DoJ takes the steering wheel

Published On 01/10/2013 | By Kim de Kock | Cartels, Enforcement, Litigation

In a significant development in the ongoing global investigation into price fixing allegations in the car parts industry, the US Department of Justice (DoJ) announced that 9 Japan-based companies and two former executives have agreed to plead guilty and pay total criminal fines in excess of US$740 million (approximately A$795 million) for their respective roles in alleged international price fixing conspiracies.

The DoJ has been investigating the car parts industry for a number of years and has to date charged 20 automotive parts suppliers and 21 executives.  The latest criminal fines bring the total tally to US$1.6 billion in what has been termed the largest criminal investigation undertaken by the DoJ’s antitrust division.

The conduct, including price fixing, bid-rigging and market sharing, related to about 30 different car parts such as windshield washer and wiper systems, starter motors, alternators, airflow meters, fuel injection systems, ignition coils, compressors and condensers for air-conditioning systems, radiators, seat belts, bearings and electric powered steering assemblies.  The impact of the cartel conduct has been far reaching, affecting a number of car manufacturers in the United States and elsewhere including Ford, General Motors, Honda, Nissan, Toyota, Chrysler, Subaru, Suzuki Motor Corporation and Mitsubishi.  It is believed that the conduct affected more than 25 million motor cars bought by American consumers during the course of a decade, from 2000 to 2010.

The recent plea agreements reached are subject to US court approval and include the following criminal fines and sentences:

  • Hitachi Automotive Systems Ltd – US$195 million;
  • Mitsubishi Electric Corporation – US$190 million;
  • Mitsuba Corporation – US$135 million;
  • Jtekt Corporation – US$103.27 million;
  • NSK Ltd – US$68.2 million;
  • Mitsubishi Heavy Industries Ltd – US$14.5 million;
  • T.Rad Co Ltd – US$13.75 million;
  • Valeo Japan Co Ltd – US$13.6 million;
  • Yamashita Rubber Co Ltd – US$11 million;
  • Gary Walker, former executive of a US subsidiary of a Japan-based automotive products supplier – 14 months prison term and a US$ 20,000; and
  • Tetsuya Kunida, former executive of a US subsidiary of a Japan-based automotive anti-vibration rubber products supplier – 12 months and 1 day prison term and a US$ 20,000.

As the latest charges are part of an ongoing investigation in the US, US Attorney General Eric Holder stated that they “will continue to check under every hood and kick every tyre to make sure we put an end to this illegal and destructive conduct”.

The DoJ coordinated its extensive investigation with numerous competition regulators including the Japanese Fair Trade Commission (JFTC), European Commission, Canadian Competition Bureau, Korean Fair Trade Commission, Mexican Federal Economic Competition Commission and the ACCC.

As reported in our previous post, in November 2012, the JFTC fined four Japanese car parts companies 3.4 billion yen (approximately A$39.5 million) for violations of Japan’s anti-monopoly laws.  In June 2013, the European Commission sanctioned companies in the wire harness industry and the German Federal Cartel Office has only recently conducted dawn raids.  Here at home, the ACCC is equally taking action against suppliers in the wire harness industry as well as suppliers of ball bearings (as reported previously here).

We will continue to keep you updated of further developments as they unfold.

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About The Author

is a Senior Associate in the Sydney office of King & Wood Mallesons where she specialises in anti-trust law, with a focus on mergers and acquisitions, access matters as well as general competition issues. Outside of the office, Kim has recently taken up surfing... but is probably not going to be appearing on the ASP tour any time soon.

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