Withdrawing the three-way merger, and absorbing rivals one at a time (1968)

From restoring the whole to filing one case at a time

The words chairman Nakajima Keiji drew out of the Fair Trade Commission — “well, go ahead and submit it” — were worth nothing 183 days later. In the same April of 1968 the merger plan of Yawata and Fuji Steel was made public, and large-scale consolidation itself, rather than the integration of any particular firms, became a question of national policy. What Oji chose at the moment of withdrawal was neither litigation nor a scaled-down two-company deal, but a reduction in the unit put up for review. Narrow the counterparty to one company and the share argument breaks apart grade by grade, and the antitrust wall comes down to the height of a single case. That substitution can be seen as setting the pattern for the next quarter-century of mergers.

The price of the detour, though, was not small. As Tanaka Fumio said in 1979, a merger of the three Oji companies would not have improved the industry: excess capacity and unstable markets continued regardless of the failed three-way deal and were carried into the 1990s. Absorbing one company at a time did add depth across product grades, but restoring scale took twenty-five years, and the point of arrival coincided with the moment domestic demand began to shrink. The 183 days of 1968 were both half a year in which the chance of restoration was lost and half a year in which the company learned its method of merging.