A global auto industry price-fixing scandal being investigated by the US Department of Justice continues to unfurl as ever more companies – most of them Japanese – are found guilty of fixing the prices of numerous types of vehicle parts. Toyo Tire & Rubber is the latest company to agree to plead guilty to the crime and to pay a fine of $120 million, according to a statement by the DoJ.

While some of us know Toyo best as a maker of sticky track-day tires, the company also supplies parts including anti-vibration rubber (used in engine mounts and suspension bushings) to automakers like Toyota, Nissan and Fuji Heavy Industries (which makes Subaru cars) and constant-velocity-joint boots (CV boots) to GKN Plc., both of which are parts that the DoJ investigation found to have fixed prices. The probe found that the anti-vibration parts price fixing started as early as March 1996 and continued until at least May 2012. The CV boot price fixing was found to have started as early as January 2006 and lasted until at least September 2010.

The DoJ says that Toyo has agreed to cooperate in the ongoing investigation, which, including Toyo, has found guilty 22 companies and 26 executives. 20 of those executives have been sentenced to prison in the US or entered plea agreements to serve time in prison.

For more detailed information on Toyo's part in the price fixing scandal, check out the press release below.
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Toyo Tire & Rubber Co. Ltd. Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. Cars

Company Agrees to Pay $120 Million Criminal Fine

Osaka, Japan-based Toyo Tire & Rubber Co. Ltd. has agreed to plead guilty and to pay a $120 million criminal fine for its role in two separate conspiracies to fix the prices of automotive components involving anti-vibration rubber and driveshaft parts installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

According to a two-count felony charge filed today in U.S. District Court for the Northern District of Ohio in Toledo, Toyo engaged in a conspiracy to allocate sales of, to rig bids for, and to fix the prices of automotive anti-vibration rubber parts it sold to Toyota Motor Corp., Nissan Motor Corp., Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries, affiliates and suppliers, in the United States and elsewhere. According to the charge, Toyo and its co-conspirators carried out the anti-vibration rubber parts conspiracy from as early as March 1996 until at least May 2012.

In addition, according to the charge, Toyo engaged in a separate conspiracy to allocate sales of, and to fix, raise and maintain the prices of automotive constant-velocity-joint boots it sold to U.S. subsidiaries of GKN plc, a British automotive parts supplier . According to the charge, Toyo and its co-conspirators carried out the constant-velocity-joint boots conspiracy from as early as January 2006 until as late as September 2010.

Toyo, which has subsidiaries based in Franklin, Ky., and White, Ga., has agreed to cooperate with the department's ongoing investigation. The plea agreement is subject to court approval.

"Today's charge is the latest step in the Antitrust Division's effort to hold automobile part suppliers accountable for their illegal and collusive conduct," said Renata B. Hesse, Deputy Assistant Attorney General for the Department of Justice's Antitrust Division. "The division continues to vigorously prosecute companies and individuals that seek to maximize their profits through illegal and anticompetitive means."

Automotive anti-vibration rubber parts are comprised primarily of rubber and metal, and include engine mounts and suspension bushings. They are installed in automobiles for the purpose of reducing road and engine vibration. Automotive constant-velocity-joint boots are composed of rubber or plastic, and are used to cover the constant-velocity-joints of an automobile to protect the joints from contaminants.

The department said the company and its co-conspirators carried out the conspiracies through meetings and conversations, discussed and agreed upon bids, price quotations and price adjustments, and agreed to allocate among the companies certain sales of the anti-vibration rubber and constant-velocity-joint boots parts sold to automobile and component manufacturers.

Including Toyo, 22 companies and 26 executives have been charged in the Justice Department's ongoing investigation into the automotive parts industry. All 22 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.8 billion in criminal fines. Of the 26 executives, 20 have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences.

Toyo is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division's criminal enforcement sections and the FBI. Today's charges were brought by the Antitrust Division's Chicago Office and the FBI's Cleveland Field Office, with the assistance of the FBI headquarters' International Corruption Unit and the U.S. Attorney's Office for the Northern District of Ohio. Anyone with information concerning the focus of this investigation should contact the Antitrust Division's Citizen Complaint Center at 1–888–647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI's Cleveland Field Office at 216-522-1400.


