On 23rd December 2013, the Korean antitrust regulator, the Korea Fair Trade Commission (“KFTC”), imposed fines of 114.6 billion won (approximately US$108 million) on a number of auto parts suppliers, including Japan’s Denso Corporation and Germany’s Bosch and Continental AG. The charges related to the fixing of prices for car instrument panels and wipers, in particular those sold to Hyundai and its affiliate, Kia Motors. The FTC has estimated that price collusion has affected the cost of around 11 million units. The parts in question account for approximately 0.5% of the price of the car.
The largest fine, 63 billion won, was imposed on the Denso Corporation, which was accused of fixing prices between January 2008 and March 2012, initially with Continental AG and then with Bosch. The FTC found that price collusion led to a sharp increase in price estimates provided by the suppliers. Continental AG and Bosch have been fined 46 billion and 5.6 billion won respectively.
Shin Dong-kwon, Head of the Cartel Investigation Bureau at the KFTC, said, “We collaborated with antitrust regulators from the US and the EU to crack down on price collusion among auto parts makers. And we will closely monitor international cartels targeting the Korean market in the future.”
The U.S. Justice Department and antitrust enforcers worldwide have been investigating price-fixing by around 20 companies and 21 executives in the automotive industry. To date, the corporations in question have agreed to pay $1.6 billion in fines.
On Friday 6th December 2013 Judge Daniel R. Dominguez of the US District Court of Puerto Rico in San Juan handed down the longest sentence in US history for a single antitrust charge. Frank Peake, the former president of Sea Star Line LLC, was sentenced to serve five years in prison and to pay a $25,000 criminal fine for his participation in what the indictment described as a conspiracy to fix rates and surcharges for freight transported by water between the continental United States and Puerto Rico.
The prison sentence was far shorter than the 87 months sought by prosecutors from the Antitrust Division of the US Department of Justice. The prosecuting attorney in the case was reported to have said that the record sentence was intended to “get the attention of companies and executives around the world.”
Reports have quoted the Department of Justice as asserting that Peake and his co-conspirators conspired to fix, stabilise and maintain rates and surcharges for Puerto Rico freight services, to allocate customers between them and to rig bids submitted to customers. Peake was involved in the conspiracy from at least late 2005 until at least April 2008.
As a result of an ongoing Department of Justice investigation, the three largest water freight carriers serving routes between the continental United States and Puerto Rico, including Peake’s former employer Sea Star, have pleaded guilty and been ordered to pay more than $46 million in criminal fines for their roles in the conspiracy. Sea Star pleaded guilty on 20th December 2011, and was sentenced by Judge Dominguez to pay a $14.2 million criminal fine. Sea Star transports a variety of cargo shipments, such as heavy equipment, perishable food items, medicines and consumer goods, on scheduled ocean voyages between the continental United States and Puerto Rico.
Custodial sentences have been handed down to five other individuals. Additionally, Thomas Farmer, the former vice president of price and yield management of Crowley Liner Services, was indicted in March 2013 for his role in the conspiracy and is scheduled to go to trial in May 2014.