Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Auto parts maker INOAC Corp. allegedly engaged in price fixing conspiracy, (Feb 10, 2016)
Law Firms Mentioned:Cotchett, Pitre & McCarthy, LLP | Robins Kaplan LLP | Susman Godfrey L.L.P. | The Miller Law Firm, P.C.
Organizations Mentioned:Cotchett Pitre & McCarthy, LLP | INOAC Corporation | INOAC Group North America LLC | INOAC USA Inc. | Robins Kaplan, LLP | Susman Godfrey, LLP | U.S. Department of Justice
By Linda O’Brien, J.D., LL.M.
Japanese auto parts manufacturer INOAC Corporation and its domestic subsidiaries have engaged in a conspiracy to fix prices of, and rig bids for, automotive plastic interior trim products sold in the United States, according to a complaint filed in the federal district court of Detroit (Ascher v. INOAC Corporation, February 9, 2016).
Interior trim products are molded automotive component parts made from plastics, polymers, elastomers, and resins that are used in automotive interiors. INOAC Corporation, based in Nagoya, Japan, and its domestic subsidiaries—INOAC Group North America LLC and INOAC USA Inc.—manufacture, market, and sell interior trim products in the United States.
Halley Ascher and 53 other consumers indirectly purchased or leased a new passenger automobile, which included interior trim products manufactured by INOAC as a component part.
According to the complaint, in 2010, authorities in the United States, Europe, Canada, and Japan began antitrust investigations aimed at suppliers of automotive parts. The investigations originated after several European original equipment manufacturers (OEMs) brought complaints to the European Commission.
In November 2015, the U.S. Department of Justice Antitrust Division announced that INOAC agreed to plead guilty and pay a $2.5 million criminal fine for its role in a conspiracy to fix prices and rig bids on certain plastic interior trim automotive parts installed in cars sold to U.S. consumers. The charge stated that the conspiracy lasted from June 2004 through September 2012.
The information, filed in the federal district court in Covington, Kentucky, stated that the conspiracy consisted of an agreement among INOAC and its co-conspirators to allocate sales, rig bids, and fix prices of automotive interior trim parts sold to Toyota in the U.S. and elsewhere. According to the information, INOAC and its co-conspirators carried out their scheme by (1) participating in meetings, conversations, and other communications to discuss the bids and price quotations to be submitted to Toyota in the U.S. and elsewhere; (2) exchanging information on bids and price quotations; and (3) submitting bids and price quotations to Toyota in accordance with the agreement.
The structure and characteristics of the interior trim products market in the U.S. is conducive to a price fixing agreement, the plaintiffs maintained. First there are substantial barriers into the market. A new entrant would face high and lengthy start-up costs, including manufacturing plants and equipment, energy, transportation, distribution channels, and building customer relationships. INOAC owns multiple patents related to the manufacture of body sealing products, which place a significant burden on new entrants. OEMs allegedly cannot change suppliers easily since they design their vehicles so the interior trim products they purchase are integrated with other components. Second, demand for interior trim products is highly inelastic because there are no close substitutes for these products, the complaint alleges.
The complaint also states that the conduct of the defendants increased costs for consumers, since the prices were illegally fixed on automotive parts. The defendants’ price fixing conspiracy purportedly has restrained price competition, fixed the prices of interior trim products at artificially inflated levels, deprived consumers of free and open competition, and caused consumers to pay artificially inflated prices.
The plaintiffs assert claims for unjust enrichment and violations of Section 1 of the Sherman Act and state antitrust and consumer protection statutes. The action seeks declaratory and injunctive relief, restitution, disgorgement, treble damages, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.
The case is No. 2:16-cv-10461-GCS-RSW.
Attorneys: E. Powell Miller (The Miller Law Firm, P.C.), Hollis Salzman (Robins Kaplan LLP), Marc M. Seltzer, Terrell W. Oxford, and E. Lindsay Calkins (Susman Godfrey L.L.P.), and Steven N. Williams (Cotchett, Pitre & McCarthy, LLP) for Halley Ascher.
Companies: INOAC Corporation; INOAC Group North America LLC; INOAC USA Inc.
News: Antitrust MichiganNews