Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Consumers claim Nishikawa Rubber conspired to fix auto parts prices, (Feb 9, 2016)

By Linda O’Brien, J.D., LL.M.

Japanese auto parts manufacturer Nishikawa Rubber Company and its domestic subsidiaries have engaged in a conspiracy to fix the prices of and rig bids for body sealing products sold in the United States, according to a complaint filed in the federal district court in Detroit (Ascher v. Nishikawa Rubber Company, February 8, 2016).

Body sealing products are rubber automotive component parts that seal doors, hoods, and other automotive compartments and prevent weather, wind, and debris from entering the vehicle. Nishikawa Rubber Company, based in Hiroshima, Japan, and its domestic subsidiary and joint venture, Nishikawa of America, Inc. and Nishikawa Cooper LLC, manufacture, market, and sell body sealing products in the United States.

Halley Ascher and 53 other consumers indirectly purchased or leased a new passenger automobile which included body sealing products manufactured by Nishikawa 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 October 2015, the U.S. Department of Justice Antitrust Division announced that a federal grand jury in Covington, Kentucky, returned the one-count indictment against Nishikawa employees Keiji Kyomoto, Mikio Katsumaru, and Yuji Kuroda for conspiring to rig bids for and fix the prices of body sealing products sold to auto makers over an eight-year period. To date, 38 companies and 58 individuals have been charged in the Antitrust Division’s ongoing investigation into price fixing of automotive parts. Each of the 38 companies has either pleaded guilty or agreed to plead guilty, and together has agreed to pay more than $2.6 billion in criminal fines.

There are substantial barriers to entry into the body sealing products market, the complaint asserts. A new entrant would allegedly face costly and lengthy start-up costs, including manufacturing plants and equipment, energy, transportation, distribution channels, and building customer relationships. Nishikawa owns multiple patents related to the manufacture of body sealing products, which purportedly place a significant burden on new entrants. OEMs cannot change suppliers easily since they design their vehicles so the body sealing products they purchase are integrated with other components. Furthermore, demand for body sealing products is inelastic because there are no close substitutes for these products, the complaint alleges.

The complaint also states that the criminal activity of the defendants has a significant impact on automotive manufacturers and affected every market where automobiles are manufactured or sold. As a direct result of the defendants’ alleged price fixing conspiracy, consumers purportedly paid artificially inflated prices for body sealing products.

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, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-10456-LJM-EAS.

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: Nishikawa Rubber Company; Nishikawa of America, Inc.; Nishikawa Cooper LLC

News: Antitrust MichiganNews