement with distributors and wholesalers about the territories in which,or the customers to which, the reseller may resell the products;
an agreement in which our company limits the individuals or firms from whom
our customers will purchase goods or services, or attempts to limit ourcustomers’ rights to purchase goods and services from others; orselling the same product at different prices or on different terms or conditions
to different customers during the same time period.

You must discuss any of these matters with your regional Legal Department
before reaching any such agreement.

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4. Abuse of Dominant Position
There is nothing illegal or wrong with a company becoming successful though
legitimate means such as the use of patents. However, the competition laws generally
prohibit exclusionary conduct by a monopolist (e.g. Japan and USA) or abuse of theirstrong market position (e.g. Japan, EU and many other countries).
Companies with significant market power can be said to have a special responsibility
not to allow their conduct to distort the market. Conduct that can be considered
anticompetitive if carried out by a dominant / monopolistic company without objective
justification includes:







charging unreasonably high prices;selling at unjustifiably low prices (below cost) in order to prevent a newcompetitor entering the market;
an agreement tying the purchase of one product to an agreement to purchaseanother product;refusing to enter into a contract with a customer;
entering into exclusive purchasing or selling requirements (non-compete); or
structuring rebates/discounts so that customers are penalized if they do not buy
all their requirements from the dominant company.

If our company has a very strong position on the market for any specific product,
employees must not enter into contracts for products or services with the above
conditions (or refuse to enter into a contract) BEFORE getting legal advice fromyour regional Legal Department.

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B.

POTENTIALLY SENSITIVE AREAS

1. Social Interactions with Competitors
In the event that you interact socially with a competitor, you must take care to ensurethat such interactions never concern sensitive business topics such as prices, costs,
terms and conditions of sale, business plans, suppliers, customers, territories, capacity,
production, or any other subject that could be considered competitively sensitive, unlessapproved by the regional Legal Department in advance.
2. Trade Associations and Industry Events
Trade associations and industry events bring together participants in a specific industry
to discuss matters of common interest. However, these association meetings andindustry events can provide opportunities for competitors to discuss topics that can leadto a violation of competition laws. Employees must obtain training or guidance fromthe regional Legal Department before joining the trade association and refer to thistraining or guidance regularly. Once employees have joined a trade association, theyshould ensure that a written agenda is prepared in advance of each meeting and that the
topics of discussion are consistent with the agenda. Employees are expected to
immediately report to the regional Legal Department if any discussions occur during
the meetings that relate to competitively sensitive topics.
3. Information Exchanges
Any information exchange with a competitor that involves information that is nonpublic, current or forward-looking, unaggregated or firm-specific, and therefore isconsidered to be competitively sensitive in some respect, is likely to raise competition
law risks. Any exchange of competitively sensitive information among competitors
should be evaluated by the regional Legal Department for competition risk andstructured to minimize competitive harm.
4. Joint Ventures, Consortia, M&A, Cooperation Agreements with Competitors,
and Other Legitimate Ventures with Competitors
While it might be legitimate for competitors to create a joint venture or a consortium tocompete better, such agreements can raise substantial competition law issues. Due tothe competition law risks associated with the formation and execution of sucharrangements, a member of the regional Legal Department must be involved, from the
beginning of the discussions. The regional Legal Department must ensure that
discussions, negotiations, communications, and the proposed business venture itself are
pro-competitive, as well as ensure the flow of documentation and communications, andthe execution of the venture itself, is in compliance with competition laws.

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5. Benchmarking Issues
Benchmarking is a structured comparison of other companies’ ideas, processes,
practices, or methods. It can be a pro-competitive tool when done properly by: (i)legitimate surveying or consulting organization employing certain safeguards, or (ii) byonly using public information or information legitimately provided by a customer.
However, benchmarking carried out without careful adherence to those safeguards canbe used as a means to exchange competitively sensitive information in a violation ofcompetition laws. You must seek prior permission of the regional Legal Department
before participating, or agreeing to participate, in any benchmarking exercise other thanthose described in (i) and (ii) above. You must contact the regional Legal Department
if you have any questions or concerns regarding whether a benchmark survey and/or
exercise violates this policy.
6. Vertical Business Relationships with Competitors
You may encounter situations in which a company with which SEG competes is also a
supplier, distributor, or has another relationship with SEG that is separate and apartfrom the product/area in which the companies compete. You must ensure that any
communications with this competitor are strictly limited to the “vertical” business
relationship with SEG (i.e. buyer/supplier, distributor/customer, etc.), notencompassing other areas where we do compete. If you are unsure about whether acommunication with one of these competitors on a topic is permitted, it is important toseek the guidance of the regional Legal Department in order to get appropriate advice
and implement appropriate safeguards, including non-disclosure agreements andinternal firewalls.

