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Japanese Auto Parts Makers Fined Companies Admit They Fixed Prices of Car Parts
(about 3 hours later)
Nine Japanese automotive suppliers pleaded guilty on Thursday to charges of conspiracy and agreed to pay $740 million in criminal fines for fixing the price of auto parts sold in the United States and abroad. In an expanding global antitrust investigation, nine Japanese automotive suppliers, along with two former executives, have agreed to plead guilty to conspiracy and pay more than $740 million in criminal fines for fixing the price of auto parts sold in the United States and abroad, the Justice Department said Thursday.
Thursday’s pleas were the latest in what the Justice Department said is its largest criminal antitrust investigation, involving more than a dozen separate conspiracies, 30 kinds of parts and sales of more than $5 billion to General Motors, Ford and Chrysler, as well as the American subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Subaru and Toyota. The pleas were the latest in what the Justice Department said was its largest criminal antitrust investigation, one that has involved the authorities from Asia to North America to Europe and has now resulted in $1.6 billion in fines since 2011.
Hitachi Automotive Systems and Mitsubishi Electric Corp. are among the companies that pleaded guilty. More than a dozen separate conspiracies involving more than 30 kinds of parts affected sales to Chrysler, Ford and General Motors, as well as the American subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Subaru and Toyota.
“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers,” Attorney General Eric H. Holder Jr. said in a statement. “In total, more than 25 million cars purchased by American consumers were affected by the illegal conduct.”“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers,” Attorney General Eric H. Holder Jr. said in a statement. “In total, more than 25 million cars purchased by American consumers were affected by the illegal conduct.”
The parts included seatbelts, radiators, windshield wipers and air-conditioning systems, Mr. Holder said. Hitachi Automotive Systems and Mitsubishi Electric paid the biggest fines, $195 million and $190 million. The Justice Department said the two companies’ price-fixing schemes lasted from at least January 2000 through February 2010.
Two former executives — an American and a Japanese national — also pleaded guilty Thursday for their involvement in the scheme, in which executives met in-person and colluded on the phone to rig bids, fix prices and allocate the supply of parts, the Justice Department said. The parts included seat belts, radiators, windshield wipers and air-conditioning systems, Mr. Holder said. The Justice Department said that while the price fixing increased the cost of cars for consumers, there was no way to determine exactly how much.
So far in the investigation, 20 companies and 21 executives have been charged. Each company has pleaded guilty or agreed to do so, the Justice Department said. Together, they have agreed to pay more than $1.6 billion in criminal fines. The two former executives — Gary Walker, an American, and Tetsuya Kunida, a Japanese national working for American subsidiaries of Japanese companies — also pleaded guilty for their involvement in the scheme, in which executives met in person and colluded on the phone to rig bids, fix prices and allocate the supply of parts, the Justice Department said.
All but four of the 21 executives charged have been sentenced to prison or have entered into plea agreements that call for prison sentences. Mr. Kunida, who worked for an American subsidiary of a Japan-based supplier, was sentenced to 12 months and a day in an American prison. He pleaded guilty to a felony charge of fixing the price of products sold to Toyota and other automakers from at least November 2001 until May 2012.
The continuing investigation has affected automakers in the United States, Canada, Japan and Europe over more than a decade, the department said. Thursday’s charges were filed in United States District Courts in Detroit, Cincinnati and Toledo, Ohio. Mr. Walker, an American and former executive at an American subsidiary of a Japan-based supplier, was sentenced to 14 months. The Justice Department said he engaged in a conspiracy to fix the prices of seat belts sold to Honda, Mazda, Nissan, Subaru and Toyota from at least Jan. 1, 2003, through February 2010.
“These enforcement actions send a clear and consistent message to all who would take advantage of consumers,” Mr. Holder said. “The Department of Justice is determined to hold accountable the companies and individuals that are responsible for this cartel behavior that undermines competition in the marketplace and causes millions of Americans to pay more for the products they use every day.” Each man is to pay a $20,000 fine.
