Antitrust Law Daily Wrap Up, ANTITRUST NEWS: California claims Mitsubishi engaged in auto parts price fixing conspiracy, (May 4, 2016)

By Linda O’Brien, J.D., LL.M.

A Japanese manufacturer of wire harness systems, alternators, starters, ignition coils, HID ballasts, electronic powered steering assemblies, fuel injection systems, and value timing control devices for motor vehicles and its domestic subsidiaries have engaged in a conspiracy to rig bids and fix the prices of those parts sold in the United States, according to a complaint filed by the California Attorney General in the federal district court of Flint, Michigan (In re Automotive Parts Antitrust Litigation, May 3, 2016).

Japanese-based Mitsubishi Electric Corporation and its domestic subsidiaries manufacture and sell automobile parts to automobile manufacturers for installation in vehicles made and sold in the United States. The State of California and its state agencies have purchased automobile parts and vehicles with automobile parts made by Mitsubishi.

According to the complaint, from at least January 2000 and continuing until February 2010, the defendants conspired to suppress and eliminate competition by agreeing to rig bids and fix prices for automotive wire harness systems, alternators, starters, ignition coils, HID ballasts, electronic powered steering assemblies, fuel injection systems, and value timing control devices. Since at least 2010, competition authorities in the United States, the European Union, and Japan have pursued investigations into a conspiracy in the market for automobile parts. In September 2013, the U.S. Department of Justice Antitrust Division announced that Mitsubishi agreed to plead guilty to price fixing and bid-rigging in connection with the sale of certain automobile parts and to pay a $190 criminal fine for its role in the conspiracy.

The structure and characteristics of the market are conducive to a price fixing agreement and made collusion particularly attractive in the market, the complaint states. Specifically, there are high barriers to entry as new entrants face high start-up costs associated with manufacturing plants and equipment, energy, transportation, distribution infrastructure, skilled labor, and developing long-standing customer relationships. There allegedly is inelasticity in demand. An increase in price for the products created only a small change in the quantity demanded of that product, the state charged.

The complaint also alleges that, throughout the duration of the conspiracy, the defendants affirmatively and fraudulently concealed their unlawful conduct. The plaintiff did not discover the relevant facts, despite the exercise of due diligence, until September 2013 when the guilty plea became public. Thus, any statute of limitations applicable to the plaintiff’s claims was tolled through at least September 2013.

The defendants’ price fixing conspiracy has artificially inflated prices for automobile wire harness systems, alternators, starters, ignition coils, HID ballasts, electronic powered steering assemblies, fuel injection systems, and value timing control devices. Entities purchasing vehicles with such components have been deprived of free and open completion and were forced to pay supra-competitive prices for the parts and for vehicles installed with those parts, the complaint charges.

The Attorney General asserts claims for unjust enrichment, unfair competition, and violations of Section 1 of the Sherman Act and California’s Cartwright Act. The action seeks declaratory and injunctive relief, 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-11591-LVP-SDD.

Attorneys: Kamala D. Harris, Attorney General, State of California.

Companies: Mitsubishi Electric Corporation; Mitsubishi Electric US Holdings, Inc.; Mitsubishi Electric Automotive America, Inc.

News: Antitrust MichiganNews