Business / Corporate

Japanese road builders to face record ¥60 billion fine for forming cartel to fix asphalt prices

Kyodo

The nation’s antitrust watchdog will impose fines totaling nearly ¥60 billion ($536 million) on Maeda Road Construction Co. and seven other major road paving material companies for forming a cartel to raise the price of asphalt, sources said Wednesday.

The Fair Trade Commission has started informing the companies, also including Kajima Road Co. and Toa Road Corp., of its decision, according to the sources. If finalized, the fine will be the largest by combined value to have been applied by the watchdog for violations of Japan’s antimonopoly law.

Within that total Maeda Construction is expected to face a fine of nearly ¥20 billion, also the largest for one company.

The companies, all headquartered in Tokyo, are suspected of forming the price-fixing cartel several years ago. Market prices for asphalt are used as a reference when the central and local governments set bidding prices for constructing roads.

An illegal cartel on the price of asphalt could have inflated the cost of public spending on roads, resulting in the waste of taxpayers’ money.

The other companies expected to be penalized are Nippon Road Co., Obayashi Road Corp., Taisei Rotec Corp., Seikitokyukogyo Co. and Gaeart Co.

As the material has a market size of hundreds of billions of yen and those major companies have repeatedly fixed prices across Japan, the commission applied a rule under the antitrust law to increase the fine by 50 percent, the sources said.

The watchdog raided Kajima Road in September 2016 on suspicion that it had set up a cartel in relation to the asphalt supplied in and around the city of Kobe.

Further investigations were made in February 2017 when the violation was suspected to have extended nationally.

Previously, the largest fine imposed was ¥27 billion in March 2007 for a bid-rigging case over the construction of a garbage incinerator.