The US Justice Department announced on 19 July 2013 that Panasonic and its subsidiary Sanyo Electric have agreed to plead guilty and pay USD56.5 million in fines for two separate conspiracies to fix the prices of auto parts and battery cells. Battery maker LG Chem Ltd. has also agreed to plead guilty to price fixing of battery cells and to pay a fine of USD1.1 million. The announcement follows the guilty pleas entered by Diamond Electric and an executive with Swedish company Autoliv on 16 July 2013. Panasonic will pay USD45.8 million and Sanyo USD10.731 million. All three companies have agreed to cooperate in the on-going investigations and charges have been filed for violations of the Sherman Act.
Panasonic was charged with three counts of cartel activity going as far back as 1998. Two of these involved bid-rigging and price fixing of steering wheel switches, turn switches, ballasts and other parts sold to Toyota in two separate conspiracies. The third count involved fixing the prices of ballasts used for lamps sold to Honda, Mazda and Nissan. All of the affected parts were installed in cars sold in the United States and elsewhere. Panasonic was said to have agreed with its competitors to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids and fix, stabilise and maintain part prices. The company has issued a statement saying that it has taken steps to strengthen its compliance programmes.
Sanyo Electric and LG Chem were charged in a separate conspiracy of fixing the prices of cylindrical lithium ion battery cells used in laptops sold worldwide between 2007 and 2008. These are the first guilty pleas in the on-going investigation into price fixing in the cylindrical lithium ion battery cell industry. The companies agreed to price the battery cells at pre-determined levels and then took steps to monitor the agreements and conceal the conspiracy.
This is the latest penalty to result from the on-going investigation into the auto parts industry which has so far seen 12 companies and 15 executives plead guilty and has cost the auto industry more than USD874 million in fines and resulted in prison sentences of between a year and a day and two years. Substantial fines have also been imposed in parallel investigations in Europe, Australia, Korea, Japan and Canada.
The US Justice Department announced on 16 July 2013 that Japanese company Diamond Electric Manufacturing (Diamond Electric) has agreed to plead guilty and pay a USD19 million fine for fixing the prices of ignition coils in cars sold in the United States. Takayoshi Matsunaga, an executive from the Swedish company Autoliv, has also agreed to plead guilty in relation to price fixing of seat belts sold to Toyota for installation in cars made and sold in the United States.
Diamond Electric, which has agreed to cooperate with the ongoing investigation, is the tenth auto-parts maker to plead guilty in the Justice Department’s long-running investigation into price fixing, bid-rigging and other anticompetitive conduct in the automotive parts industry. The cartel ran from July 2003 to February 2010 and this is the first case in the investigation involving parts sold directly to a company headquartered in the United States – Ford. Parts were also sold to Toyota and Fuji Heavy Industries, the parent company of Subaru.
Diamond Electric has apologised for its conduct and has stated that it has created a compliance programme and introduced strict new policies relating to pricing activities to ensure that there is no repeat of the anticompetitive behaviour.
Matsunaga, a Japanese national, has been handed a prison sentence of one year and day and a USD20,000 fine. He is the fifteenth executive to plead guilty during the probe. Autoliv itself agreed to plead guilty in June 2012 and was fined USD14.5 million. Felony counts have now been filed in relation to price fixing in violation of the Sherman Antitrust Act, and both agreements are subject to court approval.
To date the investigation has cost the ten companies and fifteen executives USD828 million in criminal fines. Investigations into price fixing of parts in the automotive industry are also underway in Europe, Australia, Korea, Japan and Canada. On 10 July 2013, the EU Competition Commission fined four wire harness suppliers a total of EU141.8 million for taking part in cartels that covered the whole European Economic Area.
AU Optronics Corp executive Shiu Lung Leung was sentenced yesterday in California to two years imprisonment and a fine of $50,000 for his involvement in a criminal conspiracy to fix the prices of liquid crystal displays used in computer screens and televisions.
This sentence followed Leung’s conviction by a federal jury in December 2012 and brings to 13 the number of executives from various companies found guilty of this price-fixing conspiracy.
Leung faced a potential sentence of 10 years imprisonment yet following a contested trial his sentence is less than that agreed by corporate executives in other cartels that have pleaded guilty. This may set a new benchmark for such plea negotiations in the US in future.
To date eight companies involved in this cartel have been sentenced to pay criminal fines totalling more than $US1.39 billion.