FTC searches tire makers for evidence of bid-rigging

Investigators from the Fair Trade Commission on Thursday searched the offices of more than 10 companies, including Bridgestone Corp. and other major tire makers, on suspicion that they repeatedly rigged bids on Defense Agency contracts for Self-Defense Force vehicle and aircraft tires, investigative sources said.

The firms searched by the antitrust watchdog also included Yokohama Rubber Co. and Toyo Tire & Rubber Co. as well as their sales and manufacturing arm, they said.

The sources said the companies held talks before tenders were opened for the agency’s procurement of tires for aircraft, including F-2 fighters, and tires for four-wheel-drive vehicles and trucks.

The agency invites such tenders several times a year, with the amount of contracts totaling roughly 2 billion yen a year.

In the pre-tender talks, the companies determined among themselves which of them would win the orders for each of the items being bid on, according to the sources.

The tenders are open to newcomers, but participants have been mostly fixed because there are a limited number of tire manufacturers and affiliated sales and manufacturing companies in Japan.

FTC investigators suspect that the firms in question agreed to take turns winning the contracts, the sources said.

In a number of bid-rigging cases in Japan, government bodies that put out the tenders were often found to be involved in the unfair practice, having let prospective bidders know about the scheduled contract price in advance.

However, FTC investigators believe that Defense Agency officials were not involved in this latest case, the sources said.

The agency has improved its tender system following revelations in 1999 that oil wholesalers were rigging bids for contracts to supply jet fuel to the agency.

In the incident, Tokyo prosecutors filed charges against nine officials from 11 oil wholesalers.

In April this year, the nine were convicted of the unfair bidding practices by the Tokyo High Court, which also criticized the Defense Agency for “condoning bid-rigging for the sake of stability in procurement price.”

“A search was conducted, but we do not know the details,” an official of Bridgestone said.