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The Fair Trade Commission filed a criminal complaint Wednesday against 11 oil wholesalers, alleging that they rigged bids on fuel sold to the Defense Agency, in violation of the Antimonopoly Law.

The FTC’s move is expected to lead prosecution investigators to raid the firms in connection with the allegations.

The 11 firms are Nippon Mitsubishi Oil Corp., Showa Shell Sekiyu K.K., Japan Energy Corp., Cosmo Oil Co., Idemitsu Kosan Co., General Sekiyu K.K., Fuso Sekiyu K.K., Kyushu Oil Co., Kygnus Sekiyu K.K., Taiyo Oil Co. and Taiho Industries Co., FTC officials said. All the firms are based in Tokyo.

The scandal, highlighting the opaque nature of the government’s defense procurement system, breaks in the wake of a recent bill-padding case involving major defense contractors in which a former chief of the Defense Facilities Administration Agency was given a suspended prison sentence Tuesday.

The allegations concern a total of about 20 billion yen worth of contracts the 11 companies concluded during fiscal 1998 to supply fuel and petroleum products for Self-Defense Forces aircraft and vehicles, the officials said.

The FTC suspects the 11 firms held clandestine consultations and rigged bids prior to bidding sessions so that certain oil distributors could land contracts with the agency, they said.

Each firm’s share was decided in accordance with its past record of contracts with the agency, they added.

According to oil industry sources, the wholesalers appear to have been engaged in bid-rigging in order to secure contracts with SDF bases located close to their respective oil refinery plants so that they could save on transportation costs. The contracts are signed with each SDF base across the country.

Transportation of jet fuel, for example, requires a specially designed vehicle that costs more than 20 million yen, the sources said.

The bid-rigging allegations surfaced late last year, when the Board of Audit detected suspicious practices involving tenders for supplies of jet fuel to the Air Self-Defense Force.

In March, FTC investigators raided the offices of petroleum distributors on suspicion that they had rigged bids.

It was the second FTC action on alleged bid-rigging this year. In February, the FTC filed a criminal complaint against three steel pipe makers.

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