Bridge cartel arrests

08 May 2008

Japan: Executives from eight Japanese steel companies have been arrested following allegations that bids for steel bridge projects let by the Japanese government had been rigged. According to the Fair Trade Commission, up to 47 Japanese companies have been involved in the cartel since the 1960s (see iC's November 2004 business page). However, the current investigation is focusing on bids during fiscal years of 2003 and 2004. The steel bridge construction market in Japan is estimated to worth around JPY 350 billion (US$ 3.2 billion) per year.

In total 14 executives from Yokogawa Bridge Corporation, JFE Engineering, Kawanda Industries, IshikawajimaHarima Heavy Industries, Miyaji Iron Works, TTK Corporation, Takadakiko and Kurimoto were arrested last month. Investigators from the Tokyo High Public Prosecutor's Office are reported to have searched more than 100 locations, belonging to 47 companies following the arrests.

The 47-strong group is accused of forming two organisations - K-kai and A-kai - specifically to carry out and manage the illegal bidding activities. Documentation found at the premises of Yokogawa Bridge Corporation sets out the membership rules of K-kai. The rules state that members should “respect independent adjustment rules in accordance with a spirit of conciliation”and “prevent a drop in price”and any member breaking the rules would have its membership cancelled.

If found guilty, the companies will face fines of up to 6% of the contract value. Nine of the companies are also accused of bid rigging on sewage pump and waste incineration plant construction contracts since 1999.

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