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JFTC renders recommendation to the Hospital Diet Wholesale Cooperatives in Japan for restricting members' selling districts

March 14/2003
Japan Fair Trade Commission

The Hospital Diet Wholesale Cooperatives in Japan (the Coop) received FTC recommendation in violation of Section 8-1 (4) [unjustly restricting the functions or activities of the constituent entrepreneurs].

 1. Parties concerned
 The Hospital Diet Wholesale Cooperatives in Japan

 2. Whereas the Coop was incorporated as a cooperative association under the governing law applicable to small- or medium-sized firms and cooperatives, its acts are object of the Antimonopoly Act as it lacks the requrement of Section 22-2 [member's option to voluntarily join or withdraw from membership] of the Antimonopoly Act.

 3. Outline of violation
 (1) The Coop was charged with market segmentation by apportioning a sales territory in a prefecture unit to each member in order to prevent internal collision. The Coop forced a member not to sell diet food (Note 1), which was purchased from the Coop itself or purchased indirectly from supporting members (Note 2), to a third company outside a member's sales territory.
Note 1: Therapeutic food is taken for dietary requirement of kidney disease/diabetes or other diseases
 Note 2: Supporting members consist of food makers specifically for therapeutic food.

 (2) Faced with conflicts of interest regarding a sales territory, the Coop arbitrated in a dispute among members, further,prohibited resale of its own brand food to non-members by concluding sales contracts with members.

 4. Cease and desist order
 (1) The Coop was obliged to never to segment a market and never to prevent members from reselling outside a sales territory.

 (2) The Coop was enjoined to amend the agreement with a member firm by deleting a clause " resale to non-member firms shall be prohibited."

 (3) The Coop was obliged to notify member firms of its intention to avoid recurrence of a similar conduct as well as remedial actions.

 5. The due date for acceptance of recommendation: 4 April 2003
 Recommendation/decision if accepted, or otherwise, proceed to initiate hearings

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

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