In December 2005, major general contractors declared that they would abandon bid-rigging practices. But the recent arrest of five officials from five companies shows the declaration to have been a sham. A thorough investigation is called for to eradicate such collusion. The five officials — from Obayashi Corp., Okumura Corp., Kajima Corp., Shimizu Corp. and Maeda Corp. — are suspected of having colluded shortly after the declaration to decide which firm would win tenders for Nagoya city subway construction projects in February and June 2006.

The projects involved extensions of five sections of the Sakuradori subway line. Subway construction yields large profits for general contractors since each kilometer of subway line construction costs more than 20 billion yen. Nagoya has been extending its subway lines since opening its first one in 1957. At present, six subway lines totaling 89 km run in Nagoya, the central city in the Tokai region.

In the past, the Fair Trade Commission had a hard time in its efforts to wipe out bid-rigging practices because of the inadequacy of the Antimonopoly Law. But the revised law, which took effect in January 2006, raises the amount of fines and empowers the FTC to conduct searches and seize evidence with warrants. As a result, the FTC can now search the offices of major general contractors.

The revision has empowered district public prosecutors to arrest and indict suspected violators of the law based on a complaint filed by the FTC. The arrests of the five general contractor officials was the first such action by district public prosecutors. In the past, only the Tokyo High Public Prosecutor’s Office could take such a step. Interestingly, it was Hazama Corp., a party to the collusion, that blew the whistle on the bid rigging. Under provisions of the revised law, the company and its officials receive immunity from prosecution.

General contractors should realize that the revised law has made bid rigging a thing of the past. It is high time that they cleaned house.

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