Maglev collusion said to have begun after JR Tokai rejected Japanese firms’ proposal to ditch competitive bidding

Major general contractors may have begun colluding on bids for the Central Japan Railway Co. (JR Tokai) maglev high-speed train project after the railway operator rejected their proposal for contracts to be awarded without competitive bidding, it was learned Wednesday.

The Fair Trade Commission plans to file criminal complaints Friday against Taisei Corp., Kajima Corp., Obayashi Corp. and Shimizu Corp., and related officials from the four general contractors including former Taisei executive Takashi Okawa, 67, and Kajima official Ichiro Osawa, 60, for their suspected violation of the antimonopoly law, informed sources said.

Acting on the FTC move, the Tokyo District Public Prosecutor’s Office is expected to indict the firms and individuals the same day, the sources said.

JR Tokai launched bid procedures after the government approved in October 2014 its project to construct the maglev line between Shinagawa Station in Tokyo and Nagoya Station in Aichi Prefecture.

By the end of last year, JR Tokai had struck 24 contracts for the maglev project, with 23 of them concluded through competitive bidding.

According to the sources, JR Tokai required high levels of safety for the construction of new station facilities underneath Shinagawa and Nagoya stations, both of which are used in the company’s existing shinkansen services.

JR Tokai also asked specific general contractors to conduct prior research on appropriate construction methods, and had them shoulder substantial related costs.

Officials at the general contracting firms asked JR Tokai to grant them contracts without bidding to ensure that they would secure work orders for projects where they had conducted the research, the sources said.

After JR Tokai rejected that request in favor of competitive bidding, the officials started conspiring to adjust bids, according to the sources.

Earlier this month the prosecutor’s special investigation squad arrested Okawa and Osawa for allegedly breaching antitrust law by colluding with Obayashi and Shimizu officials around 2014-2015 by predetermining successful bidders from the four companies for construction work at the two stations.

The two have denied the allegations. Former superiors to Obayashi and Shimizu admitted their involvement in the malpractice, the sources said.

JR Tokai aims to open the Tokyo-Nagoya maglev line in 2027.

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