Fines for price-fixing: Who paid.
Defendant/Total Criminal Fine
Aisan Industry Co., Ltd. $6,860,000
Aisin Seiki Co., Ltd $35,800,000
Autoliv, Inc. $14,500,000
Bridgestone Corporation $425,000,000
Continental Automotive Electronics, LLC
and Continental Automotive Korea, Ltd. $4,000,000
DENSO Corporation $78,000,000
Diamond Electric Mfg. Co., Ltd. $19,000,000
Fujikura, Ltd. $20,000,000
Furukawa Electric Co. Ltd. $200,000,000
G.S. Electech, Inc. $2,750,000
Hitachi Automotive Systems, Ltd. $195,000,000
Hitachi Metals, Ltd. $1,250,000
Jtekt Corp. $103,270,000
Koito Manufacturing Co., Ltd. $56,600,000
Mitsuba Corporation $135,000,000
Mitsubishi Electric Corporation (MELCO) $190,000,000
Mitsubishi Heavy Industries, Ltd. $14,500,000
NGK Spark Plug Co., Ltd. $52,100,000
Nippon Seiki Co., Ltd. $1,000,000
NSK Ltd. $68,200,000
Panasonic Corporation $45,800,000
Showa Corporation $19,900,000
Stanley Electric Company, Ltd. $1,440,000
T.RAD Co. Ltd. $13,750,000
Takata Corporation $71,300,000
Tokai Rika Co., Ltd. $17,700,000
Toyo Tire & Rubber Co., Ltd. $120,000,000
Toyoda Gosei Co., Ltd. $26,000,000
TRW Deutschland Holding GmbH $5,100,000
Valeo Japan Co., Ltd. $13,600,000
Yamashita Rubber Co., Ltd. $11,000,000
Yazaki Corporation $470,000,000
TOTAL - 32 - $2,438,420,000
Source: U.S. Department of Justice.
The Justice Department is continuing to take complaints of antitrust violations online or at Mail Citizen Complaint Center, Antitrust Division, 950 Pennsylvania Ave., NW, Room 3322, Washington, DC 20530 or by phone 1-888-647-3258.
“We just got hammered. It’s unjust what happened to our people in the United States.”
Willie Thorpe, a former Dayton area auto parts factory worker
Ohio’s auto parts industry hasn’t had much good news over the past decade.
Huge job losses, loss of market share and what critics say is an unfair playing field has dealt a crippling blow to a trademark Ohio industry.
But experts say a wave of federal prosecutions of price-fixing and bid-rigging involving mostly Japanese auto parts makers is raising the promise of new jobs for American manufacturers and a more competitive parts market.
Since 2010, 48 people have been charged in the ongoing investigation, tapped by the Justice Department as the largest antitrust criminal case in history. Thirty-two companies have pleaded guilty or have agreed to plead guilty. The companies, with operations in 14 states including Ohio, agreed to pay more than $2.4 billion in fines, Justice Department officials said.
In simple terms, the government charged that the companies agreed with each other about who would win bids for parts and who would supply certain parts to manufacturers. They would also increase the price of those parts.
For former Dayton area auto parts factory workers like Willie Thorpe, 64, the prosecutions are a good step. But Thorpe says the administration and Congress need to do more to ensure that U.S. workers and consumers aren’t victimized by a poorly policed globalized economy.
“We just got hammered,” Thorpe said. “It’s unjust what happened to our people in the United States. It devastated so many families on our side, and our tax base, that it’s shocking to me we don’t have adequate trade laws. They need to protect our turf.”
In testimony before Congress, Justice Department officials called the probe, conducted in concert with other federal agencies, an investigation of "large-scale international cartels that affect wide swaths of the economy."
Auto parts manufacturing in Ohio has been hit by some of the state’s heaviest job losses up to and during the Great Recession. In 2004, the sector employed 94,200. By October of this year, employment had fallen by 27 percent, to 68,300. Ohio remains the number two state for auto-parts-making after Michigan. Employment in the industry nationwide stands at 734,222.
The total cost to consumers from the multiple conspiracies is difficult to pin down, but the Justice Department said the conspiracies involved $8 billion in parts sold to manufacturers and more than 25 million cars bought by consumers.
Area cases
An indictment announced by the Cincinnati FBI office last month charged two executives of Japanese automotive parts manufacturers with operations in Kentucky.
It said Hiroya Hirose, an executive at NSK Ltd., and Masakazu Iwami, an executive at Jtekt Corporation, conspired to fix the prices of bearings sold to Toyota beginning at least as early as 2001 and continuing until July 2011. The two were charged with price-fixing and bid-rigging in violation of the Sherman Act, a crime carrying a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.
Requests for comment from NSK Ltd. and Jtekt were not returned.
