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From Antitrust Law Daily, September 26, 2013

Nine automobile parts manufacturers agree to plead guilty to DOJ price fixing charges, pay more than $740 million in fines

By Tobias J. Gillett, J.D., LL.M.

The Justice Department today announced that nine Japan-based automobile parts manufacturers and two executives have agreed to plead guilty to charges that they participated in separate conspiracies to fix the prices of parts sold to U.S. car manufacturers and installed in cars sold in the United States and elsewhere. The companies agreed to pay a total of more than $740 million in criminal fines for their roles in the conspiracies.

Under the agreements announced today, the companies will pay criminal fines in the following amounts: Hitachi Automotive Systems Ltd., $195 million; Jtekt Corporation, $103.27 million; Mitsuba Corporation, $135 million; Mitsubishi Electric Corporation (MELCO), $190 million; Mitsubishi Heavy Industries Ltd. (MHI), $14.5 million; NSK Ltd., $68.2 million; T.RAD Co. Ltd., $13.75 million; Valeo Japan Co. Ltd., $13.6 million; and Yamashita Rubber Co. Ltd., $11 million. In addition, Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier, will serve 12 months and one day in a U.S. prison and pay a $20,000 criminal fine and Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier, will serve 14 months in a U.S. prison and pay a $20,000 criminal fine.

According to the Justice Department, the companies and executives participated in price fixing schemes by attending meetings and communicating by telephone to reach collusive agreements to rig bids, set prices, and allocate the supply of automobile parts sold to car manufacturers, including Chrysler, Ford, General Motors, and the U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota, and Fuji Heavy Industries, more commonly known as Subaru. They allegedly also communicated to monitor and enforce their agreements. The conspiracies allegedly harmed U.S. automobile plants in the states of Alabama, California, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Ohio, Tennessee, Texas, and Wisconsin.

The Justice Department today filed the following charges in the federal district court in Detroit:

  • Hitachi Automotive Systems Ltd. A one-count felony charge alleges that Hitachi and co-conspirators, including MELCO, conspired to rig bids and fix prices for auto parts sold to Ford, General Motors, Honda, Nissan, and Toyota, including starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils, inverters, and motor generators, from at least as early as January 2000 until at least February 2010.
  • Mitsuba Corporation. A two-count felony charge alleges that Mitsuba and co-conspirators, including MELCO, conspired to rig bids and fix prices for auto parts sold to Chrysler, Honda, Subaru, Nissan, and Toyota, including windshield washer systems and components, windshield wiper systems and components, starter motors, power window motors, and fan motors, from January 2000 until February 2010. Mitsuba also agreed to plead guilty to one count of obstruction of justice for its efforts to destroy evidence of collusion in the auto parts industry.
  • Mitsubishi Electric Corporation (MELCO). A one-court felony charge alleges that MELCO and co-conspirators, including Hitachi and Mitsuba, conspired to rig bids and fix prices for auto parts sold to Chrysler, Ford, General Motors, Honda, Subaru, Nissan, and certain of their subsidiaries, including starter motors, alternators, and ignition coils, from at least as early as January 2000 until at least February 2010.
  • Mitsubishi Heavy Industries Ltd. (MHI). A one-count felony charge alleges that MHI and co-conspirators conspired to rig bids and fix prices for compressors and condensers sold to General Motors and Mitsubishi Motors North America from at least as early as January 2001 until at least February 2010.
  • T.RAD Co. Ltd. A one-count felony charge alleges that T.RAD and co-conspirators conspired to rig bids and fix prices for auto parts sold to Honda and Toyota, including radiators and automatic transmission fluid warmers, from November 2002 until February 2010.
  • Valeo Japan Co. Ltd. A one-count felony charge alleges that Valeo and co-conspirators conspired to allocate the supply, rig bids, and fix prices for air conditioning systems sold to Nissan North America, Suzuki Motor Corp., and Subaru from April 2006 until February 2010.
  • Gary Walker. A one-count felony charge alleges that Walker engaged in a conspiracy to rig bids and fix prices for seatbelts sold to Honda, Mazda, Nissan, Subaru, and Toyota from at least January 1, 2003 until at least February 2010.

The Justice Department today filed the following charges in the federal district court in Cincinnati:

  • Jtekt Corporation. A one-count felony charge alleges that Jtekt and co-conspirators conspired to rig bids and fix prices for bearings sold to Toyota from 2000 until July 2011 and electric powered steering assemblies sold to Nissan from 2005 until October 2011.
  • NSK Ltd. A one-count felony charge alleges that NSK and co-conspirators conspired to allocate markets, rig bids, and fix prices for bearings sold to Toyota from 2000 until July 2011.

The Justice Department today filed the following charges in the federal district court in Toledo:

  • Yamashita Rubber Co. Ltd. A one-count felony charge alleges that Yamashita and co-conspirators conspired to rig bids and fix prices for automotive anti-vibration rubber products sold to Honda Motor Co., American Honda Motor Co., and Suzuki Motor Corp. from at least April 2003 until May 2012.
  • Tetsuya Kunida. A one-count felony charge alleges that Kunida engaged in a conspiracy to rig bids and fix prices for automotive anti-vibration rubber products sold to Toyota and other automakers from at least November 2001 until May 2012.

“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers, and more than 25 million cars purchased by American consumers were affected by the illegal conduct,” said Attorney General Eric Holder. “The Department of Justice will continue to crack down on cartel behavior that causes American consumers and businesses to pay higher prices for the products and services they rely upon in their everyday lives.”

“Some of the price-fixing conspiracies lasted for a decade or longer, and many car models were fitted with multiple parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The Antitrust Division has worked hand in hand with its international competition colleagues who have provided invaluable assistance to the Justice Department in breaking up these worldwide price-fixing cartels.”

“Today’s charges should send a message to companies who believe they don’t need to follow the rules,” said Ronald Hosko, Assistant Director of the FBI’s Criminal Division. “If you violate the laws of this country, the FBI will investigate and put a stop to the threat you pose to our commercial system. The integrity of our markets is a part of the foundation of a free society.”

The Justice Department’s ongoing investigation into price fixing and bid rigging in the auto parts industry has so far resulted in charges against 20 companies and 21 executives. All of the companies have either pled guilty or agreed to plead guilty and have agreed to pay more than $1.6 billion in criminal fines. Seventeen of the executives have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for prison sentences. DENSO Corporation, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc., TRW Deutschland Holding GmbH, Diamond Electric Mfg. Co. Ltd, and Panasonic Corporation have already pled guilty. Fifteen executives have been sentenced to pay criminal fines and to serve sentences ranging from a year and a day to two years each. The Justice Department has coordinated its investigation with the Japanese Fair Trade Commission, the European Commission, the Canadian Competition Bureau, the Korean Fair Trade Commission, the Mexican Federal Economic Competition Commission, and the Australian Competition and Consumer Commission.

The plea agreements announced today are subject to court approval. A charge of price fixing under the Sherman Act carries maximum penalties of a $100 million criminal fine for corporations and a $1 million criminal fine and 10 years in prison for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Mitsuba’s obstruction of justice charge carries a maximum penalty of a $500,000 criminal fine.

Companies: Hitachi Automotive Systems Ltd.; Jtekt Corp.; Mitsuba Corp.; Mitsubishi Electric Corp.; Mitsubishi Heavy Industries Ltd.; NSK Ltd.; T.RAD Co. Ltd.; Valeo Japan Co. Ltd.; Yamashita Rubber Co. Ltd.

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