The Confrontation of Administrating Power and Legal Solution

MITI vs. FTC on the Petroleum Industry Cartel Case

Abstract

This article aims at explaining the caracteristics of legal solution as a non-market decision making. For the purpose of explaining it, we try to study a recent legal case, i. e. the Petroleum Industry Cartel Case, which was prosecuted by FTC of Japan in May, 1974 andd arrived at a conclusion in Feb. 1984.
But we don't study the case from a jurist's point of view, because we are mainly interested in the influence of the confrontation between the two bureaus on the principle of independence or insulating rules of judicial administration and decisions. So we adopt the approach of both Public Choice Study and Economic Analysis of Law.
One of the issues in this case is the illegality of the cartel which is derected by“Gyôsei-shidô” (Japanese-style administrative guidance) of MITT. The Supreme Court declared“guilty”because even if the Cartel was directed by “Gyôsei-shidô”, it did restrict the competition and violated the Antimonopoly Laws. It means that the decision gives the priority to Antimonopoly Laws over the Petroleum Industry Law. Though the Petoleum Industry Law is the legal foundation of the “Gyôsei-shidô”, it is not a law of application exclusion of Antimonopoly Legislation. And so the oil companies were declared guilty.
But, both MITT and Keidanren (The Federation of Economic Organization) rather felt relieved at the decision, because the careful study of the decision makes it clear that“Gyôsei-shidô”is basically legal, unless it violates the Antimonopoly Laws. That is the Japanese way of allocating administrating power between the two bureaus.
In this article, we found the reason why the Supreme Court judgement made such a conservative decision-the reason is, we guess, in the nature and the process of legal decision making themselves which characterize nonmarket decision making.