On March 4, 2025, the Fair Trade Commission (FTC) of Japan commenced measures against approximately 20 renovation companies, following allegations of bid-rigging related to large-scale renovation projects for aging apartments. This action has raised eyebrows and highlighted potential violations of the Antimonopoly Act due to unfair trade restrictions.
Among the companies subjected to the on-site inspections were well-known firms: Haseko Reform, based in Minato, Tokyo; Shinyo from Kawasaki; Nakamura Painting Store located in Shinagawa; Construction Painting Industry from Chiyoda; and Nissou Tsutsumi Works from Toshima, among others. Allegations include collusion where construction companies supposedly exchanged information beforehand to fix construction prices and predetermined contractors involved with renovations.
Market analysis has indicated these types of collusions have occurred for decades, particularly surrounding renovations of tower apartments. According to the Ministry of Land, Infrastructure, Transport and Tourism’s survey from the fiscal year 2021, most renovations are performed on a 12 to 15-year schedule, with average costs falling between 1 million to 1.25 million yen per unit and total project costs ranging from 40 million to 60 million yen.
Interestingly, as construction material and labor costs have risen, so too have the costs associated with these renovations. It's reported by insiders close to the inquiry, and due to the increased financial burden, many management associations are struggling with insufficient reserve funds to cover these elevated expenses.
Typically, the planning and commissioning of renovation works fall to management associations composed of residents; yet, due to their often limited expertise, they tend to outsource contracting jobs to specialized construction consultants or management companies. This reliance on outside expertise may be contributing to the allegations of collusion, as the FTC suspects these external parties may also be implicated.
The investigations aim to unravel the possible complicity of these companies, which appear to be mitigating competition by employing mechanisms to maintain profit levels and secure bids among themselves. The FTC, acting on tips from various stakeholders, believes this might be not just localized to one scenario but rather typical practice within the area of renovations and construction for many years.
Further investigations revealed additional firms implicated beyond the original list, including Daiwa, Reno Hapia, Fuji Defense, and YKK AP Rakusee. These companies are believed to have played substantial roles in the alleged arrangements surrounding bid processes.
Raising concerns, the FTC's investigation marks the first inquiry of its kind, drawing attention to the issues of trust and transparency within the industry. Residents facing increased living costs have heavily criticized these practices as they lead to inflated renovation expenses, contributing to the rising financial burdens on individuals.
According to the 2021 survey, 23.1% of properties are renovated approximately every thirteen years, which correlates to increased renovation cycles as properties age or if they face significant wear and tear. The financial repercussions of this suspected collusion could be far-reaching, and it leaves homeowners worried about the potential for rising fees, as they finance these renovations via maintenance dues.
Community members have begun to voice their frustration publicly, raising awareness of how this situation may affect affordability and market rates for living accommodations. There is apprehension concerning how high refurbishment fees can strain household finances, especially as many neighborhoods are transitioning to more modern living standards.
The local real estate market has begun reacting to these developments, with some property experts predicting changes to how bids and tenders will be processed going forward. Homeowners express hope for fair and transparent bidding processes, asserting the need for improved regulation to prevent such misconduct from continuing.
Residents, management associates, and the broader public are now left contemplating the impact of these practices, which potentially undermine market integrity and inflate costs disproportionately borne by regular apartment owners trying to maintain their homes.
This multi-dimensional issue brings to light the multiple layers of accountability necessary to protect consumers from unethical practices within any industry and emphasizes the importance of vigilance and transparency moving forward. Stakeholders expect the commission's inquiry to yield substantial reforms aimed at ensuring fair pricing and protecting consumer interests.