Auto parts price-fixing probe rattles industry
An investigation into price-fixing and bid-rigging in the auto parts industry has mushroomed into the Justice Department’s largest criminal antitrust probe ever, and it’s not over yet.
The investigation, made public four years ago with FBI raids in the Detroit area, has led to criminal charges against dozens of people and companies, stretched across continents and reverberated through an industry responsible for supplying critical car components.
The collusion has saddled U.S. drivers with millions of dollars in extra costs.
“It’s a very safe assumption that U.S. consumers paid more, and sometimes significantly more, for their automobiles as a result of this conspiracy,” Brent Snyder, a deputy assistant attorney general in the antitrust division, said.
So far, 34 individuals have been charged and 27 companies have pleaded guilty or agreed to do so, the Justice Department says. Collectively, they have agreed to pay more than $2.3 billion in fines. New cases have arisen with regularity, with Attorney General Eric Holder promising last September that investigators “would check under every hood and kick every tire.”
The most-recent development came Thursday, when an executive from a Japanese company was charged with conspiring to fix the prices of heater control panels sold to Toyota and with persuading workers to destroy evidence.
Officials say the investigation stands out not just for its scope but also for the cooperation the authorities have received from Japan, Australia and other countries. Despite the challenges of prosecuting foreign nationals, the Justice Department has won guilty pleas from a series of Japanese executives who opted to get their punishment over with rather than remain under indictment in their home countries and subject to career-crippling travel restrictions. Though the techniques and strategies sometimes differed, the executives generally carried out the collusion by trading coded emails, meeting at remote locations and destroying documents to avoid paper trails.
With an eye toward eliminating competition and maximizing profits, they exploited an industry that experts say is in some ways vulnerable to collusion: There are a finite number of purchasers and suppliers, there’s steady pressure among companies to cut prices — and car parts, unlike certain products that have a great deal of variability, are generally standardized and homogeneous.
The Justice Department first publicly surfaced aspects of the investigation when FBI agents in Detroit raided the offices of Denso Corp, Yazaki North America and Tokai Rika. All three companies have pleaded guilty to their roles in price-fixing and bid-rigging schemes.
Since the raids, the probe has broadened to encompass about $5 billion worth of auto parts.