Nine Japan-based Car Parts Companies and two executives have agreed to plead guilty and pay over $740 million in criminal fines for conspiring to fix prices on more than 30 different automotive products. These parts were sold to U.S. car manufacturers and installed in vehicles sold across the United States and globally, according to the Department of Justice.
The department revealed that the price-fixed auto parts were supplied to major automotive companies including Chrysler, Ford, and General Motors, as well as the U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota, and Subaru.
“These international price-fixing conspiracies impacted over $5 billion in car parts sold to U.S. car manufacturers, and more than 25 million cars purchased by American consumers were affected by this illegal conduct,” stated Attorney General Eric Holder. He emphasized the Department of Justice’s commitment to combating cartel behavior that inflates prices for American consumers and businesses.
Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program, noted that some conspiracies spanned a decade or more, affecting numerous car models with multiple price-fixed components. He highlighted the invaluable collaboration with international competition authorities in dismantling these global price-fixing cartels.
“Today’s charges should serve as a clear message to companies who believe they are above the law,” said Ronald Hosko, Assistant Director of the FBI’s Criminal Division. “The FBI is dedicated to investigating and stopping any threats to our commercial system, ensuring the integrity of our markets, which is fundamental to a free society.”
This announcement brings the total to 20 companies and 21 executives charged in the Antitrust Division’s ongoing investigation into price fixing and bid rigging within the auto parts industry. To date, all 20 companies have pleaded or agreed to plead guilty, with fines exceeding $1.6 billion. Seventeen of the 21 executives have received or are expected to receive significant prison sentences in the U.S.
Each company and executive involved in the recent charges has agreed to cooperate with the ongoing antitrust investigation. These plea agreements are pending court approval. The agreed fines and sentences include:
- Hitachi Automotive Systems Ltd.: $195 million criminal fine
- Jtekt Corporation: $103.27 million criminal fine
- Mitsuba Corporation: $135 million criminal fine
- Mitsubishi Electric Corporation (MELCO): $190 million criminal fine
- Mitsubishi Heavy Industries Ltd.: $14.5 million criminal fine
- NSK Ltd.: $68.2 million criminal fine
- T.RAD Co. Ltd.: $13.75 million criminal fine
- Valeo Japan Co. Ltd.: $13.6 million criminal fine
- Yamashita Rubber Co. Ltd.: $11 million criminal fine
- Tetsuya Kunida: (Former executive, automotive anti-vibration rubber products supplier) 12 months and one day in prison, $20,000 criminal fine
- Gary Walker: (Former executive, automotive products supplier) 14 months in prison, $20,000 criminal fine
The Department of Justice detailed that MELCO and Hitachi colluded with each other and other firms on the prices of various auto parts, including starter motors, alternators, and ignition coils. Mitsuba and Mitsubishi Electric also conspired on starter motor sales. The remaining companies engaged in collusion with other unnamed co-conspirators.
These price-fixing schemes involved meetings and communications in both the U.S. and Japan, where agreements were made to rig bids, set prices, and allocate the supply of car parts. The conspirators employed tactics to maintain secrecy, such as using code names and meeting in remote locations. They also communicated to monitor and enforce these illegal agreements.
The conspiracies impacted U.S. automobile plants across 14 states, including Alabama, California, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Ohio, Tennessee, Texas, and Wisconsin.
The Justice Department collaborated with international agencies such as the Japanese Fair Trade Commission, the European Commission, the Canadian Competition Bureau, the Korean Fair Trade Commission, the Mexican Federal Economic Competition Commission, and the Australian Competition and Consumer Commission during this investigation.
Companies and Specific Charges
The charges were filed in various U.S. District Courts, outlining specific details for each company:
Hitachi Automotive Systems Ltd.
Hitachi faced a felony charge for conspiring to rig bids and fix prices of car parts sold to Ford, General Motors, Honda, Nissan, and Toyota. The affected parts included starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils, inverters, and motor generators. This conspiracy spanned from at least January 2000 to February 2010.
Hitachi, a global manufacturer of car parts, produces components critical to engine function, from air and fuel regulation to engine starting and valve timing.
Mitsuba Corporation
Mitsuba was charged with two felonies: conspiracy to rig bids and fix prices for windshield washer and wiper systems, starter motors, power window motors, and fan motors sold to Chrysler, Honda, Subaru, Nissan, and Toyota, from January 2000 to February 2010. Additionally, Mitsuba faced an obstruction of justice charge for destroying evidence upon learning about the U.S. investigation.