Hitachi will pay a $195 million fine, and Mitsubishi will pay $190 million as a result of Thursday’s charges. Jtekt Corporation, Mitsuba Corporation, Mitsubishi Heavy Industries Ltd., NSK Ltd., T. RAD Company, Valeo Japan Company and Yamashita Rubber Company have also agreed to plead guilty, the Justice Department said. Twenty companies and 21 executives have been charged so far in the Justice Department’s investigation. Each company has pleaded guilty or agreed to do so, the Justice Department said. All but four of the 21 executives have been sentenced to prison or have entered into plea agreements that call for prison sentences.
Last year, Yazaki Corporation paid one of the largest fines levied in the investigation — $470 million — and four of its executives were sentenced to up to two years in prison. The actions on Thursday underscored a willingness of countries to cooperate as business relationships become more international.
“Twenty years ago, a case of this size would have been inconceivable,” said Spencer Weber Waller, a professor at the Loyola University Chicago School of Law and director of its Institute for Consumer Antitrust Studies. “We often fought with these countries against the application of U.S. antitrust laws, but now they themselves are more stringent in applying their own antitrust laws.”
Scott D. Hammond, assistant attorney general of the Antitrust Division’s Criminal Enforcement Program, said that some of the conspiracies announced on Thursday were originally discovered by the Japan Fair Trade Commission.
As for the price fixing, Professor Waller said it “appears to be one of the longest-running international cartels that has come to light.”
General Motors called the price fixing among suppliers unacceptable. “We are greatly concerned by the large number of suppliers in the automotive supplier sector who have pled guilty to serious criminal price-fixing charges,” it said in a statement.
Ford said it was monitoring the investigation and would not comment further.
Toyota said in a statement that it “expects its suppliers to provide the company with quality parts at competitive prices, while complying with all applicable laws in the markets where they do business.”
It also said: “We are committed to supporting free and fair competition among suppliers, and we have code of conduct guidelines in place that we expect suppliers to meet. We take any violations of these guidelines seriously.”
Hitachi will pay its $195 million fine in connection with charges that it conspired with other companies to rig the prices of auto parts it sold to General Motors, Ford, Honda, Nissan and Toyota in the United States and other countries.
In a statement, Hitachi said it would institute measures to prevent such actions in the future and was “committed to ensuring to comply with all applicable antitrust laws or competition laws.”
Mitsubishi will pay its $190 million fine on charges that it conspired to fix the prices of auto parts like starter motors, alternators and ignition coils it sold to Chrysler, Ford, General Motors, Honda, Nissan and Subaru.
“We’ve cooperated fully with the Department of Justice and have concluded our discussions,” Mitsubishi said in a statement.
The charges were filed in United States District Courts in Cincinnati, Detroit and Toledo, Ohio.
“These enforcement actions send a clear and consistent message to all who would take advantage of consumers,” Mr. Holder said.
Mitsuba Corporation will pay $135 million on charges that it fixed the price of parts sold to Chrysler, Honda, Nissan, Subaru and Toyota. The company also agreed to plead guilty to one count of obstruction of justice, because of orders from a high-level United States-based executive to destroy evidence, the Justice Department said.
Jtekt Corporation will pay $103 million and NSK Ltd. will pay $68.2 million. The remaining companies will pay lesser amounts, including a fine of $14.5 million for Mitsubishi Heavy Industries Ltd., which pleaded guilty to rigging prices for compressors and condensers, and a fine of $13.75 million for T.RAD Company, which sold radiators and devices that warm the automatic transmission fluid.
Valeo Japan, which sold air-conditioning systems, will pay $13.6 million. Yamashita Rubber will pay $11 million for fixing the price of automotive antivibration rubber products.
As the investigation expands, Mr. Holder said, the Justice Department will continue to look into price fixing in the automotive industry. “Our work isn’t done,” he said.