The American television industry is (check one):
(A) Dying as a result of unfair trade practices by Japanese manufacturers.
(B) Dying because it cannot compete with Japanese manufacturing and marketing efficiency.
(C) Not dying.
Zenith Radio Corp., the largest U.S. TV manufacturer, has gone to a full court press in Washington and elsewhere to broadcast its message that (A) is the correct answer.
Zenith's offensive charging illegal covert payments and an illegal cartel is one of the latest outbreaks in a 10-year- old television war fought over such a wide terrain that dozens of pins would be needed on a commander's wall map.
Millions of dollars, thousands of jobs in the United States, TV prices to consumers and U.S. relations with Japan and other allies are at stake as the political mood of Washington appears to have swung some degrees away from free trade toward protectionism.
An international trade war is a possible result if the United States throws up new, high trade barriers, many economists believe.
"I have been involved with internation trade since the Johnson administration and this is the most worrisome period by far, particularly because things seem out of control," said Harold B. Malmgren, a former deputy special representative for trade negotiations.
In presentations to members of Congress and officials of executive agencies, Zenith argues that it is a mistake to cast the issue of survival of American television makers in terms of free trade and protectionism.
"In fact," Zenith is telling anyone who will listen, "the issue is whether law enforcement agencies in the United States and Japan will act to stop the illegal behavior which is making free trade impossible."
The Zenith argument is that U.S. antitrust laws were violated by a cartel agreement of 18 Japanese companies and Motorola. The case, filed in 1974, may go to trial this fall. Most of the court record is under seal.
Senate Majority Leader Robert C. Byrd (D.W.Va.) and Sens. Birch Bayh this month have made similar accusations of predatory pricing and illegal cartel activity against the Japanese.
"Unless steps are taken immediately, the (U.S. television) industry is threatened with extinction," Byrd said two weeks ago.
Zenith representatives recently have given administration officials and interested members of Congress summaries of documents from the Philadephia case under the title: "Destruction of the American Television Industry: A case Study of Convert Payments and Antitrust injustice."
The allegations of rebates and antitrust violations are separate from the April U.S. Customs Court decision, in a case also brought by Zenith, that refunds of a domestic Japanese tax to manufacturers constitute a subsidy of Japan's TV exports. The decision, if upheld, would require new U.S. duties on Japanese TV sets.
The U.S. government is appealing. If the decision is upheld, it could touch off an international trade war since it could apply equally to steel and many other U.S. imports.
In addition to that decision and Zenith's Philadelphia susit, actions against Japanese TV makers include:
An "active investigation" by the Customs Bureau of fraud allegations, three inquiries lauched under the auspices of the International Trade Commission, and a preliminary examination of the antitrust charges by the justice Department.
"it's a pattern of harassment," said a Japanese embassy official. "Enough is enough."
Japan and the Carter administration agreed last week that Japan would voluntarily limit its exports to the United States to 1.75 million color TV sets a year. (Japan dominates the black-and-white TV market, but the battlefield is the high-price, high profit color market.)
President Carter considers that agreement as providing the U.S. industry with adequate protection and he therefore rejected an International Trade Commission recommendation of sharply increased import duties on television receivers. Zenith, however, has not been mollified and believes the quota is an inadequate remedy for the damage it says has been done to the America TV industry.
U.S. imports were 1.3 million receivers in 1972, 1.5 million in 1973 and 1.2 million in 1975. Last year imports soared to 2.8 million.
American manufacturers depict the huge increase as an avalanche of sets set loose by a Japanese industry ready to kill off its U.S. competition.
American Retail Federation suggested to the ITC that the increase was partly a Japanese response to the several complaints against their imports - an attempt to beat the deadline of what looked like "a very real threat" to the future of imports.
In addition, Sears, Roebuck & Co. gave much of its private label TV receiver business to Japanese manufacturers for the first time in 1976, according to a company spokesman.
Sears, with more than 10 per cent of the market, is the largest retailer of TV sets and it found that Japanese suppliers were more willing to meet price and quantity specifications, the spokesman said.
"The fact is that if there were an additional tariff or quota on imports the problems of the domestic industry would still exist because on our opinion imports are not the problem," Harry A.Inman told the ITC on behalf of the American Retail Federation.
