Provisional Translation
| OTO No. | 663 | Classification | MLIT-(6) |
|---|---|---|---|
| Date of Acceptance | June 9, 2003 | Ministry/Agency Receiving Complaint | Cabinet Office |
| Responsible Ministries | Ministry of Land, Infrastructure and Transportation | Related Laws |
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| Complainant | Domestic firm | Exporting Countries | Spain |
| Subject | Review of the classification of type of business in Japan Railway Construction Public Corp.'s "Examination of qualification of participants in competitive bidding for material procurement" | ||
| Description of Complaint | 1. The complainant is an importer of "instrument transformers (special high-voltage equipment)" from Arteche of Spain. The transformers are purchased and used by electric power companies and railroad companies as electric generating and transforming equipment. Japan Railway Construction Public Corp. plans to construct Hokuriku Shinkansen line (Joetsu-Toyama), Kyushu Shinkansen line (Hakata-Shinyatsushiro) and Tohoku Shinkansen line (Hachinohe-Aomori). But, prior to the completion of the shinkansen line construction, the corporation intends to complete construction of transformer stations, including installation of "instrument transformers (special high-voltage equipment)," and other electrical work. The complainant began preparations for obtaining the qualification to take part in competitive biddings for "instrument transformers (special high-voltage equipment)" that are to be used in each of the shinkansen line construction and electrical works planned by Japan Railway Construction Public Corp. However, Japan Railway Construction Public Corp.'s official announcement on "Acceptance of Applications for Qualification to Take Part in Competitive Biddings for Fiscal 2003" mentions only manufacturers in its "Classification of type of business" eligible to take part in bidding for "instrument transformers (special high-voltage equipment). The complainant inquired about this with Japan Railway Construction Public Corp. According to the complainant, the public corporation explained that it cannot purchase "instrument transformers (special high-voltage equipment) from the type of companies that import and sell products, like trading houses. 2. The complainant contends that it has the same capability as manufacturers in terms of (1) after-sale maintenance and (2) compensation for damages and that, therefore, Japan Railway Construction Public Corp.'s claim that it cannot purchase from the type of companies that import and sell products, like trading houses cannot be used as the reason for limiting bidding participants to only manufacturers. (1) After sale maintenance of goods There has been no report of defects in the "instrument transformers (special high-voltage equipment)" sold by the complainant so far. Chances of the transformers developing flaws are extremely low. Should they develop flaws, the complainant would dispatch engineers of Arteche, the Spanish manufacturer of the products, immediately. The complainant also intends to establish a set-up to cope with emergencies, such as replacement of defective parts, in close consultation with the Japan Railway Construction Public Corp. so that it can provide the same services as those offered by domestic manufacturers. (2) Compensation for damages after purchase of goods The PL Act (Product Liability Act) provides that "the manufacturer, etc." shall be liable for damages caused by the injury, when injuring someone's body or property due to a defect in its delivered product which it manufactured, processed, imported or put the representation of name, etc. Article 2-3 of the PL Act defines "the manufacturer, etc." as any person who manufactured, process, or imported the products as business. In other words, under the PL Act, even when Japan Railway Construction Public Corp. purchased goods from the person who imported the goods, it will be compensated for damages in the same way as when it purchased goods from manufacturers. As just described, the complainant has the same capability as manufacturers in terms of (1) after-sale maintenance and (2) compensation for damages. It is exactly this reason that the complainant has a solid record of importing and selling "instrument transformers (special high-voltage equipment)" to Electric Power Co. etc. The complainant sold 20 units of instrument transformers during the period from 2000, when it started delivering the product, to May 2003. 3. The complainant has applied for examination of qualification to take part in a bidding for "instrument transformers (special high-voltage equipment) offered by West Japan Railway Co. and its application is now under technical screening. The difference in goods to be purchased by Japan Railway Construction Public Corp. and West Japan Railway Co., is that the goods to be purchased by the former is for use in new projects, while the goods to be purchased by the latter is for use in renewal projects. There is no difference between the two in the performance required of "instrument transformers (special high-voltage equipment)." In other words, both Japan Railway Construction Public Corp. and West Japan Railway Co. are planning to purchase the same performance goods. Despite this, Japan Railway Construction Public Corp. limits qualified participants in its goods-purchase bidding to only manufacturers. It is an unnecessary regulation. 4. From the above, it can be said that Japan Railway Construction Public Corp.'s examination of qualifications for competitive bidding that limits suppliers of "instrument transformers (special high-voltage equipment)" to only manufacturers amounts to nothing less than an import barrier. Therefore, the Ministry of Land, Infrastructure and Transportation should revise the "classification of type of business" in Japan Railway Construction Public Corp.'s official announcement on "Acceptance of Applications for Qualification to Take Part in Competitive Biddings for Fiscal 2003" that limits bidders for its purchase of "instrument transformers (special high-voltage equipment) to only manufacturers. The ministry should open the door for importers by changing the phrase from "only manufacturers" to "manufacturers and distributors" including importers. |
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| Details of Measures | The official announcement on "Acceptance of Applications for Qualification to Take Part in Competitive Biddings" of Japan Railway Construction Public Corp. (hereinafter to be called public corporation) already covers "agents wishing to sell manufactured products" and its application manual also mentions to that effect. We have also received reports that there were cases where the public corporation and sales agents concluded manufacturing contracts. However, due to the vague description of agents in the official announcement on the examination of qualification for competitive bidding, the explanation of the public corporation led the inquirer to misunderstand that sales agents are not qualified to take part in the bidding. The public corporation told us that if the inquirer in question makes an application in the future they would accept it. They also told us that they would revise the description of its official announcement on the examination of qualification for competitive bidding in order to prevent the recurrence of a similar incident. The ministry intends to give the public corporation guidance as the need arises. |
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| Classification of Processing | Ca | Directions | IV |
| Remarks | A written reply was made on June 17, 2003. | ||