: About Ethical

A consortium of Japanese companies used code names and secret meetings to rig bids for dozens of types of auto parts imported to the United

States in a decade-long conspiracy that may have cost US consumers hundreds of millions of dollars, US officials have revealed.

Unveiling what the Justice Department said is its largest-ever criminal anti-trust investigation, US Attorney General Eric Holder Jr said nine

companies had agreed to plead guilty in the case and pay roughly US$740 million (NZ$893m) in fines.

The companies included Mitsubishi Heavy Industries, Hitachi Automotive Systems and Mitsubishi Electric. Two executives also pleaded guilty, and

one will face a one-year prison term.

Holder described a massive and complex conspiracy as executives conferred in the United States and Japan, sometimes retreating to “remote

locations,” to manipulate prices for windshield wipers, radiators, power-window motors and other parts that were sent from overseas to be included

in new cars assembled in the United States.

The parts entered the supply chains of almost every major US-based automaker, including Detroit’s Big Three and the US subsidiaries of

Japanese firms including Honda, Mazda, Mitsubishi, Nissan, Subaru and Toyota.

US Justice Department officials said they could not estimate how much the conspiracy cost consumers. But they said that over as many as 13

years, it affected prices on more than US$5 billion worth of auto parts used in more than 25 million vehicles — or about US$200 per car.

Combined, the companies had enough pricing power to divvy up sales, co-ordinate bids, and “stabilise and maintain” prices.

Holder described the companies as divided into several “cartels” that “targeted US manufacturing, US businesses and US consumers.”

“Americans paid more for their cars. And American companies … were victims,” Holder said of the investigation, which is still ongoing after several

years. “As we have uncovered each auto part conspiracy, we have continued to find more and more parts that are involved.”

Including the fines announced today (NZ time), US officials over the past two years have levied US$1.6 billion (NZ$1.93b) in penalties against a

total of 20 auto-parts firms and sent 16 executives to jail.

Trade and industry firms and company executives largely declined to comment on the case.

Honda North America released a brief statement saying it expected all of its suppliers “to observe the law.”

The US auto-parts sector has been hit hard in recent years by the spread of auto-supply manufacturing around the world, the ability of auto

companies to source parts from an expanding number of countries, and trade restrictions in places such as China that have limited US companies’

ability to export. Once done in house by automakers such as GM and Ford, auto-parts manufacturing was steadily outsourced beginning in the

1990s.

Over the past few years, and particularly since a trade agreement with Canada and Mexico was signed, US auto-parts imports have grown rapidly,

topping US$125 billion last year for engines, tyres and other components.

Japan has been a major supplier, sending about US$17 billion in parts to the United States last year.

The case comes at a sensitive time in US-Japanese economic relations, as US officials try to further open a Japanese market that is at once rich

— the country has the third-largest economy in the world — and considered difficult for important US industries to crack.

Japan recently joined free-trade talks with the United States, but some labor and manufacturing companies worry that those discussions will

produce only limited access to a market that has struggled for decades to fully open.

Scott Hammond, deputy assistant attorney general for the antitrust division, said the case “should resonate in boardrooms around the world” and

discourage future efforts to manipulate prices.

-Washington Post/Bloomberg