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JFTC recommendation to participants in bidding for a construction contract invited by Iwamizawa City and remedical actions requested of the Mayor of Iwamiawa City

JFTC recommendation to participants in bidding for a construction contract invited by Iwamizawa City and remedical actions requested of the Mayor of Iwamiawa City

January 30/2003
Japan Fair Trade Commission

As for the bidding called by Iwamisawa-City for a construction contract, 126 participants in bidding received FTC recommendation today, in violation of Section 3 [unreasonable restraint of trade] of the Antimonopoly Act. Further details are described in Chapter 1 below.

 As the FTC recognized that officials of Iwamisawa City who put construction works to tender, had been involved in collusive bidding, thus, the FTC required a remedial action of the Mayor under the governing law "the Act concerning elimination and prevention of involvement in bid rigging etc. ". Further details are described in Chapter 2 below.

 Moreover, such a fact was ascertained that both Iwamisawa Construction Association (the Association) and Iwamisawa Piping Cooperative (the Coop) were involved in the antimonopoly violation as stated in Chapter 1. Therefore, the FTC strictly ordered them to prevent such a fraud from recurring in the future.

 §1. Recommendation to participants in bidding

 1. Parties concerned in the Iwamisawa-shi area (see Appendix in Japanese text format)
 (1) general construction/landscaping works … 46 corporations
 (2) building construction … 42 individuals
 (3) laying pipes … 17 corporations
 (4) paving … 16 corporations
 (5) electricity works … 17 individuals

 2. Outline of violation
 As with tendering being let through private competitive bidding process (standard), for stable and sustainable benefits of local businesses, staff members of the Iwamisawa-City municipal office colluded in placing orders by:
 * establishing a target of annual order intake per contractor
 * designating expected winning bidders in order to assure completion of construction works
 *implying names of potential winning bidders and the rough amount of contracts to the board members of the Association and the Coop (liaison officers)
 * liaison officers further notifying potential winning bidders of both nominations as winners and the estimated amount of contracts

 The above corporations colluded in joining a tacit agreement that they predetermined potential winning bidders and allocated contracts, consequently, a conspiracy resulted in a substantial lessening in the marketplace to the detriment of the public interest.

 3. Cease and desist order
 The above corporations were enjoined to cease the above act.
 The above corporations were condemned never to conspire or commit a similar fraud in the future.

 4 The due date for acceptance of recommendation: 14 February 2003 Recommendation/decision if accepted, or otherwise,proceed to initiate hearings

 §2. Remedial action dictated to Mayor of Iwamisawa City (the Mayor)

 In order to ensure steady and continual inflow of order receipts to benefits of local businesses, some officials of the City infringed the provisions of the Antimonopoly Act,charged with repetitive collusion under a tacit coordination with or consent/implications from supporting staff members before putting a contract to tender as follows:
 (1) calculated the average amount of order intake during the most recent five years, and then fixed the target amount for annual order placements allotted to each corporation
 * designated potential winning bidders to ensure business opportunities of each construction contract
 The Mayor's act of instigating collusion against bidders conflict with the provisions of Section 5-1 of the governing law "Act concering Elimination and Prevention of involvement in bid rigging etc."

 (2) implied the name of an expected bidder as well as the rough amount of a contract to the board members of the trade associations, et al, and then, the board members transferred the Mayor's tip-off to each expected bidder.
 An act to disclose secrecy information to the board members conflict with the provisions of Section 3.

 Subsequently such an implication induced the above participants to commit antimonopoly violations.

 3. The FTC ordered the Mayor to implement remedial actions to stop the above fraud in order to secure compliance with Section 3-2.

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