Consumers Are Losers in Auto Supplier Price-Fixing Probe


  • Attorney General Eric Holder Picture

    Attorney General Eric Holder Picture

    Attorney General Eric Holder said that Americans paid more for their cars as a result of a vast price-fixing conspiracy on automobile parts in U.S. cars. | September 26, 2013

Just the Facts:
  • Consumers are among the losers in a vast scheme that involved price-fixed parts on many vehicles sold in the U.S., Edmunds says.
  • Nine Japanese auto suppliers and two executives have agreed to plead guilty to conspiracy charges and pay more than $740 million in fines for rigging the prices of 30 products for vehicles built or sold in the U.S. and elsewhere, the U.S. Justice Department announced on Thursday.
  • "It's unclear if there will be any price adjustments in the future on affected products," said Jessica Caldwell, an Edmunds senior analyst.

WASHINGTON — Consumers are among the losers in a vast scheme that involved price-fixed parts on many vehicles sold in the U.S., Edmunds says.

Nine Japanese auto suppliers and two executives have agreed to plead guilty to conspiracy charges and pay more than $740 million in fines for rigging the prices of 30 products for vehicles built or sold in the U.S. and elsewhere, the U.S. Justice Department announced on Thursday.

"Any time there is price fixing, the consumer loses," said Jessica Caldwell, an Edmunds senior analyst. "This case is compounded by the fact that it affected so many automakers and is not a small, isolated incident. It's unclear if there will be any price adjustments in the future on affected products, but considering the rate of price growth in the car industry, it seems unlikely."

The Justice Department said that price-fixed auto parts were sold to Chrysler, Ford and General Motors, as well as to the U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Toyota and Fuji Heavy Industries (Subaru).

"These international price-fixing conspiracies affected more than $5 billion in automobile parts sold to U.S. car manufacturers, and more than 25 million cars purchased by American consumers were affected by the illegal conduct," said Attorney General Eric Holder in a statement.

Holder added: "As a result of these conspiracies, Americans paid more for their cars. And American companies such as Chrysler, Ford and General Motors, as well as U.S. subsidiaries of Honda, Mazda, Mitsubishi, Nissan, Subaru and Toyota — were victims of the illegal cartels.

"During the course of this wide-ranging investigation, as we have uncovered each auto part conspiracy, we have continued to find more and more parts that are involved. And our work isn't done. We will continue to check under every hood and kick every tire to make sure we put an end to this illegal and destructive conduct."

The conspiracies raised the cost of parts put into those vehicles. It is also believed to be one of the largest criminal antitrust probes in the agency's history.

The Justice Department said that including those announced on Thursday, 20 companies and 21 executives have been charged in the Antitrust Division's ongoing investigation into price fixing and bid rigging in the auto parts industry.

"All 20 companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $1.6 billion in criminal fines," the department said. "Seventeen of the 21 executives have been sentenced to serve time in U.S. prisons or have entered into plea agreements calling for significant prison sentences."

The affected auto parts include seatbelts, windshield washer and wiper systems, starter motors, power window motors, fan motors, alternators, ignition coils and air-conditioning systems. Specific car makes and models were not cited in the Justice Department statement.

The suppliers named by the Justice Department include Hitachi Automotive Systems, which will pay a $195 million criminal fine, Jtekt Corp., which will pay a $103.27 million criminal fine and Mitsuba Corp., which will pay a $135 million criminal fine.

Others include Mitsubishi Electric Corp., which will pay a $190 million criminal fine, Mitsubishi Heavy Industries, which will pay a $14.5 million criminal fine and NSK, which will pay a $68.2 million criminal fine. T.Rad Co. will pay a $13.75 million criminal fine, Valeo Japan Co. will pay a $13.6 million criminal fine and Yamashita Rubber Co. will pay an $11 million criminal fine.

The Justice Department says the investigation into auto parts price-fixing is ongoing. It is unclear just what sort of recourse the average consumer has at this point, short of a class-action lawsuit.

Edmunds says: "My advice is to follow the story and find out which parts are affected and if any of them are in something you own," said Jessica Caldwell, Edmunds senior analyst.

Comments

  • greenpony greenpony Posts:

    My interest in this is directly proportional to how much extra it costed me. Less than $100 per vehicle, it may as well be zero. Still, a class action suit is doable, and I wouldn't say no to some auto supplier's $13 check that they have to send out 10,000,000 copies of.

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