Japan Government Warns 2 Firms About Low Bids

Japan’s Fair Trade Commission today issued “stern warnings” to two Japanese computer manufacturers that may have engaged in unfair trade practices by bidding one yen on local government projects.

After several weeks of investigation, the commission decided the bids of one yen, the equivalent of 0.7 cents, made by Fujitsu Ltd. and NEC Corp. required “stern warnings,” said Takashi Yamamoto of the FTC’s Trade Practices Division.

The commission said the low bids, made on contracts to design computer software for several city governments, were judged likely to be “unjust low-price sales” and “customer inducement by unjust benefits” under the Unfair Trade Practices chapter of the Anti-Monopoly Law.

The FTC’s decision stopped short of saying the bids had violated the law but warned if the two companies make excessively low bids again, there was a strong possibility the “Anti-Monopoly Law would be applicable.”

NEC said in a statement that it had “reflected deeply on the social outcry over careless bidding” and had taken measures to ensure it would not occur again.

Fujitsu also issued a statement saying it had taken steps to prevent such problems and repeated a request to Hiroshima and Nagano officials to cancel the contracts won with low bids.

Shortly after Fujitsu won a contract to design computer software for the Hiroshima city water supply system with a one-yen bid, several other such cases surfaced.

Fujitsu and NEC were found to have submitted bids of one yen to design software for libraries in Nagano in central Japan and for planning an information system for Wakayama prefecture in western Japan. Fujitsu won both contracts.

The commission said Fujitsu also won a contract to develop a culture and educational information system for Hiroshima with a $700 bid and with a $70 bid won another contract to conduct a feasibility study on a library computer system for Saitama prefecture near Tokyo.

“These cases are not common, but recently there has been a sudden increase that seems to indicate a trend,” the commission’s statement said.

Yamamoto said it was uncertain whether the FTC ruling would affect the contracts. “We cannot legally say whether the contracts should be carried out or not. The local government officials and Fujitsu will have to discuss that issue,” he said.

The deals provoked criticism over what U.S. officials charged was weak enforcement of Japan’s antitrust laws. FTC officials say warnings are strict enough to enforce compliance with fair trade rules.