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  • 30 Comments
      GR
      • 1 Year Ago
      I just want to point out that the US gov't isn't the one who uncovered the scheme despite them getting the attention from prosecuting it. It was uncovered by Japanese investigators who then alerted US authorities. The reason why the DOJ got involved is because the cars with these products are sold in the US. Toyo tire is just one of the companies involved. Denso, Mitsubishi, and a few other major auto parts manufacturers are involved. Now you may think how does this affect me? When prices are fixed, competition is artificial and prices are driven up. The car maker then is forced to buy these parts at higher cost, seeing no other option. The car maker then is forced to increase prices to the consumer because of higher manufacturing costs. The consumer is basically getting ripped off because the car maker is getting ripped off by the parts makers who are involved in the price fixing scheme. These parts suppliers don't only supply parts to Japanese brands. Victims include GM and German brands therefore it may affect you even if you don't own a Japanese brand car. It's actually a good thing to prosecute these corrupt executives with widespread media coverage. It will deter companies to engage in price fixing in the future. This is especially true in Japan where public attention to one's crime causes a huge sense of shame and self-humiliation, often worse than the actual punishment.
        RocketRed
        • 1 Year Ago
        @GR
        The interesting thing about your final culture point: In Japanese commerce, the "japanese way" eschews the kind of cut-throat competition we supposedly love in the U.S. Japan emerged from the ruins of the war, in part, by organizing its industry toward developing expertise and scale in manufacturing, which was/is often incopatiible with sharp price competition. As much as the Japanese have a keen respect for order in social and business relations, this sense of order, ironically, is what can lead to these kind of abuses. I think this will lead to dissonance, as much as shame for the executives, in Japan. However, ultimately, the illegal behavior will be discipined by jail time.
      Fonin
      • 1 Year Ago
      in the end, the consumer pays the increase, Toyo is not going to pay it\'s fines to the consumers. and the consumers will get doubled-over as they then foot the bill for the fines as they are absorbed into product costs.
      flammablewater
      • 1 Year Ago
      I feel like this is a waste of time when we could be actually investigating and prosecuting Wall St. execs.
        flammablewater
        • 1 Year Ago
        @flammablewater
        They're going to jail for selling tires at a high price? OCCUPY --- Japan, I guess?
        what
        • 1 Year Ago
        @flammablewater
        The Japanese companies need to brib.....er I mean "donate" more to our crooked politicians. The only time they can be bi-partisan is when they are screwing the serfs over.
        jz78817
        • 1 Year Ago
        @flammablewater
        Uh, the DOJ has more than 60 agencies. Anti-trust is one of those agencies. Your "Wall St. execs" would most likely be investigated by the Securities and Exchange Commission. So no, they're not "wasting time" by prosecuting price fixing.
      Anthony
      • 1 Year Ago
      I see the "corporate defenders" are out in full force. Price gouging hurts the consumer (you guys). What the heck is wrong with some of you guys? Just because you're ok with being bent over by corporations don't expect everyone else to be. What's even more pathetic is that they broke an actual law and only one person here (so far) acknowledges that fact. If this were an individual that broke a law? The same people here saying that this Toyo Fiasco isn't a big deal, would be calling for that individuals head. How did you guys get so brainwashed, to the point where you think its ok for a corporation to break the law?
        Famsert
        • 1 Year Ago
        @Anthony
        I think it's the fact that there's dozens of Wall street executives who got away with slaps on the wrist for blowing out billions of dollars in the economy and ruined the lives of thousands of people.
        jz78817
        • 1 Year Ago
        @Anthony
        you should see the loons fervently defending Apple after they got smacked for price-fixing on eBooks. And in that case, nobody even went to jail!
        juststudent
        • 1 Year Ago
        @Anthony
