During its more than three decades of operation in Japan, PPG has observed a litany of anti-competitive practices occurring in the Japanese flat glass market. Attached to my testimony you will find a longer listing of some of these practices, but I would like to highlight several areas for you. Japanese flat glass producers have imposed informal sales quotas on their suppliers. These quotas operate by prohibiting Japanese distributors from buying any non-Japanese affiliated foreign manufactured glass until a minimum quota amount of Japanese produced glass is first purchased. If a Japanese distributor does not meet the quota for purchases of glass from his Japanese suppliers before buying glass from independent foreign producers, the distributor faces any of a number of pressures ranging from unfavorable credit reports, to forfeiture of cash deposits made in advance of purchases, to social ostracism.
Japanese producers exercise control over the distributors in many ways.
Some are direct, such as the acquisition of partial ownership or forced consolidation of distributors. In some cases, Japanese producers require distributors to open their accounting and purchasing records to the producers, so that the source of purchases is known to the Japanese producers. In other cases, Japanese producers have been known to place their personnel on the management staff of their distributors. Evidence of Collusion One of the strongest proofs of the collusive nature of the Japanese market came from a Japanese employee of a U.S. glass producer who has stated that he personally collected and aggregated the production numbers of the Japanese producers so that each could regulate their production according to the agreed market share. Additional strong evidence of collusion is contained in recent comments reported in the Japanese press which suggest that Japanese producers and distributors are engaged in price signaling if not outright price fixing.