Business
5:59 pm
Thu September 26, 2013

Nine Japanese Auto Parts Makers Plead Guilty To Price Fixing

Originally published on Thu September 26, 2013 7:19 pm

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

Most of the people who work in the auto industry don't work for car companies. Instead, they're involved with making the parts that go into the cars. It's a global network that manufactures everything from seatbelts to radiators. Well, now it's caught up in a widening federal investigation into price fixing.

NPR's Jim Zarroli reports the Justice Department said today nine Japanese companies have pleaded guilty to collusion.

JIM ZARROLI, BYLINE: With these latest cases, some 20 Japanese companies have pleaded guilty to price fixing and will pay $1.6 billion in fines. Twenty-one executives have also been named, most of whom have agreed to serve jail time.

Scott Hammond, of the Justice Department, says it's the biggest criminal investigation in the history of the antitrust division.

SCOTT HAMMOND: The breadth of the conspiracies that have been brought to light today are as egregious as they are pervasive.

ZARROLI: The companies named today conspired to fix the prices of some $6 billion worth of parts, including seatbelts and power windows. The parts had gone into some 25 million cars made by GM, Chrysler and Ford, as well as Japanese companies like Honda, Subaru and Toyota. In some cases, the executives involved had been meeting secretly to discuss prices for more than a decade in the U.S. and Japan.

U.S. Attorney General Eric Holder.

ERIC HOLDER: In order to keep their illegal conduct secret, they used code names and they met in remote locations. Then they followed up with each other regularly to make sure the collusive agreements were being adhered to.

ZARROLI: In one conversation, recorded by U.S. officials, one executive is heard telling another - let's not stick our hands out to take each other's business.

By secretly coordinating their prices and agreeing not to outbid each other on contracts, the companies kept prices for parts artificially high. The Justice Department first began charging companies in 2011 and U.S. officials say they're still not finished.

Again, Scott Hammond.

HAMMOND: Every time we discover a conspiracy involving automotive industry, we seem to find another one, a new group of products that are affected.

ZARROLI: U.S. officials say the higher prices paid by automakers for the parts were passed on to consumers. Michael Smitka, a professor of economics at Washington and Lee University, says the amount added to the cost of each car may not have been big.

MICHAEL SMITKA: But when you have the ability to get a little bit here, a little bit there over the space of 10 years, it really adds up to a mind-boggling amount of dollars. So this, as anti-trust goes, this is a really big set of cases.

ZARROLI: The companies cited so far make up just a small percentage of the 300 or so Japanese parts-makers doing business in the U.S., but they include some of the best-known and biggest names. Hitachi Automotive, which is part of the big corporation of the same name, said today it would take steps to comply with U.S. antitrust law. Mitsubishi Electric says it is cooperating fully with the investigation and is focused on moving forward.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.