Case studies of bid-rigging and procurement reform assessment in fuel oil supply in Japan and Korea

Abstract

In November 1999, the Japanese Fair Trade Commission took legal action against participants in bids for oil delivery work ordered by the Self-Defense Forces. Then, in September 2000, the Korean Fair Trade Commission took legal action against participants in bids for oil delivery work ordered by the Korean Ministry of National Defense. These actions were not related, though there are similarities between the cases, each of which involves oil delivery companies obtaining special procurement privileges through deals with national security authorities. Study of these cases led to speculation as why the industry is conductive to collusion. According to the study three important results were recognized: Several measures in the plan for Japanese and Korean procurement reform were then analyzed. The implementation can clarify issues that are important for eradicating the participantsyʼ incentives for collusion.