Eight shipbuilders were warned Monday by the government's competition policy watchdog over alleged bid rigging on defense contracts.
The Fair Trade Commission said it issued the warning over what it deems were acts to unfairly restrict competition for contracts from the Maritime Self-Defense Force between fiscal 1996 and fiscal 1999.
The eight warned are Mitsubishi Heavy Industries Ltd., Ishikawajima-Harima Heavy Industries Co., Sumitomo Heavy Industries Ltd., Hakodate Dock Co., Mitsui Engineering & Shipbuilding Co., NKK Corp., Sasebo Heavy Industries Co. and Hitachi Zosen Corp.
The shipbuilders allegedly colluded to determine which company among them would win bids for contracts to inspect and service minesweepers and destroyers ordered by the MSDF's regional units in Ominato, Aomori Prefecture; Yokosuka, Kanagawa Prefecture; Kure, Hiroshima Prefecture; and Sasebo, Nagasaki Prefecture.
In November 1999, the government's Board of Audit determined that a competitive bidding process was not working for these contracts, resulting in continually high-priced orders.
In January 2000, the Defense Agency announced a plan to improve the process of awarding contracts by requiring companies submitting bids to meet certain qualifications.
The FTC says it has seen a corresponding improvement in the bidding process since the changes were instituted.