Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Distributor targets foreign auto parts makers in price fixing suit, (Oct 1, 2015)

By Linda O’Brien, J.D., LL.M.

Global automotive parts manufacturers Hitachi, Denso, Aisan Industry, and Mitsubishi engaged in a conspiracy with other manufacturers and suppliers to fix prices for fuel injections systems sold in the United States, according to a complaint filed in the federal district court in Flint, Michigan (Irving Levine Automotive Distributors, Inc. v. Aisan Industry, Co., Ltd., September 29, 2015).

Japanese companies Aisan Industry Co., Ltd., Hitachi Automotive Systems, Ltd., Denso Corporation, Keihin Corporation, Maruyasu Industries Co., Ltd. Mikuni Corporation, Mitsuba Corporation, Mitsubishi Electric Corporation; Korean company Hyundam Industrial Co., Ltd.; and German company Robert Bosch GmbH, and their domestic subsidiaries, manufacture and supply a variety of automotive parts, including fuel injection systems. Irving Levine Automotive Distributors, Inc. is a distributor of motor vehicle parts and accessories.

A fuel injection system admits fuel or a fuel/air mixture into engine cylinders and may include fuel injectors, high pressure pumps, fuel pumps, pressure regulators, electronic throttle motors, and other components sold as a unitary system, part of an engine management system, or as separate components.

The complaint states that the U.S. Department of Justice (DOJ) is currently conducting a broad criminal investigation into illegal price fixing and bid rigging in the automotive parts industry. In September 2013, the DOJ announced that Hitachi agreed to pay a $195 million fine and plead guilty to a one count felony charge for its role in conspiracies to fix prices and rig bids for automotive parts sold to automobile manufacturers Ford, General Motors, Honda, Nissan, and Toyota from January 2000 until at least February 2010.

In September 2014, the DOJ announced that it had charged four Hitachi executives with conspiring to fix the prices of auto parts, including fuel injection systems, sold to a number of auto manufacturers in the United States and abroad. The executives obstructed the department’s investigation into the company’s criminal conduct, according to the complaint.

The complaint charges that the defendant manufacturers and others participated in a conspiracy to suppress competition in the automotive parts industry by agreeing to fix prices and allocate the supply of fuel injection systems sold to automobile manufacturers in the U.S. As a result of their unlawful conduct, auto part distributors and other customers paid artificially-inflated prices for fuel injection systems they purchased.

The complaint also alleges that the structure of the fuel injection system market in the U.S. is conductive to collusion. First, it claims that there are high barriers to entry, including significant start-up costs associated with transportation, electricity, distribution infrastructure, labor, and the establishment of customer relationships. Second, it alleges that there is inelasticity of demand for fuel injection systems since there are no viable substitutes for these products. Third, it maintains that the defendants attended industry events that created opportunities to conspire.

The plaintiffs had no knowledge of the conspiracy until September 2013, when the DOJ publicly announced the filing of its criminal information against Hitachi. There was no information in the public domain to indicate that any one of the defendants was involved in a fuel injection systems price fixing conspiracy. Moreover, the defendants concealed and carried out the conspiracy in a manner that precluded detection and publicly represented that their pricing and bidding activities were unilateral, rather than based on anticompetitive agreements. Such fraudulent concealment and false representations tolled the statute of limitations applicable to the plaintiffs’ claims, the complaint alleges.

The plaintiff asserts claims for violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 4:15-cv-13423-TGB-MKM.

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), Eugene A. Spector (Spector Roseman Kdofroof & Willis, P.C.), Irwin B. Levin (Cohen & Malad, LLP), Manuel J. Dominguez (Cohen Milstein), Solomon B. Cera (Cera LLP), and Carl E. Person for Irving Levine Automotive Distributors, Inc.

Companies: Irving Levine Automotive Distributors, Inc.; Aisan Industry Co., Ltd.; Hyundam Industrial Co., Ltd.; Hitachi Automotive Systems, Ltd.; Denso Corporation; Keihin Corporation; Maruyasu Industries Co., Ltd.; Mikuni Corporation; Mitsuba Corporation; Mitsubishi Electric Corporation; Robert Bosch GmbH

News: Antitrust MichiganNews