The past antitrust violations

As stated before, Seikitokyu has been subjected to an on-site inspection by the Japan Fair Trade Commission (hereinafter referred to as “JFTC”) 5 times since January 2015.

In 3 cases of 5 violations above, the cease and desist order(*) or suspension of business were rendered. As to remaining 2 cases, final decision has not come yet.

On-site inspection by JFTC（cases which were already decided）

①On 29th January 2015, JFTC conducted on-site inspection as Seikitokyu was suspected that it had restrained competition in the bidding for the paving works ordered by the Tohoku Branch of East Nippon Expressway Company Ltd．and Ministry of Land, Infrastructure and Transport (hereinafter referred to as “MLIT”).（Link）

②On 24th March 2016, JFTC conducted on-site inspection as Seikitokyu was suspected that it had restrained competition in the bidding for the paving works ordered by the Kanto Branch of East Nippon Expressway Company Ltd．and MLIT.（Link）

③On 2nd August 2016, JFTC conducted on-site inspection as Seikitokyu was suspected that it had restrained competition in the bidding for the paving works ordered by Tokyo Metropolitan Government, Tokyo Port Terminal Corporation and Narita International Airport Corporation and MLIT.（Link）

Disposition by JFTC for the violations above

On 6th September 2016, JFTC rendered the cease and desist order for ① as Seikitokyu violated antitrust.（Link）
On 21st September 2016, JFTC rendered the cease and desist order for ② as Seikitokyu violated antitrust.（Link）
On 17th November 2016, MLIT ordered Seikitokyu to suspend business for 45 days for ① and ②.（Link）
28th March 2018, JFTC ordered Seikitokyu to pay JPY 28.08 mil surcharge for ③ regarding the bidding for the paving works ordered by Tokyo Port Terminal Corporation.（Link）
On 7th June 2018, MLIT ordered Seikitokyu to suspend business for 45 days for ③ regarding the bidding for the paving works ordered by Tokyo Metropolitan Government, Tokyo Port Terminal Corporation and Narita International Airport Corporation.（Link）

*the cease and desist order is an order such as for the board of directors to resolve recurrence prevention measures and strengthen compliance system in the company.

Seikitokyu’s reaction

Seikitokyu reacted to the disposition by JFTC above as followings.

On 25th March 2016, recurrence prevention measures were released.（Link）
On 14th September 2016, Notice of the Voluntary Return of Directors’ Compensation was released.（Link）

CEO, Representative director 30％ of compensation for 3 months
Executive operating officer and Representative director 30% of compensation for 3 months
3 of Representative operating officer 10％ of compensation for 3 months

Seikitokyu has not claimed for damages against officers and employees who were involved in the antitrust violations. According to the explanation of Seikitokyu at the 2018 AGM as below, it is because Seikitokyu need to apply for the leniency program (**).

**a program of JFTC whereby companies that provide information about a cartel in which they participated might receive full or partial immunity from surcharge. Please find the link of JFTC.

Reaction to violations of antitrust

: Why Seikitokyu didn’t claim compensation for damages as a civil case? In other word, if the violation was done by specific person in charge, not by the whole company, Seikitokyu should claim for damages against such person.
In order to fulfill the duty of due care of prudent manager imposed on the Board of directors, you should claim compensation. Auditors, what is your opinion on this?

: Standing auditor: The price cartel of asphalt mixture is still under investigation of JFTC. Regarding the violations JFTC has already rendered its order, employees’ cooperation was needed to apply for the leniency program. Therefore, we decided not to claim compensation. The decision of the board was appropriate.
CEO：The application for the leniency program was important. To apply this, quick confirmation of facts is needed. If our employees had been afraid of internal punishment and reluctant to tell the truth, we would have faced difficulties. Therefore, we discharged them to gain their corporation. It was to protect the company and to acquire immunity from surcharge.

: Are you talking about the case of East Nippon Expressway Company and Tokyo Port Terminal Corporation? （CEO：Yes）Even though Seikitokyu was seeking to apply for the leniency program and asked the employees for the cooperation, it is nonsense to claim nothing.
I’m not saying that you must bankrupt the employees or excruciate them. All I want to say is that you should claim compensation for damages. You should follow the due procedure even if it results in a settlement for a paltry sum of money.
With respect to the price cartel of asphalt mixture, Seikitokyu estimates a large surcharge. Could I expect there is a different decision for Seikitokyu to make in the future?

: The case is still under investigation of JFTC.