As part of the Department of Justice's ongoing crackdown of price fixing in the auto industry, KYB agreed to pay $62 million and pleaded guilty to conspiracy to set the cost of shock absorbers from the mid '90s through 2012. The company allegedly worked with co-conspirators to keep the cost of the parts high, and those components then made it into vehicles from Honda, Kawasaki, Nissan, Subaru, Suzuki, and Toyota. "Any collusive agreement among competitors to restrict price competition undercuts our free enterprise system and violates the law," said Carter M. Stewart, US Attorney of the Southern District of Ohio, in the DoJ's announcement.
Over the past few years, the DoJ has brought cases against 37 parts suppliers and 55 executives, leading to over $2.6 billion in fines. The investigations haven't always been so successful – some of the Japanese execs fled from the US to avoid prosecution. Critics allege that price fixing is simply how business is done.
According to Automotive News, Sumitomo Electric Industries is also facing a $50 million settlement in a civil lawsuit that's related to price fixing of parts like wiring harnesses and heater control panels. The plaintiffs include owners and dealers that purchased vehicles with these parts. The company asserts that the violations are from before 2010, and it now has different process in place to avoid further violations.
Kayaba Industry Co. Ltd., dba KYB Corporation (KYB) has 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.
According to charges filed today, 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 Company, including their subsidiaries in the United States.
"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. "Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to protect American car buyers and hold automotive part suppliers accountable for their illegal conduct."
"Any collusive agreement among competitors to restrict price competition undercuts our free enterprise system and violates the law," said U.S. Attorney Carter M. Stewart of the Southern District of Ohio. "We will continue to work to prosecute these fraudulent arrangements in order to protect consumers' right to free and open competition, particularly in the auto parts industry."
"Fixing prices and rigging bids is against the law and ultimately harms consumers by artificially inflating prices and creating a corrupt marketplace," said Special Agent in Charge Angela L. Byers of the FBI's Cincinnati Division. "The FBI and our partners will continue to investigate anticompetitive practices and promote fair competition."
According to the information filed in the U.S. District Court of the Southern District of Ohio, KYB, based in Tokyo, 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.
Today's charge is 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 the Antitrust Division's criminal enforcement sections and the FBI. KYB has agreed to cooperate with the department's ongoing investigation and the plea agreement is subject to court approval. Including KYB, 37 companies and 55 executives have been charged in the division's ongoing investigation and have agreed to pay a total of more than $2.6 billion in criminal fines. KYB is being prosecuted by the Antitrust Division's Chicago Office and the FBI's Cincinnati Field Office, with assistance from the U.S. Attorney's Office of the Southern District of Ohio. Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry 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 Cincinnati Field Office at 513-421-4310.