Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Automotive OEMs charge Japanese power steering suppliers with price-fixing conspiracy, (Jun 17, 2016)

By Edward L. Puzzo, J.D.

Japanese suppliers of motor vehicle Electric Powered Steering Assemblies engaged in a multi-year price-fixing and big-rigging conspiracy that damaged a class of direct purchasers, including most of the largest automotive manufacturers in the United States, according to a complaint filed in the federal district court in Detroit (Saratoga Lane, LLC v. JTEKT Corporation, June 14, 2016).

Saratoga Lane, LLC brought a putative class action against Japanese manufacturers JTEKT, Showa, and Yamada, and their American subsidiaries, charging them with engaging in a conspiracy to rig bids and fix prices of motor vehicle Electric Powered Steering Assemblies, in violation of the Section 1 of the Sherman Act and Section 4 of the Clayton Act.

The proposed class consists of direct purchasers of motor vehicle Electric Powered Steering Assemblies in the United States—including original equipment manufacturers (OEMs) General Motors, Ford, Chrysler, Nissan, Toyota, BMW, Honda, Hyundai, Kia and Mercedes-Benz—during the period of January 2005 to September 2012.

Collusion plausible. The complaint alleges that certain economic characteristics of the market for Electric Powered Steering Assemblies make collusion among suppliers in that market plausible: (1) high barriers to entry; (2) price inelasticity; and (3) opportunities for collusion. Entry into this market would require expenditure of millions of dollars of start-up costs, and assured relationships with significant customers to justify those costs, the complaint maintains. Further, since there are no viable substitute products for Electric Powered Steering Assemblies, pricing is highly inelastic. Finally, industry events provided myriad opportunities to meet, conspire, and share information.

Conspiracy alleged. The complaint alleges that the defendants agreed during meetings and communications to allocate among themselves the business of supplying Electric Powered Steering Assemblies sold in the United States, and manipulated the OEMs' Request for Quotation process to conspire to fix their prices and allocate sales of the Assemblies.

Effect of conspiracy. The complaint allege that the effect of the conspiracy has been to suppress or eliminate price competition for the Assemblies, fixing their prices at supra-competitive levels, and damaging the class members by causing them to pay higher prices for the Assemblies than they would have in the absence of the conspiracy.

The complaint alleges that it is timely, the plaintiff class having no knowledge of the anti-competitive conduct until the September 2013 announcement by the Department of Justice of JTEKT's agreement to pay a $103 million criminal fine for price-fixing.

In addition to certification as a class action, the complaint seeks a ruling that defendants' behavior was a per se violation of Section 1 of the Sherman Act, treble damages, a permanent injunction, attorneys fees, and pre- and post-judgment interest.

The case is Civil Action No. 2:16-cv-12181-PDB-DRG.

Attorneys: Darryl Bressack (Fink Associates Law) for Saratoga Lane, LLC.

Companies: Saratoga Lane, LLC; JTEKT Automotive North America, Inc.; American Showa, Inc.; Yamada North America, Inc.

News: Antitrust MichiganNews