Japanese auto suppliers to settle price-fixing suits

David Shepardson
Detroit News Washington Bureau

Washington — Sumitomo Electric Industries said Wednesday it has agreed to pay $50 million to settle a civil lawsuit stemming from the Justice Department’s massive price fixing and bid rigging investigation, while another Japanese company agreed to plead guilty.

Tokyo-based Kayaba Industry Co. Ltd. — also known as KYB Corp. — agreed to plead guilty and to pay a $62 million criminal fine for its role in a conspiracy to fix the price of shock absorbers installed in cars and motorcycles sold to U.S. consumers — the 37th company to admit wrongdoing in the probe.

The Justice Department said KYB conspired from the mid-1990s until 2012 to fix the prices of shock absorbers sold to Fuji Heavy Industries Ltd. — manufacturer of Subaru vehicles — Honda Motor Co. Ltd., Kawasaki Heavy Industries Ltd., Nissan Motor Company Ltd., Suzuki Motor Corporation and Toyota Motor Co.

To date, 55 individuals have been charged in the Justice Department’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry. Also, 37 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.6 billion in criminal fines.

“KYB turned the competitive process on its head by agreeing with its competitors to fix the prices of shock absorbers installed in cars and motorcycles sold in the U.S.,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.

According to documents filed in U.S. District Court in Ohio, KYB and its two co-conspirators agreed to allocate the supply of shock absorbers sold and determine the price submitted to the targeted vehicle manufacturers. “To keep prices up, KYB and its co-conspirators also agreed to coordinate on price adjustments requested by the vehicle manufacturers and strived to keep their conduct secret,” the government said.

Sumitomo’s settlement covers auto dealers who bought cars with higher priced parts built by Sumitomo and consumers who bought the vehicles. The settlement must be approved by U.S. District Judge Marianne O. Battani in Detroit.

In total, 10 suppliers have agreed to pay $237 million to dealers and vehicle buyers. Last month, Japanese auto supplier T.RAD agreed to pay $7.41 million and Tokyo-based Fujikura Ltd. will pay $7.14 million. Another 30 lawsuits against other auto suppliers involved are pending.

The settlements covers three classes: companies that directly purchased auto parts; auto dealers; and consumers who bought vehicles that had higher-priced parts because of price-fixing and bid-rigging. Separate settlements for automakers and dealers top $100 million.

In a separate suit, Ford Motor Co. labeled Sumitomo Electric Industries a co-conspirator with other firms that pleaded guilty but didn’t sue Sumitomo.

Sumitomo hasn't been charged by the Justice Department. In 2012, the European Union fined Fujikura, Yakazi and two other wire harness makers $182 million for price fixing that affected Toyota, Nissan Motor Co., Honda Motor Co. and Renault. Sumitomo wasn't fined by the EU because it alerted authorities of price fixing and bid rigging and was granted immunity — it otherwise would have faced hundreds of millions in fines.

About 25 million cars sold in the U.S. since 2003 were affected; the Justice Department has said U.S., German and major Japanese automakers are among the victims.

The massive civil lawsuits are consolidated in front of Battani in Detroit. Depositions in the 30 separate cases are underway. Last month, lawyers noted that many Japanese executives will be questioned in Japan. “Conducting depositions in Japan is difficult and expensive because depositions may only take place at the Embassy of the United States in Tokyo or the United States Consulate General in Osaka-Kobe and are governed by esoteric procedures under Japanese law,” they wrote in a legal filing.

Last year, Stockholm-based Autoliv Inc. agreed to pay $65 million to settle civil antitrust lawsuits in the United States. The Swedish company will pay $40 million to the direct purchaser settlement class, $6 million to the auto dealer settlement class, and $19 million to the vehicle buyer class. Autoliv expects to record an expense of $65 million in its second-quarter 2014 results.

In April, German auto parts maker Robert Bosch GmbH agreed to plead guilty and pay a $57.8 million fine for price fixing. The Justice Department said Bosch — which has its North American headquarters in Farmington Hills and is the world's largest independent supplier — agreed to plead guilty in a conspiracy to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold around the world.

Auto supplier price-fixing is being investigated by officials in the U.S., Europe, Australia, South Korea, Japan and Canada. A Justice Department investigation first came to light with search warrants executed by the FBI in early 2010 at the Metro Detroit U.S. headquarters of three Japanese suppliers.