Chapter 4: Cartels and bid rigging
In Japan, it may be the case that cartels are an even more serious and complicated issue than in the EU, in particular because horizontal coordination has often been rooted in the traditional business practices of Japanese companies. Professor Hadley, an economist who was sent to Japan to join the US General MacArthurís headquarters in Tokyo after World War II, wrote that Japan did not have a long tradition of cartels based on explicit agreement before the 1920s but was rather typified by ëcordial oligopolyí, which characterised the handful of combines dominating the economy. In the 1930s, however, cartels were encouraged by the government, and for a time were even mandatory in a variety of sectors as industry became an instrument for increasingly militant policies. In addition, as the European economy recovered after World War I, the markets of the colonial territories to which the Japanese small and medium sized enterprises had been selling daily commodities were taken by the European companies. Accordingly, the Japanese small and medium sized companies started to sell cheap products of low quality to compete with the European competitors in these markets. As a result, the Ministry of Commerce and Industry (now METI) established the export association system to limit the sale of low quality products manufactured by threatened Japanese enterprises. As suggested above, bid rigging has been the main problematic area of cartel control in Japan, particularly in the construction sector.
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