        I'm not expert in economy, but I think sometimes price fixing help save the industry by stabilizing the price. In 2005, samsung pleaded guilty for price fixing dram. Years later, dram price is fallen very low and several dram company ceased to exist. Less competition is also not good for us consumer.
      vaua70
      • 1 Year Ago
      what if all these Japanese company decide to shut down all factories in US and go somewhere else including stop selling stuff and in US what would the smart politicians do?
        morning_glory1
        • 1 Year Ago
        @vaua70
        Do you really think the Japanese are that stupid to sacrifice their largest market. The company would go broke ... quickly, but not before their shareholders executed their management.
        krusshall
        • 1 Year Ago
        @vaua70
        Do you condone illegal business practices?
        jz78817
        • 1 Year Ago
        @vaua70
        wave goodbye. You want to do business in a particular country, you are subject to its laws. If a foreign company operating in Japan ran afoul of their laws, Japan wouldn't hesitate to kick their asses out.
      Famsert
      • 1 Year Ago
      I just think it's a bit funny that they'll prosecute and jail Japanese executives but many American executives have gotten away with way worse.
        Gator
        • 1 Year Ago
        @Famsert
        Because the Japanese aren't stuffing our pockets.
        jz78817
        • 1 Year Ago
        @Famsert
        yeah. 'cos Ken Lay, Jeff Skilling, Dennis Kozlowski, Mark Swartz, Jon and Tim Regas, and Bernard Ebbers all got off scot-free. oh, wait, Lay died before sentencing and the rest are still serving time. I'll let you google their names.
      PTC DAWG
      • 1 Year Ago
      You like the price you buy, you don't, you shop elsewhere...am I confused?
        The_Zachalope
        • 1 Year Ago
        @PTC DAWG
        But that's the problem with price fixing. Company A gets with Company B and Company C and they agree to set a certain price for a commodity they all manufacture/sell. So, regardless of where you go, the price is going to be about the same.
        Peter Middleton
        • 1 Year Ago
        @PTC DAWG
        yes. keep your education going
      threefortyduster
      • 1 Year Ago
      I tried to buy Toyo slicks once when they first came out and were doing a buy one get one promotion, but for some reason, they failed to make the most popular slick size used in drag racing (28x9). I did not buy them then and haven't since. Price fixing sucks. It raises the price of components, which raise the prices of our cars. Some of the people below don't seem to understand that. I wonder what they'd do if 3 of the biggest oil companies decided to raise gas prices by $5 a gallon overnight. I bet their opinion on price fixing would change.
        icemilkcoffee
        • 1 Year Ago
        @threefortyduster
        The entire reason for OPEC's existence is to do price fixing.
          jz78817
          • 1 Year Ago
          @icemilkcoffee
          OPEC is an organization of countries and isn't subject to US law.
        karlInSanDiego
        • 1 Year Ago
        @threefortyduster
        You think oil/gas prices aren't a factor of industry price fixing? If competition and the hollow promise that Capitalism brings with it, were around, we would not have seen prices ballon above $3.5-4 and stay there. The US rules on price fixing are probably very unreasonable from an outsider's view, and they certainly are an artificial constraint on what is supposed to be free market, which if it were truly free, wouldn't try to forbid collusion. Did you know it is illegal for two competitors to even discuss their prices in private? Not collude to fix prices. Discuss them. I'm not saying the rule isn't needed, but it is completely counter to freedom of speech.
          axiomatik
          • 1 Year Ago
          @karlInSanDiego
          Oil/gas pricing isn't due to price fixing. Oil pricing is a result of the global commodities market. Consumers in the US are competing with consumers in China to buy oil. There is no surplus of oil to drive down the price, oil companies are constantly searching for new sources of oil because global demand for oil keeps increasing every year.
      churchmotor
      • 1 Year Ago
      Clearly TOYO forgot to grease Eric Holders palms.
      damienreiduae
      • 1 Year Ago
      *crickets chirping*
      barndog1948
      • 1 Year Ago
      got toyo tires on my car. didn't thing they were such hot sh_t.
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