More Guilty Pleas in U.S. Department of Justice Auto Parts Probe

High on the Foley & Lardner LLP priority list of top antitrust issues facing automotive suppliers for 2014 was the broad and aggressive criminal antitrust investigation of the auto parts industry by the U.S. Department of Justice. As Foley reported then, the wide-ranging investigation had by the end of 2013 snared 24 companies and 26 individuals. Fines totaling more than $1.6 billion dollars in fines and substantial jail time for the individuals, many foreign nationals who had been convicted are serving substantial jail time.

Top Legal Issues Facing Automotive Suppliers in 2014: AntitrustThe Department of Justice promised that this investigation would continue unabated and indeed it has. During the month of February 2014, two more companies agreed to plead guilty to conspiring to fix prices of auto parts. On February 3, 2014 Aisan Industries Co., Inc. pled guilty to fixing the prices of electronic throttle bodies sold to Nissan Motors Co. Ltd. in the United States and elsewhere. Aisan, a Japanese-based company, agreed to pay $6.86 million. Less than two weeks later, Bridgestone Corp., another Japanese-based company, agreed as well to plead guilty and pay a substantial fine in the amount of $425 million for fixing the price of automotive anti-vibration rubber parts that it sold to a number of Japanese OEM including Toyota, Nissan, Suzuki, and Isuzu. According to the U.S. Department of Justice, these were hard-core cartels lasting upwards of a decade. With these guilty pleas, total U.S. fines imposed in the on-going auto parts probe exceed $2 billion.

And the investigations continue. The U.S. Department of Justice has made it clear that there are more enforcement actions to come as it uses its leniency and leniency plus policies to widen the net of suspected criminal activity. Under these policies, there are ever-increasing incentives for companies to disclose what appears to be an apparent unending stream of industry groups that have engaged in criminal cartel activity.

Keep in mind that in addition to the substantial criminal penalties that have been imposed and the significant incarceration that has been meted out to almost 30 individuals, there are massive treble damages actions that have been filed seeking compensation for the damages alleged resulting from the inflated pricing resulting from such conspiracy. The effect of the guilty pleas is to provide a prima facie case for the treble damage plaintiffs. These cases which have been consolidated in the federal district court for the Eastern District of Michigan (in re Automotive Parts Antitrust Litigation) involve almost 30 types of auto parts.

Moreover, the U.S. criminal and civil litigations are only one of a multitude of global investigations of the auto parts industry. In addition to the U.S. investigation, there have long been investigations in the EU, Japan, Canada and Korea. In the latest development, the Chinese government announced on February 19, 2014 that the Price Supervision and Anti-Monopoly Bureau of the Chinese National Development and Reform Commission was conducting its own investigation.

Take Action Now

So what should automobile suppliers do? As Foley has said before, there is no excuse for this spiral of activity. You and your company need to make compliance and compliance audits a No. 1 priority.

A well-organized and thoughtfully implemented compliance policy is an important initiative. Take action now before your company is the target of this on-going investigation. Or, for that matter, take compliance action now to detect and ward off any other antitrust problems that may be uncovered. An effective competition compliance program can hopefully avoid the criminal cartel activity from occurring and, in any event, will help reduce the sanctions that would be imposed if, despite the company’s best efforts, a problem arises.