JAPANESE COURT RULES AGAINST COSMETICS FIRM

Byline: KOJI HIRANO

TOKYO--A Japanese court has ruled that a subsidiary of Kao Corp., a major cosmetics manufacturer, tried to control retail pricing by cutting off a store that had been discounting Kao's cosmetics.
The Tokyo District Court found that the Kao unit had violated the nation's anti-monopoly law when it stopped selling to the retailer, Egawa Kikaku.
It was the first time that a Japanese court has ruled that such a cutoff violated the anti-monopoly law.
Yoshizo Egawa, president of Egawa Kikaku, said, "The decision of the court made it clear that Kao's cutoff of the distribution contract with us was done in an attempt to stop our sales at discount prices. Price control by cosmetics manufacturers should be corrected."
Kao stopped supplying its products to Egawa Kikaku in June 1992 because, Kao said, the retailer secretly diverted Kao product to other retailers. "Under the distribution contract," Kao noted, "the retailer should sell products directly to consumers."
However, the court decided that the real reason Kao cut off Egawa Kikaku was that the retailer refused to hold the line on prices and follow the manufacturer's suggested retail pricing strategy.
Prior to the cutoff, Egawa Kikaku had sold Kao cosmetics at prices 10 to 20 percent below the suggested retail price.
--Fairchild News Service

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