". . . The problem originates in the poor management and inadequate planning and marketing judgement of teh domestic industry itself,r Inman said.
Zenith has about 22 per cent of the U.S. color TV market. RCA has about 20 per cent Japanese imports were 33 per cent of the color market in 1976.
Those figures, a minority of observers say, indicate the U.S. industry isn't moribund, but only crying wolf.
Zenith bases its antritrust charges against the Japanese on the agreement between 18 manufacturers and the history of U.S. TV makers.
In less than 10 years, 17 of 28 U.S. television producers left the field and five of the remaining 11 no longer exists as independent companies.
Admiral and Philco were acquired by other U.S. companies and other three by firms associated with the Japanese cartel.
Motorola was acquired by Japan's Matsushita, which sells Panasonic in this country, in 1974; Magnavox was taken over by a Noirth American Philips, which has ties to Matsushita, in 1974. Warwick Television, which made many of Sanyo of Japan in December, 1976.
Zenith's Philadelphia suit calls for the undoing of these mergers,M but the law is not clear whether that remedy is available in a private suit.
Zenith would like to see the Justice Department fule a crimianal antitrust suit and said:"A law school professor could not ask for a more classic example of a foreign cartel, involving price fixing, predatory pricing, market allocation and customer allocation."
Majority Leader Byrd said he was informed Friday that the Attorney General has initiated an investigation into possible antitrust violations. Justice's "findings on this matter will be carefully reviewed by Congress," he said.
Justice Department antitrust lawyers have had copies of the Japanese manufacturers' agreement for some time but until now have not been convinced there is an antitrust violation. They are now examining additional documents.
The Japanese agreement, whjich had effect at least from 1963 to 1973, called for a minimum, not a maximum price.
"If they were plotting to undersell U.S. companies, why did they set a minimum?" one Justice lawyer asked.
"When the price feature is a minimum price it's a little harder to translate that into a lernaicious aggreement," he added.
In addition, the legal situation is complicated because teh cartel was formed overseas and involves the Japanese government. "It's an antitrust minefield." one lawyer said.
The Japanese government has told the Philadelphia court that it in effect compelled the manufacturers to form their agreement, and a Japanese embassy official said the purpose was to keep Japanese prices high enough so that the U.S. would not accuse them of dumping cheap receivers in the U.S. market.
The U.S. television industry wanted Japan to form the agreement and the U.S. government nudged them about it, Malmgren remembers from the 1960s. He is now a private economic consultant with several Japanese TV manufacturers as clients.
A Justice lawyer compared the Japanese agreement to an antitrust extemption granted to U.S. companies for their business abroad under the Webb-Pomerene Act.
The U.S. movie industry, for example, speaks with one voice abroad under a Webb-pomerene exemption. Similar cooperation between movie companies in the United States would be antitrust violation.
Zenith's allegations of covert rebates to American purchasers by Japanese manufacturers are detailed in depositions taken in connection with the Philadelphia civil suit.
Officals of Motorola and Magnavox describe how they debated different ways to bring the cost of each TV receiver below the offical price.
Document supporting each deposition contain discussions of how to conceal the rebates and warnings feom lawyers that accepting such price adjustments from the Japanese would be illegal.
One letter a Magnavox employee wrote to a lawyer described a procedure for obtaining a rebate but calling it "excess inspection." The lawyer is asked whether it matters that the inspections don't actually occur.
At another point in the court documents, a Motorola memorandum feminds "all of us" not to discuss the rebate procedure with anyone outside a small circle.
"Whether our files of correspondence and old purchase orders should be purged will have to be discussed with our legal people," another memo says.
A Japanese embassy official said he knows of no prosecutions in Japan for the rebating procedure which undercut the established export price.
"It was a long time ago - at least three years," he replied when pressed for an explanation.
One lawyer uninvolved in the Philadelphia suit expects that the rebate issue will be explosive at the trial and notes that additionally the Customs Bureau is already investigating th charges.
"Up to a point it's protectionism, then it becomes greed," One free trader said.
"One of the problems of free trade is it's sort of an elitist approach to the problems of the world," said a protectionist who notes that Labor unions and management agree completely on opposition to the foreign foe.