A Closer Look at Auto Parts Price Fixing
— by Justin Banner
There was recent news of China digging into the price fixing and monopolistic practices of major auto manufacturers within the communist state. That included Lexus/Toyota, Audi, Chrysler, and Daimler and their repair parts side of their businesses. However, it’s not uncommon in China or with automakers and there have been other sources that the U.S. has even targeted. Here are some of the companies and issues that were taken.
To start is the class-action lawsuits of lithium-ion battery manufactures LG, Panasonic, Samsung, and Sony over the artificial costs of those batteries in 2012. The evidence that many claim is that there have been more and more companies entering into the lithium-ion battery market and the pricing has remained in a steady incline with that and the economic downturn of 2008. The price-fixing accusation has resulted in 10 class-action lawsuits and is still ongoing to this day.
In September of 2013, the Department of Justice hit nine Japanese parts suppliers with fines related to price-fixing. Those companies included Mitsubishi Electric Corporation, Hitachi Automotive Systems Limited, Mitsuba Corporation, Jtekt Corporation, Mitsubishi Heavy Industries Limited, NSK Limited, T. RAD Company Limited, and two others resulted in $740 million in fines over the $5 billion of inflated parts costs and 17 executives based in the U.S. headed to prison.
Then in November of 2013, Toyo Tires pleaded guilty to price-fixing and paid a fine of $120 million. It wasn’t over the price of Toyo Proxes tires, though, but anti-vibration rubber parts, CV boots, and other non-tire rubber parts.
This year in Europe, the EU cracked down on anti-competitive practices in exhaust system suppliers that included one based here in the U.S. French firm Faurecia, German firm Eberspaecher Group, and U.S. firm TenneCo, have been named so far and more could be coming as the investigation continues. There was also a raid against Schaeffler in Germany and SKF in Sweden along with three Japanese Suppliers for ball bearing price-fixing with fines totaling $1.3-billion.
Some automaker executives speaking to Reuters say this isn’t abnormal, but instead, “… typical business conditions we deal with routinely around the world.” It makes you wonder how much that regulator actually costs versus what you just paid for it, now doesn’t it?