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C.

ENFORCEMENT

The consequences of a competition law violation are serious both for the company andfor the employee that is involved in the violation.
1. Consequences for Company
1.1. Fines
A violation of competition laws may result in significant fines. For example, in Europe
the fine can be up to 10% of our worldwide turnover. In the U.S., fines for a violationof federal antitrust law can be $100 million or much more where twice the gain or loss
from the violation exceeds that amount. Fines also may be imposed for violations ofstate law, and these fines can be very substantial.
1.2. Customer Compensation
Injured private parties also may sue SEG in court to obtain compensation for the harmthey suffered by SEG and its competitors. In some jurisdictions, as in the U.S., private
parties may obtain ‘treble damages’ (damages equal to three times the amount of theovercharge they paid to SEG and its competitors as a result of the violation).
1.3. Cost of Investigations and Litigations
The financial cost of the proceedings in front of the competition authorities as well as
follow-on private damages actions can be high and it puts almost immediate financial
burdens on SEG companies.
1.4. Management Disruption
The existence of investigations or litigations is disruptive and this can impact onmanagement time and on the day-to-day business meaning that key decisions might bedelayed or impacted.
1.5. Reputational Damage
We must not forget the damage to our reputation that engaging in such illegal activity
can have. In the new age with social media and internet being widely accessible, theactual or potential damage to our reputation can be realized very quickly. Being seen
to have engaged in anticompetitive conduct can have a significant impact on our
reputation with our customers, but also with the general public, impacting on our ability
to recruit staff.
2. Consequences for Individuals
Breaches of competition laws are criminal offences in several jurisdictions and canresult in prison time for individual employees. The U.S., for example, is extremely
aggressive in holding individual executives accountable for engaging in antitrust
violations, even where all of the conduct occurs outside the U.S., and prison sentences

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are common and can be as long as 10 years (with people being potentially extradited
and jailed in the U.S.). Other jurisdictions are increasingly using their criminal
enforcement powers to penalize cartel conduct.

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D.

PRACTICAL GUIDELINES – DOS AND DON’TS

Employees must: Discuss any competition questions or concerns with the regional Legal
Department.
 Follow requirements regarding competition laws and undertake all required
training.
 Stop conversations, especially with a competitor, if you suspect it might touch
inappropriate areas where you have doubts about it being legal. You must:(i)
immediately inform this person that this discussion is a direct violationof this Policy;(ii)
immediately end the discussion and/or leave the discussion, asking foryour departure to be noted;(iii)
immediately make a physical note of your actions; and(iv)
as soon as possible thereafter contact the regional Legal Department
regarding the details of this discussion.
 Report any discussions that involve the topics addressed above immediately tothe regional Legal Department.
Employees must not:
 Discuss prices, the timing of price changes, costs, margins, terms and conditionsof discounts and rebates, capacities, bids for business, new projects, strategies,
business plans, suppliers, customers, or any other competitively sensitive
information with SEG’s competitors. This prohibition applies at all times andlocations, including trade associations, social occasions, and on social media.
 Joke or use ambiguous or speculative language which could be construed assuggesting or expressing an agreement or understanding to: jointly set prices orother sale terms (including credit terms or discounts); fix or agree on bids (oragreements not to bid); allocate markets or customers; reduce or control
production or output; or boycott, penalize or otherwise discriminate against
another company or person.
 Agree with a customer or competitor not to deal with other companies.
 Agree with a competitor regarding the hiring or recruitment of employees(including agreeing not to hire or recruit an employee) or the terms andconditions of employment.
 Engage in any of the following activity – without approval from the regional
Legal Department:(i)limit the territory in which or the price at which a customer may resell
our company’s products;(ii)
limit the person or companies to whom a customer may resell ourcompany’s products;(iii)
require a customer purchasing one product or service to purchaseanother product or service (tying arrangement);(iv)
prohibit a customer from purchasing from your competitors (exclusive
dealing arrangement); and/or(v)
engage in activities that might appear to be abusing a dominant position.
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E.

CONCLUSION

This Policy places responsibility to ensure compliance with competition laws on every
director, officer, manager and employee.
This Policy is intended as an aid to assist you in understanding and fulfilling yourresponsibility to comply with SEG’s Code of Conduct.
This Policy is not intended to make you an expert, but rather to help you identify
competition issues that could arise in the course of your job responsibilities.
The practices described above do not encompass every type of arrangement oragreement that has been held to constitute a competition law violation.
You must raise any agreement, business relationship, or business opportunity that may
pose competition concerns with your regional Legal Department.

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