Photo/Illutration An office of KNT Co. in Tokyo (Asahi Shimbun file photo)

Five major travel agencies were searched on Nov. 15 by the Fair Trade Commission on suspected bid rigging for transportation services for COVID-19 patients in Aomori, according to sources. 

The FTC conducted the on-site inspections at the Aomori branch offices of Tokyo-based KNT Co., Tokyo-based JTB Corp., Tokyo-based Tobu Top Tours Co., Sendai-based Nippon Travel Agency Tohoku Co., and Nagoya-based Meitetsu World Travel Inc.

The companies are suspected of violating the Anti-Monopoly Law (unfair restriction of trade) in connection with repeated bid rigging. 

According to the sources, the probe is connected to contracted services for transporting COVID-19 patients from their homes to hospitals and treatment facilities ordered by the city of Aomori in fiscal 2022.

It is suspected that the officials in charge of the five companies conspired to determine the amount of the winning bid and the winning bidder.

According to Aomori bidding records, there were five calls for bids to provide COVID patient transport services in fiscal 2022.

The Aomori branches of KNT, JTB and NTA Tohoku participated each time, with the winning bidder in each case being KNT. The winning bid totaled approximately 30 million yen ($199,300).

According to the sources, KNT re-commissioned some of the work for which it won the bid to four companies, including Tobu and Meitetsu, which did not participate in the bidding process.

FTC believes that the five firms were sharing the compensation by avoiding substantial competition through bid-rigging, according to the sources.

Regarding the travel industry, FTC also found in 2009 that KNT, JTB Chugoku Shikoku, NTA, and two companies that were merged to become today’s Top Top Tours violated the Anti-Monopoly Law by forming a cartel for school trips of public junior high schools in Okayama.

SLUGGISH TRAVEL BUSINESS

A series of fraudulent activities by major travel agencies over receiving outsourcing orders for COVID-related municipal operations has been uncovered.

Some have suggested that this is due to the profit-seeking attitude of companies trying to boost their revenues in the travel industry, which were severely damaged by the pandemic, through outsourcing services ordered by local governments.

KNT was found to have successively overcharged for outsourced vaccination call center operations and several employees were indicted for fraud.

Overcharges were made for projects in up to 50 municipalities, totaling approximately 900 million yen.

JTA also announced that it had improperly billed approximately 5.6 million yen for work on a national travel support project in Aichi Prefecture.

One of the factors that may have contributed to these frauds is the ongoing downturn in the travel industry due to the novel coronavirus pandemic.

According to the Japan Tourism Agency, domestic travel consumption from 2020 to 2022 was 11 trillion yen, 9.4 trillion yen and 18.7 trillion yen, respectively--much lower than the 27.9 trillion yen in 2019 prior to the onset of the pandemic. 

According to an investigation report into a series of frauds released by KNT's parent company in August, the company has also seen a sharp decline in orders for its travel business since 2020.

Instead, the report said, what was becoming increasingly important was the outsourcing of COVID-related work by local governments.

The report noted that the pursuit of profits was a priority within the company while undertaking the highly public nature of the work of protecting the health of citizens.

The report also stated that "appropriate measures to ensure compliance, which must also be taken into consideration, were neglected."

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