On 19 March 2014, the European Commission announced the imposition of fines totalling € 953 306 000 on two European companies (SKF and Schaeffler) and four Japanese companies (JTEKT, NSK, NFC and NTN with its French subsidiary NTN-SNR) for participating in a cartel in automotive bearings market from April 2004 until July 2011.
The Commission found that the companies coordinated the passing-on of steel price increases to their customers, colluded on Requests for Quotations and for Annual Price Reductions from customers and exchanged commercially sensitive information. This occurred through multi-, tri- and bilateral contacts. The size of the EU market for automotive bearings is estimated to be at least € 2 billion a year.
Japanese company JTEKT was not fined as it benefited from immunity under the Commission’s 2006 Leniency Notice for revealing the existence of the cartel to the Commission. NSK, NFC, SKF and Schaeffler received reductions of their fines for their co-operation in the investigation under the Commission’s leniency programme. Since all companies agreed to settle the case with the Commission, their fines were further reduced by 10%.
Commission Vice President in charge of competition policy, Joaquín Almunia, said: “Today’s decision is a further milestone in the Commission’s ongoing effort to bust cartels in the markets for car parts, after the sanctions we imposed on producers of electric wires and of foam used in car seats. It is incredible to see that one more car component was cartelised. I hope the fines imposed will deter companies from engaging in such illegal behaviour and help restore competition in this industry.”
The decision is part of a major investigative effort into suspected cartels in the automotive parts industry. The Commission has pursued cartel activity in several sectors of the industry, including wire harnesses in cars (IP/13/673) and flexible foam used in car seats (IP/14/88).
The Commission announced on 19 March 2014 that it is investigating more products, such as airbags, safety belts and steering wheels (see MEMO/11/395), air conditioning and engine cooling products (see MEMO/12/563) and lighting systems.
Takata Corporation, the Tokyo-based supplier of seat belts to Toyota, Honda, Nissan, Mazda and Fuji (the parent company of Subaru) will pay a US$71.3 million fine to settle conspiracy to restrain trade charges brought by the US Department of Justice Antitrust Division.
Takata is accused of conspiring with other companies between January 2003 and February 2011 to “suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of certain seatbelts,” according to the criminal information sheet detailing charges against Takata, filed with the Detroit Court.
Reports indicate that Chairman and CEO Shigehisa Takada will take a 30 per cent cut in executive compensation while other directors take a 15 per cent cut. Gary Walker, a sales director at the company’s US subsidiary, TK Holdings, will reportedly serve a 14-month prison sentence and pay a US$20,000 fine.
Takata has pledged to continue to co-operate with ongoing Department of Justice investigations. The company stated that it “takes this matter seriously and has taken steps to strengthen its compliance programs to comply with all applicable laws and regulations. Takata has also strengthened its internal control systems to prevent a recurrence and is committed to regaining the trust of our stakeholders.”
The car industry investigation is the largest ever conducted in the United States. Settlement agreements with US antitrust authorities have been reached by several companies, including Tokai Rika, TRW Deutschland, Furukawa Electric, Fujikura and Nippon Seiki.
From the Department of Justice, Scott Hammond, of the Antitrust Division’s criminal enforcement program, said “Every time we discover a conspiracy involving the automotive industry, we seem to find another one.”
The US Justice Department announced on 26 September 2013 that nine Japanese companies and two executives have agreed to plead guilty and pay more than USD 740 million in criminal fines for their roles in a number of conspiracies to fix prices in the car manufacturing sector.
The companies and executives engaged in various price-fixing schemes in relation to more than 30 different car components which affected more than USD 5 billion in auto parts used in more than 25 million cars sold in the US market. The companies and executives have admitted to attending meetings and making telephone calls in the US and Japan to rig bids, set prices and allocate the supply of parts sold to car manufacturers. Those involved took measures to keep their cartel conduct secret by using code names and meeting in remote locations.
The largest fines have been imposed on Hitachi Automotive Systems Ltd., Jtekt Corporation, Mitsuba Corporation and Mitsubishi Electric Corporation (MELCO) who have all agreed to pay in excess of USD 100 million. The two executives, US citizen Gary Walker and Japanese citizen Tetsuya Kunida, will serve 14 and 12 month prison sentences respectively and will each pay a USD 20,000 fine. All parties have admitted to violations of the Sherman Act and agreed to cooperate with the ongoing investigation
The fines are the latest in the Department of Justice’s ongoing investigation into the automotive sector (see previous blog post). The investigation has so far seen 20 companies and 17 executives plead guilty and has cost the auto industry more than USD 1.6 billion in fines and resulted in prison sentences of between a year and a day and two years.
What is now the largest cartel investigation in US history in terms of criminal fines and number of companies and executives under investigation looks set to continue. Eric Holder, the US Attorney General said at a press conference to announce the plea deals “The Department of Justice will continue to crack down on cartel behviour that causes American consumers and businesses to pay higher prices for the products and services they rely upon in their everyday lives”