Reporting Jeff Gilbert
DETROIT (WWJ) – Two of Japan’s largest auto suppliers have agreed to pay $548 million in fines, and four of their executives are going to jail, in connection with guilty pleas filed in a big antitrust investigation.
Yazaki and Denso pleaded guilty to violating the Sherman antitrust act. The four executives from Yazaki, Tsuneaki Hanamura; Ryoji Kawai; Shigeru Ogawa and Hisamitsu Takada, will serve prison time ranging from 15 months to two years.
“This criminal activity has a significant impact on the automotive manufacturers in the United States, Canada, Japan and Europe and had been occurring at least a decade. The conduct had also affected commerce on a global scale in almost every market where automobiles are manufactured and/or sold,” said FBI’s Special Agent in Charge Andrew G. Arena.
This is a case that had created a great deal of interest in Detroit’s automotive community.
“These auto suppliers are under a huge amount of pressure from their customers to lower prices,” said Jim Gillette, who follows suppliers for IHS Automotive. “Obviously, these folks found some way they thought they could keep the price up, albeit very illegal.”
It’s illegal for companies to discuss pricing strategy, because that can lead to less competition and higher prices.
However, auto companies, who are facing pressure to cut costs, have put a lot of pressure on their suppliers to cut prices. Gillette says that could be at the root of this case.
“I think that there was probably some collusion that ended up costing the industry some money on this,” he said. “Otherwise it wouldn’t be such a big issue.”
According to court documents filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Yazaki, DENSO, Hanamura, Kawai, Ogawa, Takada and their co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of the named products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive electrical components to automobile manufacturers at inflated prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
“As a result of the Antitrust Division’s ongoing criminal investigation of price fixing and bid rigging in the auto parts industry, more than $748 million in fines have been obtained–which already surpasses the total amount in criminal fines obtained by the division for all of last fiscal year,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The government says the investigation into price fixing among auto suppliers is continue, and could result in more charges in the future.