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Electronics Giants Accused of Bid-Rigging

March 6, 1995

TOKYO (AP) _ Japan’s fair trade watchdog filed a criminal complaint Monday accusing nine electronics companies, including Hitachi and Toshiba, of rigging bids for public works projects.

The case, in which a government agency allegedly assisted, is a major embarrassment for the Japanese government. It indicated that bid-rigging, already known to be common in the construction industry, is also prevalent in other major industries.

The United States long has pressed for stronger action against bid-rigging, which it said denies foreign companies a fair chance to compete for Japanese contracts.

The nine electronics companies allegedly met in June 1993 to decide how to divide up equipment contracts for government sewage works, in violation of the anti-monopoly law, the Fair Trade Commission said.

The companies limited competition in the project and interfered with the public interest, the commission said. It said the bid-rigging was assisted by officials of the Japan Sewage Works Agency, affiliated with the Construction Ministry.

Following the criminal complaint, it now is up to prosecutors to file charges in court against the companies and their executives.

The anti-monopoly law does not cover the agency granting the contracts, but the commission said it will reprimand the agency for failing to make efforts to eliminate bid-rigging.

The Construction Ministry also is suspending the nine companies from public works projects for three months.

``I find it extremely regrettable and unfortunate that involvement by sewage agency officials was pointed out,″ Construction Minister Koken Nosaka said at a news conference. ``I will take strict measures if the evidence of their involvement is established.″

Toshiba and Hitachi called the commission’s action ``extremely regrettable.″ They had no further comment.

The sewage agency chairman, Itaru Nakamaru, denied agency involvement and said its internal investigation found no evidence of bid-rigging.

The nine companies named in the complaint are Hitachi Ltd., Toshiba Corp., Mitsubishi Electric Corp., Fuji Electric Co., Meidensha Corp., Yaskawa Electric Corp., Nissin Electric Co., Shinko Electric Co. and Takaoka Electric Mfg. Co.

Japanese newspapers said the companies have fixed their bids at the agency’s request since 1990 so that each individual contract would be won by the company that selected it in advance meetings.

Japanese officials publicly deny that bid-rigging is widespread, but privately they defend the practice as necessary to keep many weaker companies from going bankrupt.

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