Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Hitachi, Mitsubishi among auto parts makers charged in price-fixing suit, (Oct 16, 2015)

By Michael Menzhuber, J.D., LL.M.

Global automotive parts manufacturers, including Hitachi, Denso, and Mitsubishi, engaged in a conspiracy with other manufacturers and suppliers to fix prices for alternators sold in the United States, according to an automotive parts distributor’s class action complaint filed in the federal district court in Flint, Michigan (Irving Levine Automotive Distributors, Inc. v. Hitachi, Ltd., October 15, 2015).

Japanese companies Hitachi, Ltd., Hitachi Automotive Systems, Ltd., Denso Corporation; Mitsubishi Electric Corporation; Mitsuba Corporation; and German company Robert Bosch GmbH; and their domestic subsidiaries (collectively, “defendants”), manufacture and supply a variety of automotive parts, including alternators. Irving Levine Automotive Distributors, Inc. (plaintiff) is a distributor of motor vehicle parts and accessories.

The complaint charges that the defendants participated in a conspiracy to rig bids for and to raise, fix, maintain, or stabilize the prices of alternators in the U.S. As a result of their unlawful conduct: (1) price competition has been restrained, suppressed, or eliminated with respect to alternators; (2) the prices of alternators have been raised, fixed, maintained, or stabilized at supra-competitive levels; and (3) the purchasers of alternators have been deprived of free and open competition in the alternators market.

The complaint also alleges that the structure of the alternator market in the U.S. is conductive to collusion. First, 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, there is inelasticity of demand for alternators since there are no viable substitutes for these products. Third, the defendants attended industry events that created opportunities to conspire.

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 plaintiff 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 an alternator 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 number is 15-cv-13634.

Attorneys: David H. Fink (Fink + Associates Law), Gregory P. Hansel, Randall B. Weill, Jonathan G. Mermin, and Michael S. Smith (Preti, Flaherty, Beliveau & Pachios LLP), Joseph C. Kohn, William E. Hoese, and Douglas A. Abrahams (Kohn, Swift & Graf, P.C.), Steven A. Kanner, William H. London, and Michael Moskovitz (Freed Kanner London & Millen LLC), Eugene A. Spector, William G. Caldes, Jonathan M. Jagher, and Jeffrey L. 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.; Hitachi, Ltd.; Hitachi Automotive Systems, Ltd.; Denso Corporation; Mitsubishi Electric Corporation; Robert Bosch GmbH; Mitsuba Corporation

News: Antitrust MichiganNews