[Intl-tobacco] Japan: Finance Ministry Subpanel Mulls Japan Tobacco Breakup]

[Robert Weissman]

November 7, 2001
FINANCE MINISTRY SUBPANEL MULLS JAPAN TOBACCO BREAKUP
Asia Pulse
(c) Copyright 2001 Asia Pulse PTE Ltd.
TOKYO, Nov 7 Asia Pulse - A possible breakup of Japan Tobacco Inc.
(TSE:2914) has emerged as a major topic of deliberation in the Fiscal System
Council, an advisory panel to the finance minister.
At the previous meeting of the council's subpanel on the tobacco business,
some members proposed breaking up the tobacco monopoly as a precondition for
its full privatization.
But Japan Tobacco on Tuesday rebutted the proposal, arguing that a breakup
would be inappropriate because such a measure would make it difficult for
the company to survive international competition.
It pointed out that no state-owned tobacco companies in Europe that have
been privatized have been broken up, conveniently ignoring the fact that
these firms commanded relatively low shares of their respective markets.
The subpanel has been mostly focusing on whether to reduce the government's
stake from the current two-thirds of Japan Tobacco's total equity.
The firm is urging the government to sell all its shareholdings, and many
subpanel members also see complete privatization as ideal for the long term.
But some are also concerned that privatization alone would keep Japan
Tobacco's market monopoly intact, hampering fair competition.
Thus came the proposal to privatize and break up the company, just as the
government did with Nippon Telegraph and Telephone Corp. (TSE: 9432) and the
Japanese National Railways, the predecessor to the seven Japan Railway
firms.
(Nikkei) 07-11 1218