Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Truck and equipment dealers allege price fixing conspiracy among foreign automotive wire harness products manufacturers, (Nov 24, 2014)

By Linda O’Brien, J.D., LL.M.

Foreign manufacturers of wire harness systems for motor vehicles and their domestic subsidiaries and affiliates have engaged in a conspiracy to fix the prices of wire harness products sold in the United States and wrongfully concealed their conspiracy, according to a complaint filed in the federal district court of Detroit (In re Automotive Parts Antitrust Litigation, November 21, 2014).

Wire harnesses are systems of electrical and data cables, wires, and connectors that transmit informational signals and electrical power in motor vehicles. Denso Corp.; Fujikura, Ltd., Furukawa Electric Co., Ltd., Lear Corporation, Leoni Wiring Systems, Inc., Sumitomo Wiring Systems, Ltd., K&S Wiring Systems, Inc., Yazaki Corporation, TRAM, Inc., Tokai Rika Co., Ltd., G.S. Electech, Inc., Mitsubishi Electric Corporation, Asti Corporation, and Chiyoda Manufacturing Corporation directly or through their domestic subsidiaries and affiliates manufacture and sell vehicle wire harness systems throughout the United States.

Rush Truck Centers of Arizona, Inc. and 17 other businesses are dealers of trucks, buses, commercial and railway vehicles, and construction and mining equipment that directly purchase and sell trucks and equipment containing wire harness products manufactured by one or more of the defendants.

The complaint states that the global vehicle wire harness system market size had reached $21.9 billion in 2009. The structure and characteristics of the market are conducive to a price fixing agreement and made collusion particularly attractive in the market. Specifically, there are high barriers to entry as new entrants face high start-up costs, building a distribution infrastructure, obtaining skilled labor, and developing long-standing customer relationships. There is inelasticity in demand because there are no close substitutes for these products. Further, the market for vehicle wire harness system market is highly concentrated since five of the defendants control 69 percent of the global market.

The defendants had opportunities to conspire by attending industry events and through joint ventures. The conspirators participated in meetings and improper communications under the guise of legitimate business contacts to discuss and perform acts necessary for the operation of the conspiracy, the complaint alleges.

According to the complaint, in 2010, competition authorities in the United States, European Union, and Japan began investigations into a conspiracy in the market for vehicle wire harness systems. Furukawa Electric and three of its executives, Yazaki Corporation and four of its executives, Fujikura, Inc., and G.S. Electech Inc. have pleaded guilty to participating in the vehicle wire harness system cartel and agreed to pay fines related to the unlawful conduct. The ongoing investigation of price fixing and bid rigging in the vehicle parts industry has yielded approximately $2.4 billion in criminal fines.

In September 2011, the U.S. Department of Justice Antitrust Division announced that a Japanese company and several executives pleaded guilty to criminal price fixing and bid-rigging in connection with the sale of wire harness products. The plaintiffs did not discover the relevant facts despite the exercise of due diligence until September 2011 when the guilty plea became public. Thus, any applicable statute of limitations to the plaintiffs’ claims was tolled through at least September 2011, the complaint states.

The defendants’ price fixing conspiracy has artificially inflated prices for vehicle wire harness systems and entities purchasing vehicles with such systems have been deprived of free and open completion. The impact of the defendants’ conspiracy on the plaintiffs’ businesses has been substantial. Truck and equipment dealers have had to absorb a significant portion of the overcharges that they paid due to the defendants’ illegal conduct and did not “pass on” all of the overcharges to end users, the complaint charges.

The plaintiffs assert claims for unfair competition, unjust enrichment and 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, attorneys’ fees, and any other just and proper relief.

The case is No. 12-md-02311.

Attorneys: Wayne A. Mack and J. Manly Parks (Duane Morris LLP) for Rush Truck Centers of Arizona, Inc.

Companies: Rush Truck Centers of Arizona, Inc.; Denso Corp.; Fujikura, Ltd.; Furukawa Electric Co., Ltd.; Lear Corporation; Leoni Wiring Systems, Inc.; Sumitomo Wiring Systems, Ltd.; K&S Wiring Systems, Inc.; Yazaki Corporation; TRAM, Inc.; Tokai Rika Co., Ltd.; G.S. Electech, Inc.; Mitsubishi Electric Corporation; Asti Corporation; Chiyoda Manufacturing Corporation

News: Antitrust MichiganNews