[April 21, 2006]

2ND LD: FTC may open criminal probe into 11 firms over bid-rigging cases+

(Japan Economic Newswire Via Thomson Dialog NewsEdge)TOKYO, April 22_(Kyodo) _ (EDS: UPDATING, ADDING MORE INFO, CHANGING DATELINE)

The Fair Trade Commission is likely to begin criminal investigations into 11 major water-treatment plant makers the antitrust watchdog raided last August for allegedly rigging bids for contracts from local governments, sources familiar with the probes told Kyodo News on Saturday.

The 11 companies participated in tenders invited between January and March last year, the sources said.

The companies are Ebara Corp., Kurita Water Industries Ltd., Nishihara Environment Technology Inc., JFE Engineering Corp., Sumitomo Heavy Industries Ltd., Mitsui Engineering and Shipbuilding Co., Mitsubishi Heavy Industries Ltd., Kubota Corp., Hitachi Zosen Corp, Ataka Construction & Engineering Co. and Takuma Co., according to the sources.

Of the more than 10 companies raided by the FTC last August, Ebara and Kubota repeatedly rigged bids for contracts from local governments for about 30 years by forming a bid-rigging scheme, according to FTC sources.

Mitsui Engineering and Takuma initially did not join the scheme but later became members and systematically rigged bids together with the nine other companies between January and March 2005, the sources said.

The companies are suspected of conspiring to select bid winners and fix bid prices for contracts to build water-treatment plants from local governments so as to prevent real competition, keep bid prices high and share out the contract orders among them, according to sources close to the matter.

The FTC and Osaka District Public Prosecutors Office are expected to press charges against those involved in bids for the five projects, including one by the city of Hannan, Osaka Prefecture, the sources said.

The criminal investigations will possibly start next week on major plant makers involved in the case and their officials on suspicion of violating the revised Antimonopoly Law, the first such investigation since the revised law was implemented in January, the sources said.

Among the five are a project ordered by Hannan, undertaken by Ebara, a project ordered by an administrative entity in Shizuoka Prefecture undertaken by JFE Engineering and a project undertaken by Ebara on an order from Amagi city, Fukuoka Prefecture. Amagi is now part of the city of Asakura.

Of the two other projects, one was ordered by an administrative entity in Kumamoto Prefecture and undertaken by Sumitomo Heavy Industries. The other one was ordered by another entity in the same prefecture with Ataka Construction & Engineering undertaking it.

Tenders for the five projects were held in February and March last year. In addition to the four successful bidders, other companies searched by the FTC earlier this week -- Kubota, Kurita Water Industries, and Hitachi Zosen -- bid for the five projects.

The companies won the bids at between 93.0 percent and 98.2 percent of the maximum permissible contract prices set by authorities for the projects.

The successful bid prices ranged from 1.5 billion yen to 3.1 billion yen.

Such companies as Ebara and Kubota allegedly formed a bid-rigging organization about 30 years ago and have been playing major roles in adjusting winners of orders, the sources said.

A total of 11 companies are believed to have been involved in bid-rigging after two companies joined the organization in 2004.

The FTC is investigating tenders for about 10 projects undertaken in January 2005 or after, including the five projects, which the antimonopoly watchdog suspects were rigged in a more systemic manner than those undertaken earlier, the sources said.

In a related move, Osaka prosecutors are expected to question on a voluntary basis from Saturday executives of five major plant makers suspected of involvement in the bid-rigging, the sources said.

The special investigative squad of the Osaka District Public Prosecutors Office is planning to establish a criminal case following the expected filing of criminal complaints by the FTC.

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