Three Furukawa Electric executives have agreed to serve jail terms in the US following the Department of Justice’s (DoJ) probe into price-fixing and bid-rigging in the automotive parts industry.
Furukawa has been slapped with a huge US$200m fine in a plea bargain, with the DoJ noting the “co-conspirators” had agreed to allocate wire harnesses on a model-by-model basis and had co-ordinated price adjustments requested by automobile manufacturers.
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The company acknowledged allegations in criminal proceedings relating to cartel activities with unnamed “certain competitors” for automotive wire harness and related products.
The DoJ said Furukawa participated in the conspiracy from at least as early as January 2000 until at least January 2010.
A statement from the Federal Bureau of Investigation (FBI) noted the three executives, who are Japanese nationals, have also agreed to plead guilty and to serve prison time in the US ranging from a year and a day to 18 months. These are the Department’s first charges as a result of its ongoing international cartel investigation of price fixing and bid rigging in the auto parts industry.
According to four separate one-count felony charges filed in the US District Court for the Eastern District of Michigan in Detroit, Furukawa and its executives – Junichi Funo, Hirotsugu Nagata, and Tetsuya Ukai – engaged in a conspiracy to “rig bids for and to fix, stabilise, and maintain the prices of automotive wire harnesses and related products sold to customers in the US and elsewhere.”
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By GlobalDataAutomotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars.
“As a result of this international price-fixing and bid-rigging conspiracy, automobile manufacturers paid non-competitive and higher prices for parts in cars sold to US consumers,” said acting assistant attorney general in charge of the DoJ’s Antitrust Division, Sharis Pozen.
“This cartel harmed an important industry in our nation’s economy and the Antitrust Division with the Federal Bureau of Investigation will continue to work together to ensure that these kinds of conspiracies are stopped.”
According to the plea agreements, which are subject to court approval, Furukawa, Funo, Nagata, and Ukai have all agreed to assist the department in its ongoing investigation into the automotive parts industry.
Furukawa has agreed to plead guilty for its role in a conspiracy to rig bids for and to fix the prices of the sale of automotive wire harnesses and related products sold to automobile manufacturers in the US and elsewhere.
The department said Furukawa participated in the conspiracy from at least as early as January 2000, until at least January 2010.
According to the plea agreements, Funo, Nagata, and Ukai have agreed to plead guilty for their roles in the conspiracy and to serve prison time in the US of a year and a day, 15 months, and 18 months, respectively.
The department said that Funo, Nagata, and Ukai participated in the conspiracy at various times from at least as early as April 2003, until at least July 2009. Funo worked in the Honda sales division of Furukawa in Japan and in the US as a sales representative, assistant general manager and manager.
Nagata was employed by a Furukawa subsidiary in the US as a general manager of sales and chief financial officer and by a related joint venture as marketing manager. Ukai worked in Japan in the Honda sales division of Furukawa as a manager, unit chief, and general manager.
During at least part of the conspiracy period, Funo and Nagata were employed and engaged in price fixing in the Detroit area.
According to Court documents, Furukawa, Nagata, Funo, Ukai, and their co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to allocate the supply of wire harnesses and related products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the US and elsewhere.
They sold automotive wire harnesses and related products to automobile manufacturers at non-competitive prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.
Furukawa is charged with price fixing in violation of the Sherman Act, which carries a maximum US$100m criminal fine for a corporation. Funo, Nagata, and Ukai are also charged with a violation of the Sherman Act, which carries a maximum sentence of ten years in prison and a US$1m criminal fine for an individual.
The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s charges are the first to arise from an ongoing federal antitrust investigation into bid rigging, price fixing, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section, and the FBI’s Detroit Field Office.
“When companies partner to control and price fix bids or contracts, it undermines the foundation of the US economic system,” said FBI special agent in charge Andrew Arena.
“The FBI is committed to aggressively pursuing any company involved in antitrust crimes.”
