Parts-makers fined $745m for US price-fixing

THE Australian Competition and Consumer Commission (ACCC) has started court action against two Japanese car parts-makers for price-fixing in the wake of major fines being levied in the US for the same illegal behaviour.

Overnight the US government revealed that nine parts-makers had been fined $US745 million ($A800 million) after pleading guilty before a US court for price-fixing.

So far, 17 of the 21 executives charged in the US have been sentenced to time in prison. Other cases are pending, and US attorney-general Eric Holder said the case was not yet closed, indicating more prosecutions are to come.

In Australia, the ACCC has started action against Australian Arrow, a subsidiary of the Yazaki group, and against Koyo Australia for price-fixing.

Koyo, a supplier of ball and roller bearings, has admitted the behaviour and the Federal Court is yet to decide on a penalty.

The case against Yazaki, which supplies wiring looms, will come up in the Federal Court towards the end of October.

The ACCC alleges that Yazaki and an unnamed competitor agreed to fix the price of wiring looms supplied to Toyota Australia between 2003 and 2009 for use in the Camry.

There were also other agreements that affected the pricing of harnesses for the 2002, 2006 and 2011 Camry models.

ACCC chairman Rod Sims believes cartel behaviour has pushed up the price of some vehicles.

“Wire harnesses can be anything up to eight per cent of the cost of a car, so this conduct has a serious impact on what people pay for a motor vehicle,” he said.

Mr Sims says the commission is investigating the conduct of a number of other suppliers, but would not go into detail about how many companies are facing scrutiny.

He said fines for cartel behaviour can amount to $10 million in Australia.

Some of the fines revealed in the US were of a different magnitude. The biggest fine was levied on Hitachi Automotive Systems ($US195 million), while Mitsubishi Electric Corporation was fined $US190 million.

The latest round of fines brings the total levied to $US1.6 billion under the investigation, which probed a dozen separate conspiracies.

In the latest prosecution, nine different companies and more than 20 executives were involved in the long-running scheme that included espionage-style codenames, covert phone calls and even secret meetings in remote locations.

According to the US department of justice, all had agreed to plead guilty and to pay the criminal fines for their roles in “separate conspiracies to fix the prices of more than 30 different products sold to US car manufacturers and installed in cars sold in the United States and elsewhere”.

“These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to US car manufacturers,” Mr Holder said overnight.

“In total, more than 25 million cars purchased by American consumers were affected by the illegal conduct.

“This auto parts investigation is the largest criminal investigation the antitrust division has ever pursued, both in terms of its scope and the commerce affected by the alleged illegal conduct.

“Never before has the department of justice simultaneously announced the breakup of so many separate antitrust conspiracies,” Mr Holder said.

According to the department, more car parts-makers are expected to be caught up in the investigation.

“Our work isn’t done,” Mr Holder said. “We 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 department said the price-fixing activities allegedly extended to seatbelts, radiators, windshield wipers, air-conditioning systems, power window motors, power steering parts “and a number of other products”.

The department has so far charged more than 20 companies with being involved in the price-fixing cartel, as well as 21 company executives.

“Seventeen of the 21 executives charged so far – including the two executives, one Japanese citizen and one American citizen, who have agreed to plead guilty today – have been sentenced to serve time in US prisons or have entered into plea agreements calling for significant prison sentences,” Mr Holder said.

Some of the companies involved in the alleged US price-fixing cartel have also been fined in Canada after answering similar charges.

The ACCC has been working with the authorities in the US, Canada, Europe and Japan.

Companies that pleaded guilty today and accepted fines included: Hitachi Automotive Systems ($US195m fine) Jtekt ($US103m) Mitsuba ($US135m) Mitsubishi Electric Corp ($US190m) Mitsubishi Heavy Industries ($US14.5m) NSK ($US68.2m) T.RAD ($US13.8m) Valeo Japan ($US13.6m) and Yamashita Rubber ($US11m).

General Motors was one of several car-makers that said it was watching the probe closely.

“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," GM spokesman Tom Henderson said.

“This evidences a culture of anti-competitive activity among a cross section of suppliers in the automotive sector ... this is unacceptable.”

Among the companies that the justice department’s antitrust division settled with previously were Autoliv Inc, Tokai Rika Co Ltd, TRW Deutschland Holding GmbH, Nippon Seiki Co Ltd, Furukawa Electric Co Ltd and Fujikura Ltd.