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Recommendation to Companies which Tendered for Construction Work Ordered by the City of Niigata

July 28/2004
Japan Fair Trade Commission

The Fair Trade Commission investigated participant in bids for construction work ordered by the City of Niigata based on the provisions of the Antimonopoly Act, and today issued a recommendation to 113 parties based on the provision of Subsection 2 of Section 48 of said Act that these 113 companies were in violation of the provision of Section 3 (Prohibition of unreasonable restraint of trade) of said Act.
In addition, the Fair Trade Commission recognized that the officials of the City of Niigata were involved in a bidding mentioned 2 below. Consequently, the Fair Trade Commission request the Mayor of the City of Niigata, the issuer of the order, to take measures to improve the future bids based on the provisions of the Act concerning Elimination and Prevention of Involvement in Bid Rigging, etc.

I. Recommendation

1. Related Parties

(1) 55 companies which tendered for sewerage pipe drain works and waste water pipe installation works using the jacking method and the shield tunneling method (hereinafter referred to as “jacking work”) ordered by the City of Niigata (hereinafter referred to as “55 companies”).

(2) 48 companies which tendered for sewerage pipe drain works and waste water pipe installation works using the open-digging method (hereinafter referred to as “open-digging work”) ordered by the City of Niigata in a manner of designating only companies rated as grade A. (hereinafter referred to as “48 companies”)

(3) 56 parties which tendered for a complete set of construction work (hereinafter referred to as “construction work”) ordered by the City of Niigata to persons as bidder which are rated as grade A (hereinafter referred to as “56 parties”).

2. Summary of Violation

(1) Jacking works related

The 55 companies had jointly prearranged a winner of the order for jacking works by the City of Niigata to prevent a drop for orders for jacking work placed by the City of Niigata through limited general bidding, designated competitive bidding of the public offering type or designated competitive bidding to prevent price drop since April 1, 1999 at the latest, and substantially restricted competition in the trade field of the above work contrary to the public interest by having the winner of the order decided by 55 companies.

(2) Open-digging works related

The 48 companies had jointly prearranged a designated winner of the orders for open cut work by the City of Niigata through designated competitive bidding of the public offering type or designated competitive bidding by designating only A graded companies as bidders to prevent price drop since April 1, 1999 at the latest, and substantially restricted competition in the trade field of the above work contrary to the public interest by having the winner decided by 48 companies.

(3) Construction works related

The 56 parties had jointly prearranged winners of the order for construction work ordered by the City of Niigata through limited general bidding, designated competitive bidding of the public offering type or designated competitive bidding in a manner of designating only A graded companies as bidders (including joint ventures with a representative with A grade) since April 1, 1999,at the latest, and significantly restricted competition in the trade area of the above work contrary to the public interest by having the winners decided by 56 companies.

3. Summary of measures to eliminate the violation

(1) Each of the 55 companies for the jacking work, the 48 companies for the open-digging work and the 56 parties for the construction work shall resolve at meetings of their boards of directors to confirm that they have withdraw from the unlawful conducts mentioned in 2 above, and shall notify each other thereof.
(2) Each of the 55 companies for the jacking work, the 48 companies for the open-digging work and the 56 parties for the construction work shall inform the City of Niigata of the measures taken, as mentioned in 3 (1)above, notify the Niigata Municipal Government that said companies etc. shall not involve in any conducts similar to the conduct mentioned in 2 above in the future, and make them known to their employees thoroughly.
(3) Each of the 55 companies for the jacking work, the 48 companies for the open-digging work and the 56 parties for the construction work shall not involve in conducts similar to the conducts mentioned in 2 above in the future.

4. Deadline for accepting or rejecting the recommendation

August 9, 2004
(If the recommendation is acceptable, a decision that consisting of the same items contained in this recommendation shall be made. If not, hearing procedures shall commence.)

II. Request to the Mayor of the City of Niigata for Improvement

1. The Fair Trade Commission finds that the staff of the sewerage construction division of the sewerage department, the farmland division of the agriculture, forestry and fishery department, the building and repairs division and the housing section of the development and construction department, and the facility section of the school education department of the local board of education of the Government of the City of Niigata had disclosed the planned prices for work which should have remained secret prior to the bidding in response to the requests of companies who were selected by the bidders as the designated winner of a competitive bid for the order for jacking work, the open-digging work and the construction work ordered by the City of Niigata (It was recognized by FTC’s investigation that five officials have disclosed planed prices, and fifty-two companies have received disclosure of the planned prices.)
The Fair Trade Commission also finds that a copy of the explanatory materials of proposals submitted to the contractor designation committee (hereinafter referred to as the “designation committee materials”) which were drawn up by the sewerage construction division of the sewerage department of the City of Niigata and which should have remained secret have been leaked to certain bidders who tendered for the order for jacking work and open-digging work placed by the Niigata Municipal Government.
The above mentioned bidders used the disclosed planned prices and the Designation Committee Materials and violated the Antimonopoly Act.

2. The Fair Trade Commission finds that all of the conducts of the staff of the City of Niigata mentioned in 1 above violates as Item 3 of Subsection 5 of Section 2 (involvement in bidding riggings) of the Act concerning Elimination and Prevention of Involvement in Bid Rigging, etc. Therefore, the Fair Trade Commission requested the mayor of the City of Niigata to take the necessary measures for improvement to ensure the elimination of any involvement in bidding rigging for jacking work, the open-digging work and the construction work ordered by the City of Niigata promptly, to ensure the conducts mentioned in 1 above eliminated, based on the provision of Subsection 2 of Section 3 of the said Act.

*Every announcement is tentative translation. Please refer to the original text written in Japanese.



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