"Let's not wear each other out,"
Kansai Electric Power Co., Chugoku Electric Power Co., Chubu Electric Power Co., and Kyushu Electric Power Co. said. Each executive had a meeting and decided not to enter each other's business area.
It has become clear that the region's leading electric power companies had "watered down" the purpose of the "liberalization of the electricity retail market" aimed at reducing electricity rates.
The surcharge ordered by the Japan Fair Trade Commission is 1000 billion yen. What's in the background?
The trigger was Kanden's "cross-border" sales
In 2016, the electricity retail market was fully liberalized.
Initially, there was no competition between the major power companies.
According to a survey by the Japan Fair Trade Commission, the trigger was the Kansai Electric Power Company entering the service of other companies at the end of 2017 and starting full-scale sales activities.
Kansai Electric Power, which had been competing on price in the region with major gas companies that entered the market as new electric power, entered the service of Chubu Electric Power, Chugoku Electric Power Co., and Kyushu Electric Power one after another in search of new markets, and launched a sales offensive in each region.
Chugoku Electric Power, Chubu Electric Power, and Kyushu Electric Power Co. reacted to these moves by Kansai Electric Power, and each company decided to meet with Kansai Electric Power Co. not only with sales representatives at the manager and general manager level, but also with executives to find ways to maximize mutual benefits.
"Let's stop exhausting each other," "How to get out of the price war,"
and "Raise prices in bidding" These conversations were exchanged at the meeting, and the conclusion reached was a "non-aggression agreement"
in each other's business area.
What I chose was not "competition" but "inviolability"
The major electric power companies agreed not to acquire customers beyond the regions where each company was in charge of supplying electricity before liberalization, so to speak, over "extra-high voltage" power for large-scale factories and office buildings and "high-voltage" power for small and medium-sized factories and offices.
According to experts, when operating in the service of other companies, even the major power companies are "newcomers" in the region, so they need to lower prices and appeal to consumers.
Since price competition would arise there, it seems that the aim was to avoid it and secure profits.
This agreement was made between "Kansai Electric Power and Chubu Electric Power" and "Kansai Electric Power and Chugoku Electric Power" respectively.
In addition, in public bidding to determine which suppliers of electricity to government offices, the number of businesses participating in the bidding was limited to electric power companies within the "territory," and the "lower limit" presented at the time of bidding was set high.
This agreement was made between "Kansai Electric Power and Chugoku Electric Power" and "Kansai Electric Power and Kyushu Electric Power".
Once dominated the market
In the electricity retail business, which seems to have been behind these proposals,
major electric power companies once monopolized the market in each region.
In order to reduce electricity rates and promote competition in services, the government has been liberalizing electricity in stages since 2000, and in 2016, the "liberalization of the electricity retail market for households" began, which allows ordinary households to freely choose their electricity contracts.
According to the Ministry of Economy, Trade and Industry's Electricity and Gas Trading Surveillance Committee, the ratio of new operators = new electric power to the amount of electricity sold in Japan was 2016.4% as of April 5, when it was fully liberalized, but due to a series of new entrants, it was 2.2022% as of December 12.
The breakdown shows that as of April 2016, the share of new power was 4.5% for "extra high voltage" for large-scale offices and 3.10% for "high voltage" for small and medium-sized offices, but as of December 5, it was 2022% for "extra high voltage" and 12.8% for "high voltage", indicating that after the full liberalization of the retail market, new power companies have increased their market share and competition is intensifying.
Akinori Inagaki, Group Manager of Nomura Research Institute's Carbon Neutrality Strategy Group, points out the following.
"In 2016, when we fully liberalized the program, including 'low voltage' for households, I think one of the reasons why competition among electric power companies between regions, in other words, competition by crossing borders across areas, has emerged, which has become more severe including 'high voltage.' We wanted a lower price, so we became price war."
Vice president at cartel meeting
The Japan Fair Trade Commission entered and inspected the site in April 2021.
Those who were inspected were Chugoku Electric Power, Chubu Electric Power Co., and affiliated companies Chubu Electric Power Miraiz and Kansai Electric Power.
Three months later, I joined Kyushu Electric Power and its affiliated company Kyushu Electric Mirai Energy.
