Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Auto parts makers charged in occupant safety systems price fixing suit, (Jan 4, 2016)

By Linda O’Brien, J.D., LL.M.

Three Japanese automotive parts manufacturers and their domestic subsidiaries engaged in a conspiracy to fix prices in the United States for automotive occupant safety systems, according to a complaint filed in the federal district court in Detroit (Beam’s Industries, Inc. v. Takata Corporation, January 1, 2016).

Japanese companies Takata Corporation, Tokai Rika Co., Ltd., and Toyoda Gosei Co., Ltd.—and their domestic subsidiaries—manufacture, market, and supply a variety of automotive parts, including occupant safety systems for automobile manufacturers. Beam’s Industries, Findlay Industries, and NM Holdings are suppliers of automotive parts and purchased occupant safety systems from the three defendant manufacturers.

Automotive occupant safety systems are parts designed to protect drivers and passengers from bodily harm, such as seat belts, airbags, steering wheels, and safety electronic systems. Occupant safety systems are installed by original equipment manufacturers (OEMs) in new cars as part of the automotive manufacturing process.

The complaint states that the defendant manufacturers participated in a conspiracy from January 2013 through the present to fix prices, rig bids, and allocate the supply of occupant safety systems sold to automobile suppliers and manufacturers in the United States. The defendants participated in meetings and communications in furtherance of their conspiracy and intended to artificially increase the prices for all occupant safety systems.

The U.S. Department of Justice (DOJ) and various international governmental authorities are currently conducting criminal investigations into illegal price fixing and bid rigging in the automotive parts industry. In October 2013, the DOJ charged Takata with participating in a conspiracy to suppress competition by fixing the prices of certain seat belts. According to the information, Takata and its co-conspirators carried out the conspiracy by participating in meetings to discuss bids and price quotations to be submitted to certain automobile manufacturers and agreeing to allocate the supply of occupant safety systems sold to those manufacturers. Takata agreed to plead guilty and pay a $71.3 million criminal fine to the one-count criminal information.

In September 2014, the DOJ charged Toyoda Gosei Co. with participating in a conspiracy to suppress competition by agreeing to fix prices and rig bids for automotive airbags and steering wheels. Toyoda Gosei agreed to pay a $26 million criminal fine and plead guilty to the two-count criminal information.

The complaint also alleges that the structure of the occupant safety systems market in the U.S. is conductive to collusion. First, there are high barriers to entry due to high capital investment in plant and machinery and technical expertise. Second, there is inelasticity of demand for occupant safety systems, since there are no viable substitutes for these products.

The plaintiffs assert claims for horizontal price fixing in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre-judgment and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-10002-JCO-APP.

Attorneys: David H. Fink (Fink + Associates Law), Gregory P. Hansel (Preti Flaherty, Beliveau & Pachios LLP), Joseph C. Kohn (Kohn Swift & Graf, P.C.), Steven A. Kanner (Freed Kanner London & Millen LLC), and Eugene A. Spector (Spector Roseman Kodroff & Willis, P.C.) for Beam’s Industries, Inc., Findlay Industries, Inc., and MN Holdings Company, LLC.

Companies: Beam’s Industries, Inc.; Findlay Industries, Inc.; MN Holdings Company, LLC; Takata Corporation; TK Holdings, Inc.; Tokai Rika Co., Ltd.; Tram, Inc.; Toyoda Gosei Co., Ltd.; Toyoda Gosei North America Corp.; TG Missouri Corp.

News: Antitrust MichiganNews