National / Crime & Legal

Court fines two contractors for maglev project bid-rigging

Kyodo

The Tokyo District Court has fined two major contractors for taking part in bid-rigging in connection with construction work for the Tokyo-Osaka maglev train project.

Obayashi Corp. was ordered to pay ¥200 million and Shimizu Corp. was hit with a ¥180 million fine for violating the antimonopoly law. The court found that they had colluded with two other major contractors, Kajima Corp. and Taisei Corp.

Judge Takumi Suzuki, who presided over the case, said the companies “impeded fair and free competition for the national project” and that their “culture of bidder collusion is deep-rooted,” citing the two companies’ involvement in a 2005 subway project bid-rigging case.

Prosecutors have also indicted Kajima, Taisei and an individual from each of the two firms, but they have denied the charges.

The two individuals, who were arrested in March, are former Taisei Managing Director Takashi Okawa and Ichiro Osawa, Kajima’s civil engineering sales division manager.

Obayashi was the first to voluntarily report its actions to the Fair Trade Commission based on its leniency system, but Suzuki pointed out that its “criminal liability is nonetheless grave.”

As for Shimizu, which also reported the matter to the commission, the judge said it was the last company to join the process of arranging contract winners and its share was mostly set by then.

Obayashi and Shimizu both pled guilty. Prosecutors sought ¥200 million in fines for each.

Both companies issued a statement saying they will take measures to prevent bidding collusion and continue to make efforts to regain the public’s trust.

According to the ruling, the executives of Obayashi, Kajima and Taisei met between April 2014 and August 2015 and agreed to decide on the winners of Shinagawa and Nagoya station contracts in advance, exchanging information related to bidding prices. Shimizu joined the process in January 2015.

A joint venture led by Obayashi received the order to build parts of Shinagawa and Nagoya stations, while a joint venture of Shimizu won one of the Shinagawa station contracts.

The FTC is expected to impose penalties on all the companies found guilty.

The central government has provided ¥3 trillion for the ¥9 trillion project by Central Japan Railway Co. (JR Tokai), which is to be completed by 2037.