Firebrand leads fight to clean up Japan’s dark cartels
Kazuhiko Takeshima is intent on saving the Japanese economy with a dose of fair competition
AFTER decades of frustrated irrelevance, the Fair Trade Commission of Japan (JFTC) is preparing to mount a massive “clean-up” assault on the darker practices of Japanese industry. From rigged sewage pipe contracts to haute couture handbag cartels, “nothing will escape scrutiny and nothing will be off-limits”.
In a move seen by Kazuhiko Takeshima, the JFTC’s chairman, as embarrassingly overdue, the agency will attempt an even greater feat — of changing the Japanese corporate mindset so that it no longer thinks of corruption as a necessary evil.
“You will hear most business people saying that cartels are bad and unlawful, but essential for the harmony of Japan,” Mr Takeshima said in an exclusive interview with The Times. “I have to get rid of that if the Japanese economy is to continue growing. If we do not, the whole thing will lose its incentive. I am saving the economy with fairness. There can be no growth without competition.”
Armed with a powerful new anti-monopoly law, the JFTC is planning to take on Japan’s giants — titans of heavy industry, the notoriously sewn-up construction sector and the iniquities of government contract distribution. When it has finished with those, the media, IT, pharmaceutical and financial sectors may be next.
The anti-monopoly law came into effect in January, but has been tested only sporadically. Pushing it past both the Government and the country’s disproportionately strong Keidanren business lobby took a huge effort by the JFTC and its initiative repeatedly came close to being derailed.
Now, however, the commission has gained greater rights to search businesses, can offer substantial inducements to whistleblowers, can recommend full investigations of local and central government offices and has fiercer powers of punishment. More critically, the commission has gained the will to fight the big battles needed to bring fairness to Japanese markets.
The firebrand who has endowed the JFTC with both its teeth and its bloodlust is an unlikely figure. Mr Takeshima is a smiling, slightly stooped, veteran bureaucrat who bears all the hallmarks of a pure establishment figure. From his days in the Tokyo University economics faculty to the National Tax Agency to the Cabinet Secretariat, there has been little to suggest that he would become Japan’s chief slayer of sacred cows.
In the three years since Mr Takeshima became chairman, the JFTC has been transformed. It has raided the offices of global corporations, such as Microsoft and Intel, and last year revealed the multi-trillion-yen scandal of Japan’s bridge-building cartels — a litany of bid-rigging abuses stretching back decades and involving the country’s largest steel and construction groups.
“The JFTC was silent for too long, but those days are over. You wouldn’t think it was possible, but the whole of the Diet hates me now. From communists to conservatives — all of them,” Mr Takeshima says with a grin.
According to gossip, Mr Takeshima has even managed to irritate Junichiro Koizumi, the Prime Minister, with the publication last week of a paper giving warning that post office privatisation — Mr Koizumi’s most cherished policy — could create a huge wave of fair-trade abuses.
Mr Takeshima’s unpopularity stems from the relationships that the JFTC has smashed. As he explains, Japan’s economy used to be managed by a collusive axis between businesses and government ministries. Smashing the bridge-building cartels, he says, was a symbolic victory for fair trade — a line in the sand portending a new era of crackdowns. Once Japan saw something as big as bridge-building under scrutiny, people knew that there was nowhere to hide.
Where Mr Takeshima is vague is in explaining what lies behind his clear sense of mission. He agrees that the JFTC’s first priority is to serve the interest of consumers, but plays down examples such as Japan Airlines and All Nippon Airlines — a price-numbing duopoly roundly condemned by rival American and European airlines.
He changes subject quickly to describe the overall “trickledown” effect of destroying big-scale unfairness. He talks also of how the JFTC can help to instil a greater sense of competition among individual Japanese. “The country, particularly the public sector, has lived with seniority-based promotion for too long,” he says. “Competitiveness is a concept in the total interest of Japanese people.”
He hints, though, that much of his energy has to do with the realisation that Japan has been extremely late to fight the big antitrust battles. He has analysed the approaches of the United States and the European Union, and decided, narrowly, to emulate the latter. However, he refuses to accept that the world outside Japan provides perfect examples of fair trade.
“When we get round to dealing with the retail sector,” he says, “we are going to be so much more strict about curbing the power of supermarkets than you are in Europe or they are in the US. The way the big supermarkets abuse their suppliers — that is the sort of unfairness that is never going to happen here.”
CORPORATE BATTLEFIELD
JFTC inquiries since Kazuhiko Takeshima took over in July 2002
Microsoft: unfair practice
Intel: unfair practice
Aluminium foil industry: price-fixing
Floodgate construction: bid-rigging
Glass wool industry: price-fixing
Mobile ring tones: price-fixing
Motorway warning signs: bid-rigging
Steel bridge construction: bid-rigging
Sewage works: bid-rigging
By Leo Lewis
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