Antitrust Law Daily Wrap Up, ANTITRUST NEWS: California AG sues T.RAD Co. over auto parts price fixing conspiracy, (Sep 7, 2016)

By Linda O’Brien, J.D., LL.M.

Japanese auto parts manufacturer T.RAD Co., Ltd. and its domestic subsidiary have engaged in a conspiracy to fix the prices of and rig bids for radiators and automatic transmission fluid warmers installed in cars sold in the United States, according to a complaint filed by California Attorney General Kamala Harris in the federal district court of Detroit (In re Automotive Parts Antitrust Litigation, September 6, 2016).

T.RAD Co., Ltd., based in Tokyo, Japan, and its domestic subsidiary T.RAD North America, manufacture and sell radiators and automatic transmission fluid warmers to automobile manufacturers for installation in vehicles manufactured and sold in the United States.

According to the complaint, in 2010 authorities in the United States, the European Union, and Japan began antitrust investigations into conspiracies by suppliers of automotive parts to fix prices for automotive parts from at least as early as November 2002 until at least February 2010. In September 2013, the U.S. Department of Justice Antitrust Division announced that T.RAD Co., Ltd. agreed to plead guilty and pay a $13.75 million criminal fine for its role in the conspiracy to fix the prices of automotive parts, including the named parts.

The structural characteristics of the automotive parts markets are conducive to collusion. There are substantial barriers to entry into the radiator and automatic transmission fluid warmers market. A new entrant would face substantial start-up costs, including manufacturing plants and equipment, energy, transportation, distribution channels, and building customer relationships. Furthermore, demand for the named auto parts is inelastic because an increase in the price of the product creates only a small change in the quantity demanded for that product, the complaint alleges.

The complaint also states that the unlawful conduct of the defendants has restrained fair and open competition for the named auto parts and caused the State of California to pay artificially inflated prices for the auto parts installed in automobiles purchased by the State than it would have paid in the absence of the conspiracy.

The attorney general asserts claims for unjust enrichment as well as violations of Section 1 of the Sherman Act and California’s Cartwright Act and Unfair Competition Law. The action seeks declaratory and injunctive relief, restitution, disgorgement, civil penalties, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-13199-LJM-APP.

Attorneys: Kamala D. Harris for the State of California.

Companies: T.RAD Co., Ltd.; T.RAD North America, Inc.

News: Antitrust MichiganNews