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JFTC publishes result of investigation into Canon Inc. based on the Antimonopoly Act

October 21/2004
Japan Fair Trade Commission

The Fair Trade Commission of Japan (hereinafter “JFTC”) conducted an investigation into Canon Inc. (hereinafter "Canon") because the JFTC suspected that Canon made it almost impossible for recycling companies (*1, *2) to sell recycled toner cartridges of Canon's laser printers (hereinafter "recycled cartridges"), by attaching specific IC tags (*3) to its toner cartridges and installing IC chips with the IC tags for making recorded information difficult to be analyzed and initialized. As mentioned below, however, the JFTC has found after its investigation that recycling companies became to be able to recycle cartridges thus far.
Therefore the JFTC decided to terminate this investigation.

(*1) Recycling companies are those who gather used cartridges and sell them as recycled ones.
(*2)Recycled cartridges are generally those which are gathered upon request of users of laser printers for reuse and refilled with toners and sold in the cartridge market after recycling companies discomposed and cleaned them and exchanged their consumed parts for new ones.
(*3)An IC tag is composed of an IC chip and an antenna and usually installed in commodities, which memorizes data of commodity’s identification and other information and makes it possible to read and write the data by utilizing radio wave.

1 Summary of this case

(1)
a) Canon is an influential firm in the market of color laser printer in Japan, developing, manufacturing and selling its laser printers and cartridges used for laser printers.

b) Cartridges have two types. One is an original cartridge which is provided by its original printer manufacturers. The other is a recycled cartridge which is provided by recycling companies.
Demand for cartridges used for laser printers is increasing owing to the increase of computer users. Printer users are getting more interested in recycling and reusing cartridges than ever before.
Recycled cartridges' share in the market of cartridges for black-white laser printer is about 25% and the share in the market of cartridges for color laser printer is about 4%. Both of market shares have been increasing in recent years. (Based on a figure estimated by business association of recycling companies in 2003)
Mostly the price of the recycling cartridge is nearly half of the price of the original cartridge.

c) A general cartridge for a printer installed with IC chip is designed to be unworkable even though a toner is refilled, if the information that the toner in the cartridge is empty(hereinafter “life data”) is memorized in the IC chip. Therefore,when recycling companies sell their recycled cartridges, generally,they rewrite and initialize the life data and make it possible for the printer to recognize that its cartridge is new one.

(2) From a viewpoint of preventing damage of a printer itself and securing print quality when original-type cartridge is set in the printer, Canon makes color laser printers sold from 2002 and from 2003 unworkable when toner in the cartridge is used up, which means cartridges reached the end of its life, by attaching IC tag called RFID( Radio Frequency Identification)which memorizes life data.
It is difficult for the recycling companies to analyze and rewrite the life data memorized in the IC chip and initialize it because the data is highly secured by using wireless communication method and etc. There isn’t any recycling company which is able to initialize the life data on the IC chip of the cartridges and to sell cartridges with the IC tag.
Thus the JFTC suspected that Canon obstructed a transaction of recycled cartridges by using its IC tag, which could be a violation of the Section 19 of the Antimonopoly Act (Item 15 (Interference with a competitor’s transaction) of Unfair Trade Practice). Therefore the JFTC conducted the investigation into Canon based on the Act.

(3) The facts that the JFTC found during the investigation are as follows.
a)By the software installed by Canon into their color laser printers mentioned above 1(2), the printer recognizes that the cartridge is not original and the printer panel shows “incorrect cartridge” when a printer user sets a refilled (recycled) original cartridge. In this case, however, the printer continues to be workable with the cartridge when the user operates the printer in an appropriate manner. Therefore cartridges can be reused even if the recycling companies do not initialize the life data on IC chip.

b) However, printers sometimes do not work when recycled cartridges are recognized as original ones which have reached the end of life (*4) under either conditions mentioned below.
(i)When a printer user sets a recycled cartridge which is any of the last three ones that the printer user used with the printer.
(ii) When a printer user resets within 30 days the same cartridge that reached the end of life with the printer because of any factor except life data,even though it is recycled.

(*4) When a printer user resets the original cartridge memorizing the life data in the IC chip, all of the operation of the printer stops and the message of “change toner” is shown on its panel by the software installed in the printer.

c) While some recycling companies began to sell recycled cartridges without initializing the life data in the IC chip installed in cartridges of the color laser printers mentioned in 1(2), other recycling companies still have a difficulty in selling recycled cartridges to printer users because the printers sometimes do not work for the reason that they recognize recycled cartridges as original cartridges which have reached the end of life as mentioned above 1(3).

d) Canon, taking into consideration the importance of users who wish to use recycled cartridges, has been taking the following measures in order to avoid the problem in using recycled cartridges.
(i) Canon explained to the business association of recycling companies under which conditions the printers with recycled cartridges mentioned in 1(3) are workable.
(ii) Canon partially modified the explanation of this operation of the printer in users’ manual. The message of "cartridge incorrect" shown on the printer’s panel when a recycled cartridge is installed in the printer is changed to such a message that does not make printer users hesitate to use recycled cartridges.
(iii) Since printer users, in some cases, had difficulty adjusting the tone of color (calibration) when a recycled cartridge is installed in printers, Canon modified the errors in the software which caused such difficulty.

(4) Based on the fact as mentioned in 1(1) to (4), problems of the Canon's behavior under the Antimonopoly Act have been dissolved by now, because the JFTC found the situation that recycling companies are able to provide recycled cartridges to printer users who wish to use recycled cartridges of the color laser printers mentioned 1(2).

2 The JFTC's Measure

The JFTC showed the guidelines on the Antimonopoly Act concerning recycling of cartridges in the case that manufacturers of laser printer installs IC chip in their printers'cartridges as follows.
The JFTC, from the perspective of promotion of fair and free competition, will continue to watch the competitive situation in the market of cartridges for laser printers.

Guidelines on the Antimonopoly Act concerning installation of an IC chip in a toner cartridge of a laser printer and recycling of a toner cartridge

Recently, there are more and more cases that an IC chip is installed in laser printers. It is not problematic itself under the Antimonopoly Act that a manufacturer of the laser printer installs IC chip in its printer in order to develop the quality and the function of the printer. However, for example, if a printer manufacturer, without the reason of technical necessity and etc. or beyond its necessity, interferes with printer users using recycled cartridges as mentioned below, such behavior shall be problematic under the Section 19 of the Antimonopoly Act (Item 10 (Tie-in sales etc.) or Item 15 (Interference with a competitor's transaction) of Unfair Trade Practice)

(1) Making it impossible to recycle cartridges by coding the data memorized in the IC chip or making initialization of the data difficult

(2) Making operation of the laser printer suspended or a part of the printer's functions is not workable when a recycled cartridge is set in the printer by making IC chips memorized data that toner is empty.

(3) Making it impossible to use recycled cartridges by making the control system of laser printer for IC chip too complicated or changing it so frequently

Basically the guidelines above are also applicable to the case that an IC chip is installed in an ink cartridge of inkjet printer.

*Every announcement is tentative translation. Please refer to the original text written in Japanese.



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