Major power companies’ unfair practice undermines public trust in industry

Editorial

16:12 JST, December 9, 2022

Collusion among major electric power companies to refrain from operating in each other’s service areas could lead to keeping power costs high. This is nothing less than a betrayal of their customers, and it must be punished severely.

The Japan Fair Trade Commission has notified Chubu Electric Power Co., The Chugoku Electric Power Co., Kyushu Electric Power Co. and their subsidiaries that it plans to slap them with fines totaling more than ¥100 billion for having formed a cartel over the sale of electricity to corporate customers, a practice that violates the Antimonopoly Law, which prohibits unfair restriction of trade.

The three major power companies allegedly agreed, from 2018, not to acquire customers beyond their traditional service areas when selling high-voltage electricity, mainly for small and midsize buildings, or when selling special high-voltage electricity to such facilities as large factories.

The JFTC will make a formal decision after hearing opinions from the companies. Given the enormous scale of the retail electricity market, the total amount of the penalties ordered by the watchdog is expected to hit a record high. This shows that their unfair practice has had a tremendous impact on society.

Electricity sales had previously been monopolized by major power companies in each of their service areas, but since 2000, the market has been liberalized in stages, allowing other entities to enter it. The liberalization was intended to enhance competition among the companies, leading them to offer lower electricity rates and better services.

The cartel is an attempt to undermine the principles of such market liberalization. Major electric power companies are basically supposed to make every effort to increase their profitability by improving their business efficiency and developing new businesses. Forming a cartel is an unacceptable way to secure profits.

Executives of The Kansai Electric Power Co. reportedly played a central role in forming the cartel of the companies. In 2017, Kansai Electric restarted the No. 3 and No. 4 reactors at the Takahama nuclear power station and subsequently lowered electricity rates. As a result, price-cutting competition intensified among the companies, worsening Kansai Electric’s profitability, which is believed to have influenced its decision to propose the anticompetitive scheme.

Kansai Electric will be exempt from the penalties because it voluntarily reported to the watchdog its violation of the Antimonopoly Law, using the law’s Leniency Program, which reduces or eliminates possible fines. Even so, the company bears extremely grave responsibility for its role in the unfair practice. It should explain the full picture of the cartel.

With energy prices soaring globally, many major electric power companies have been raising electricity charges for households, in addition to those for corporate customers. Chugoku Electric has applied to the Economy, Trade, and Industry Ministry for an average increase of about 30%.

While price increases are necessary to ensure a stable power supply, fair competition is a prerequisite. If this is not ensured, it will be impossible to gain the understanding of customers.

To curb the rise in electricity prices, the government plans to launch a subsidy program in January next year, which will be partly funded by taxpayers’ money. The government must step up its monitoring to ensure that healthy competition will take place.

(From The Yomiuri Shimbun, Dec. 9, 2022)