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The Fair Trade Commission on Thursday ordered NEC Corp. and Toshiba Corp. to end their bid-rigging practices in supplying zip-code reading machines to the government, FTC officials said.

The watchdog determined that NEC and Toshiba engaged in repeated bid-rigging to win orders for post office machines.

The two firms held equal market shares and benefited from a limited competitive bidding system for designated firms until 1995, when the ministry expanded bidding to domestic and foreign firms. The two strongly protested the ministry’s move.

Hitachi then entered the scene and received its first order in February, ending the two companies’ monopoly of orders, the officials said.

The FTC also advised the Posts and Telecommunications Ministry to tighten control of information to prevent leaks prior to bidding, they said. According to FTC officials, NEC and Toshiba formed a cartel between April 1995 and December 1997.

The watchdog believes ministry officials leaked information prior to the bidding, enabling the two firms to set prices near the ministry’s estimated costs, they said. Orders totaled some 15 billion yen in fiscal 1995, 11.9 billion yen in fiscal 1996 and 53.3 yen in fiscal 1997.

FTC officials said NEC and Toshiba scrapped their tacit agreement for the illegal bidding on Dec. 10 last year, when the FTC began inspecting the firms under the Antitrust Law.

Over the next 10 years, the ministry plans to install some 1,500 machines that can read seven-digit zip codes at 110 key post offices. The procurement value is estimated at some 220 billion yen.

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