Mitsuba supplies a wide range of automotive parts. The affected parts are essential for vehicle operation, including systems for windshield clearing, engine starting, and window and radiator fan operation.
Mitsubishi Electric Corporation (MELCO)
MELCO was charged with a felony for conspiring to rig bids and fix prices on automotive parts like starter motors, alternators, and ignition coils sold to Chrysler, Ford, General Motors, Honda, Subaru, Nissan, and their U.S. subsidiaries. The conspiracy occurred from at least January 2000 until February 2010.
MELCO manufactures key automotive electrical components. Starter motors initiate engine combustion, alternators generate electricity while the engine runs, and ignition coils are vital for fuel ignition.
Mitsubishi Heavy Industries Ltd.
Mitsubishi Heavy Industries (MHI) faced a felony charge for conspiring to rig bids and fix prices of compressors and condensers sold to General Motors and Mitsubishi Motors North America. This conspiracy took place from at least January 2001 to February 2010.
MHI produces essential air conditioning components. Compressors circulate refrigerant, and condensers cool the engine by releasing heat from the refrigerant.
T.RAD Co. Ltd.
T.RAD Co. Ltd. was charged with a felony for conspiring to rig bids and fix prices of radiators sold to Toyota and Honda, and automatic transmission fluid warmers (ATF warmers) sold to Toyota. The conspiracy ran from November 2002 to February 2010.
T.RAD specializes in heat exchangers. Radiators cool the engine, and ATF warmers regulate automatic transmission fluid temperature.
Valeo Japan Co. Ltd.
Valeo Japan Co. Ltd. was charged with a felony for conspiring to allocate supply, rig bids, and fix prices of air conditioning systems sold to Nissan North America Inc., Suzuki Motor Corporation, and Subaru. The conspiracy occurred from April 2006 to February 2010.
Valeo manufactures comprehensive automotive air conditioning systems, including compressors, condensers, HVAC units, and related components.
Gary Walker
Gary Walker, a former executive, was charged with a felony for conspiring to rig bids and fix prices of seatbelts sold to Honda, Mazda, Nissan, Subaru, and Toyota from January 2003 to February 2010.
Jtekt Corporation
Jtekt faced two felony charges for conspiring to allocate markets, rig bids, and fix prices of bearings sold to Toyota, and electric powered steering assemblies sold to Nissan. The bearings conspiracy lasted from 2000 to July 2011, and the steering assemblies conspiracy from 2005 to October 2011.
Jtekt produces bearings and steering systems. Bearings reduce friction in numerous applications, and electric powered steering assemblies assist vehicle steering.
NSK Ltd.
NSK Ltd. was charged with a felony for conspiring to allocate markets, rig bids, and fix prices of bearings sold to Toyota from 2000 to July 2011.
NSK specializes in bearings, which are critical components in various industrial and automotive applications.
Yamashita Rubber Co. Ltd.
Yamashita Rubber Co. Ltd. was charged with a felony for conspiring to rig bids and fix prices of automotive anti-vibration rubber products sold to Honda, American Honda Motor Company Inc., and Suzuki Motor Corporation from at least April 2003 to May 2012.
Yamashita Rubber produces anti-vibration components that reduce engine and road vibration in vehicles.
Tetsuya Kunida
Tetsuya Kunida, another executive, was charged with a felony for conspiring to rig bids and fix prices of automotive anti-vibration rubber products sold to Toyota and other automakers from at least November 2001 to May 2012.
Ongoing Investigation and Previous Charges
These charges are part of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry. Previously, companies like DENSO Corporation, Nippon Seiki Ltd., and Panasonic Corporation, among others, have pleaded guilty. Fifteen individuals have already been sentenced to prison and significant fines.
The Sherman Act violations carry substantial penalties, including fines up to $100 million for corporations and $1 million and 10 years imprisonment for individuals. Fines can be increased to twice the gain or loss from the crime. Mitsuba also faces an additional obstruction of justice penalty.
The investigation is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI, with international cooperation. Authorities urge anyone with information on anticompetitive conduct in the auto parts industry to contact the Antitrust Division or the FBI.
This case underscores the significant efforts by global authorities to ensure fair competition within the car parts industry and protect consumers from the harmful effects of price-fixing conspiracies.
