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NEC protests chip-dumping verdict

The Japanese company calls the Commerce Department's finding that it sold supercomputers far below the cost of manufacture "unfair and biased."

NEC Computer (NIPNY) has blasted the Commerce Department's conclusion that NEC violated U.S. antidumping laws by selling vector supercomputers well below cost, calling the findings "unfounded" and "unfair and biased."

The pugnacious stance by the Japanese manufacturer sets the stage for an International Trade Commission hearing next month that will pit NEC and Fujitsu against Cray Research.

The conflict centers around a contract to provide supercomputers for global climate studies to the National Center for Atmospheric Research. NEC, Fujitsu, and Cray competed for the project. Losing out, Cray filed a law suit in July 1996 alleging that both Japanese manufacturers violated U.S. antidumping laws by offering the computers at prices that were up to four times less than the cost of building them.

The Commerce Department then concluded that NEC and Fujitsu had in fact offered vector supercomputers for sale to U.S. customers at 454 percent and 173 percent less, respectively, than their fair value as determined by the department's analysis of the costs to design, develop, manufacture, and market such systems.

Yesterday, the Court of International Trade affirmed the Commerce Department's findings, stating that the Commerce Department's investigation complied with U.S. antidumping law. The decision made Cray crow, and NEC complain. Originally, NEC had filed an action with the Court of International Trade to block the Commerce investigation.

The International Trade Commission will hold a hearing on the issue of whether Cray was hurt by the anticompetitive practices on August 27. A decision is expected in September, said Cray. If NEC and Fujitsu are found in violation of antidumping laws, the Commerce Department will have the authority to collect duties equivalent to the margins gained through unfair discounting.

Reuters contributed to this report.