Kodak was hobbled by the courts earlier in the century in response to what its critics thought were attempts to monopolize the market for amateur film. According to the Kodak version, Fuji would have been willing to absorb huge losses in the short run to drive Kodak from segments of the film business and then reap monopoly profits. What was good for Kodak was also good for American consumers - or so Kodak suggested. Before the Commerce Department had a chance to calculate the penalty, Fuji agreed to raise prices. And it worked: the International Trade Commission, a quasi-judicial Federal agency, ruled in October 1993 that Fuji was selling photo paper at less than fair value. Kodak repackaged the old case against so-called predatory pricing in the new language of strategic trade theory. If such arguments sound familiar, go to the head of the class. Once Kodak slipped behind, they reasoned, Fuji would be able to reap the rewards of its commanding position by raising prices.
Kodak's experts, Jerry Hausman of the Massachusetts Institute of Technology and Paul Krugman of Stanford, hypothesized that Fuji was selling billions of dollars' worth of products below cost in the American market to discourage the no-longer-invincible Kodak from investing in the next generation of photo technology. Kodak filed dumping charges against Fuji in 1993, contending that Fuji, the world's second-largest producer, was competing unfairly in the American market for photographic chemicals and paper.