Under the Antimonopoly Act, the act of jointly arranging the price and production volume of products that should be determined by each company is prohibited as a "cartel" that restricts competition, and it was judged that the agreement between the electric power companies this time was suspected of effectively restricting transactions at low electricity rates.
March 2023, 3.
The Japan Fair Trade Commission announced the results of its investigation and found that the cartels had been linked for about two years from the fall of 30 at the latest after the liberalization of electric power.
The following people were participating in the meeting.
Four companies were fined, the largest being Chugoku Electric Power Co., which imposed more than 4.707 billion yen.
This was followed by Chubu Electric Power with more than 201.73 billion yen, its affiliates with more than 27.1010 billion yen, and Kyushu Electric Power with more than 1.<> billion yen.
The total amount amounted to <> billion yen.
This was the highest amount ever imposed by the Japan Fair Trade Commission, and of these, the surcharge ordered to Chugoku Electric Power was also the largest surcharge for a single company.
FTC "Philosophy of Electric Power Deregulation: Neglected"
Osamu Tanabe, Director General of the Examination Bureau of the Japan Fair Trade Commission, pointed out at a press conference after the investigation was completed.
"It is a violation that disregards the purpose and philosophy of liberalization, which has been promoted for many years by electric power companies, which are representative companies in the region, to maximize the control of electricity charges and to expand business opportunities for business operators.
Against the backdrop of cooperative relationships between electric power companies, some companies involved a wide range of people, including representatives and executives. It is a market division between two companies so that competition does not deprive customers in the other party's supply area, and it restricts competition in its own supply area."
In addition, since the Japan Fair Trade Commission revealed in this investigation that each electric power company took advantage of the meeting of the industry group Japan = Federation of Electric Power Companies of Japan to hold meetings regarding cartels, we requested Chairman Ikebe of the Japan Electric Power Federation (JEF) to prevent similar problems in the future.
Why? Record-high surcharge of 1000 billion yen
In principle, for violations such as cartels, a surcharge is calculated based on 10% of the sales during the period of the violation.
Electric power companies are large companies, and large companies deal with "extra-high voltage" and "high voltage" companies, and sales are large, and these factors seem to be behind the record high.
In addition, the businesses certified as cartels are as follows.
Since Chugoku Electric Power had a wide range of cartels, the amount of money was outstandingly large.
Kansai Electric Power Why is the surcharge exempted?
On the other hand, Kansai Electric Power, which has formed a cartel with each company, has been exempted from the surcharge and has not received a cease and desist order.
This is because Kansai Electric Power used a system called "surcharge reduction and exemption system = leniency".
The "surcharge reduction and exemption system" was introduced in 2006 to encourage companies that have joined bid-rigging and cartels to voluntarily report violations.
The earliest business to file a tax return before the investigation by the Japan Fair Trade Commission begins will be exempted from the full surcharge, and the following businesses will also receive a maximum reduction of 60% depending on the order of filing and the degree of cooperation.
This time, Kansai Electric Power was the first to voluntarily declare itself, so it was spared neither the surcharge nor the cease and desist order.
In addition, since Kyushu Electric Power voluntarily declared itself after the on-site inspection and actively cooperated with the investigation, the "Investigation Cooperation Subtraction System" was applied, which reduces the surcharge of companies that contribute greatly to the clarification of the truth, and a total of 30% was reduced.
What is required of electric power companies?
What is required of each company in response to this problem?
We asked Professor Toshihiro Matsumura of the Institute of Social Science, the University of Tokyo, who specializes in public economics and is an expert on electricity and gas policies.
"It is very unfortunate that concrete actions have been taken to limit competition and keep prices high, despite the fact that liberalization and system reform are originally to promote friendly competition among various businesses and seek the interests of consumers."
"First of all, it is important to improve compliance and other matters more than ever before and establish a system to prevent such things from happening again, and in addition to that, it is necessary to compete through friendly competition on a nationwide scale and actively appeal to consumers in a way that makes them understand that their constitution has changed from before. There is a possibility of an 'implicit cartel' even in the regions where this time was not a problem, so it is necessary to take a close look at whether competition is really working, including the Electricity and Gas Trading Surveillance Commission, the Japan Fair Trade Commission, and consumers."