The Japan Fair Trade Commission recognized Monday that 42 companies had engaged in bid-rigging for large-scale repair contracts for condominiums, imposing fines totaling about ¥1.6 billion ($10.2 million) on 37 of the firms. The malpractice was found for repair work contracts for 171 condominium buildings in Tokyo and six prefectures around the capital. It was the first time for the JFTC to impose administrative punishment over large-scale condominium repair contracts.
The commission also issued cease-and-desist orders to 38 of the 42 firms. Two of the 42 firms are repair work consultation companies — Renosys in the city of Osaka and Tokyo-based Sho-Sekkei. Among the other 40 construction companies are Haseko Reform and Shimizu BLC, both based in Tokyo.
Of the 37 fined companies, Ikatsu in Yokohama was slapped with the largest amount of penalty, at about ¥380 million. The commission concluded that the 42 companies engaged in bid-rigging, such as preselecting winning companies, from autumn 2021 or before to March last year. The value of the repair contracts for the 171 condominium buildings ranged from around ¥100 million to roughly ¥1 billion, with the total amount reaching some ¥31 billion.
Successful bidders paid about 5% of the contract value to the consulting companies as information and other fees. Winners were selected before the start of bidding procedures or work to compare cost estimates from bidders by condominium management associations comprising residents. The consulting companies shared undisclosed information, such as contract prices requested by condominium management associations, with construction companies in advance and maneuvered to ensure that preselected bidders would win the contracts.
It remains unclear whether the bid-rigging inflated repair costs, as actual expenses almost fell into the ranges of the budget levels set by condominium management associations. Some of the 42 firms told the JFTC that they engaged in bid-rigging because the practice had been in place for many years. Ikatsu said, “We will make sure that we run our business fairly and appropriately.”
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