Conspiracies involving at least nine auto parts companies will likely cost you when you go out to buy a new car. The corruption has roots that includes some industry in Alabama and elsewhere in the southeast.
The U.S. Justice Department Thursday announced guilty pleas entered in price-fixing conspiracy investigations involving nine Japan-based auto parts makers and two executives.
The schemes spanned more than a decade and involved efforts to rig prices for more than 30 types of car parts, including seat belts, radiators, and windshield wipers, all sold to U.S. car makers.
The FBI announced the conspiracies involved parts going to automobile plants in Alabama, California, Georgia, Illinois, Indiana, Kansas, Kentucky, Michigan, Mississippi, Missouri, Ohio, Tennessee, Texas, and Wisconsin.
Alabama ranks 4th in the U.S. both for car and light truck production and vehicle exports according to the Alabama Department of Commerce International Trade Division, with exports totaling
nearly $6.6 billion in 2012.
Nissan and Toyota have plants in Mississippi. GM, Nissan and Volkswagen have plants in Tennessee.
“The scheme directly impacted your bank account,” said FBI Criminal Investigative Division Assistant Director Ronald Hosko Thursday. “These individuals and companies drove up costs for both vehicle makers and buyers, which caused you to spend more.”
Those charged are accused of setting up phone calls and secret meetings, sometimes using code names, to rig bids, set prices, and manipulate the supply of parts to car makers.
Justice Department officials say Gary Walker, an American executive with a Japanese company operating in Michigan, admitted rigging bids to fix the prices of seat belts sold to Toyota, Nissan, Honda, and Mazda. Other defendants, such as Hitachi Automotive Systems Ltd., Mitsubishi Electric Corporation, and Jtekt Corporation worked to fix prices on starter motors, alternators, ignition coils, bearings, and other essential vehicle components.
“Some of the price-fixing conspiracies lasted for a decade or longer, and many car models were fitted with multiple parts that were fixed by the auto parts suppliers,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.
At least 20 companies and 21 auto executives have been charged in the investigation. Those companies have either pleaded guilty or agreed to plead guilty. They’ve also agreed to pay more than $1.6 billion in criminal fines. Seventeen of the executives have been sentenced to serve up to two years in prison or are awaiting sentencing.
To date the companies and executives involved and the fines and sentences included in the plea agreements are:
- Hitachi Automotive Systems Ltd. to pay a $195 million criminal fine
- Jtekt Corporation to pay a $103.27 million criminal fine
- Mitsuba Corporation to pay a $135 million criminal fine
- Mitsubishi Electric Corporation (MELCO) to pay a $190 million criminal fine
- Mitsubishi Heavy Industries Ltd. to pay a $14.5 million criminal fine
- NSK Ltd. to pay a $68.2 million criminal fine
- T.RAD Co. Ltd. to pay a $13.75 criminal fine
- Valeo Japan Co. Ltd. to pay a $13.6 million criminal fine
- Yamashita Rubber Co. Ltd. to pay a $11 million criminal fine
- Tetsuya Kunida, a Japanese citizen and former executive of a U.S. subsidiary of a Japan-based automotive anti-vibration rubber products supplier, to serve 12 months and one day in a U.S. prison and to pay a $20,000 criminal fine
- Gary Walker, a U.S. citizen and former executive of a U.S. subsidiary of a Japan-based automotive products supplier, to serve 14 months in a U.S. prison and to pay a $20,000 criminal fine.
- MELCO and Hitachi conspired with each other and other co-conspirator firms not announced yet.
Yamashita Rubber Co. is accused of entering a conspiracy to rig bids and manipulate the prices of anti-vibration rubber products sold to Honda Motor Co. Ltd., American Honda Motor Company Inc. and Suzuki Motor Corporation from at least April 2003 until May 2012.
Honda has one of three major vehicle assembly plants located in Alabama. The company produces the Odyssey minivan, Pilot SUV, Ridgeline pickup truck, Acura MDX luxury SUV at the plant in Lincoln.
The other two are the Mercedes-Benz in Vance and Hyundai in Montgomery. Mercedes produces the M-Class, R-Class, GL-Class Luxury SUV vehicles in Vance and plans to begin producing the C-Class Mercedes in 2014 and a new luxury SUV in 2015. Hyundai builds the Sonata and Elantra sedans in Alabama.
The state also has two engine assembly plants in Madison County owned by Toyota and Navistar. Toyota makes V8 engines for the Tundra and Sequoia, V6 engines for the Tundra and Tacoma, 4-cylinder engines for Camry, Highlander, RAV4, Sienna and Venza 3.5-liter V6 “2GR” engines. Navistar builds V6 and V8 diesel engines in its plant.
Automakers produced more than 880,000 cars and light-trucks in Alabama last year according to the Economic Development Partnership of Alabama.
The conspiracies, according to the FBI, affected more than $5 billion in automotive parts and more than 25 million vehicles purchased by American consumers.