In October, Hitachi Metals Ltd., which has a plant in St. Marys, agreed to plead guilty and pay a $1.25 million criminal fine for its role in a conspiracy to fix prices and rig bids for brake hoses installed in cars sold in the U.S. and elsewhere, the department said.
It added that, “Hitachi and its co-conspirators conspired through meetings and conversations in which they discussed and agreed upon bids and price quotations to be submitted to Toyota, and to allocate the supply of automotive brake hose to Toyota.”
Hitachi’s involvement lasted from as early as November 2005 until at least September 2009, the Department said.
Other companies with Ohio operations that have agreed to guilty pleas and fines include steering component maker American Showa with a plant in Sunbury, and Yazaki Corp. in Columbus. Yazaki agreed to pay a $470 million criminal fine in 2012.
‘Our members could employ more people’
Domestic auto parts makers have long complained of collusion and other forms of market-rigging, including the illegal subsidies that foreign parts makers often receive from their local governments.
The wide-ranging Justice Department probe did not examine anti-competitive practices that directly shut out domestic-based manufacturing companies from winning contracts. It instead focused on how the foreign auto parts makers inflate costs for auto assemblers — and consumers — by rigging bids and carving up the business.
Ultimately, though, attacking market-fixing should create a more competitive market that can benefit job growth and business opportunity, a top Justice Department official told this newspaper under the condition the official not be quoted by name.
“Anytime we eliminate anti-competitive price-fixing and bid-rigging, you have a more robust, truly competitive economy,” the official said. “When that happens you will produce more jobs and a better economy. The end of that should be the creation of more jobs.”
It’s a sentiment repeated by Art Liming, executive vice president and plant manager for KTH, a Japanese-owned frame supplier to Honda with a plant in St. Paris that employs 1,140. The company, which supplies only to Honda, hasn’t been involved in the prosecutions, Liming said.
“If certain suppliers are fixing prices illegally, it certainly hinders competition and price competitiveness for the consumer,” said Liming. “We all need to be competitive in our brands.”
Michael Wessel, aWashington, D.C.-based consultant and an appointee to the federal U.S.-China Economic Security Review Commission, said the prosecutions address practices that have cost production and jobs in the U.S.
“The U.S. is sending a signal that these approaches won’t be tolerated,” he said, but added: “I fear it’s not enough and more needs to be done. This should trigger a much larger investigation by Congress of the practices of Japanese companies.”
Michael Stumo, CEO of the Coalition for a Prosperous America, an advocate for the domestic auto parts industry, said the prosecutions vindicate longstanding industry complaints about such practices.
“It goes to show we can make auto parts competitively in the U.S. if not for market-rigging and price-fixing,” Stumo said. “When you have price-fixing, it’s harming our economy. Our members could employ more people if we had a free market and could eliminate cheating.”
Bridgetown agrees to pay $425M
Japan-based Bridgestone is one of the companies that agreed to pay fines — in its case for its role in fixing prices of automotive anti-vibration rubber parts. After an investigation by FBI agents from the bureau’s Chicago and Cleveland field offices, Bridgestone agreed to pay a $425 million.
The FBI found that Bridgestone “and its co-conspirators carried out the conspiracy through meetings and conversations in which they discussed and agreed upon bids, prices and allocating sales of certain automotive anti-vibration rubber products. After exchanging this information with its co-conspirators, Bridgestone submitted bids and prices in accordance with those agreements and sold and accepted payments for automotive anti-vibration rubber parts at collusive and noncompetitive prices.”
The FBI added that Bridgestone’s involvement in the conspiracy lasted from at least January 2001 until at least December 2008.
Safety systems — such as seat belts, airbags, and anti-lock brakes — have been a big target of investigators.
Manufacturers affected included the U.S.-based Big Three — Ford, General Motors and Chrysler — as well as foreign-based manufacturers with plants in the U.S., such as Honda, Toyota, Nissan, Subaru, Mazda, and Mitsubishi.
Many car models were fitted with multiple parts that were fixed by the auto parts suppliers, according to the Justice Department.
Tom Lehner, vice president of public policy for the 1,000-member Motor and Equipment Manufacturers Association, said antitrust law is a priority for its members.
“When our members get together, the first thing they do is review antitrust policy,” he said. “It’s important. There is no question that there is no place in this or any other industry for price-fixing and antitrust violations.”
Ohio Sen. Sherrod Brown, an outspoken critic of trade law enforcement, said the prosecutions send the right message.
“From currency manipulation to trade agreements to antitrust laws, we must ensure that Ohio companies and workers are on a level playing field,” he said. “One in every eight Ohio jobs is connected to the auto industry and we’ve seen the damage done to our state’s economy when that sector is weak.”
Alan Tonelson, an independent economist who specializes in trade policy, said foreign companies have made important contributions to the growth of the manufacturing sector in the U.S.
But, he said, “It needs to be much more carefully monitored.”
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