Antitrust Law Daily Wrap Up, TOP STORY: Japanese shipper NYK will plead guilty to price fixing, pay $59.4 million fine, (Dec 30, 2014)

By Jeffrey May, J.D.

The Department of Justice Antitrust Division has secured an agreement from Japanese transportation company Nippon Yusen Kabushiki Kaisha (NYK) to plead guilty and to pay a $59.4 million criminal fine for its involvement in a conspiracy in the international ocean shipping services market. Yesterday, a one-count felony charge was filed against the company in the federal district court in Baltimore (U.S. v. Nippon Yusen Kabushiki Kaisha, Case 1:14-cr-00612-GLR).

According to the charge, NYK conspired to suppress and eliminate competition by allocating customers and routes, rigging bids, and fixing prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States. NYK's participation in the conspiracy lasted from approximately February 1997 until about September 2012.

Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and rolled off of an ocean-going vessel. Examples of this type of cargo include new and used cars and trucks and construction and agricultural equipment.

“This is another step in the effort to restore competition in the ocean shipping industry to the benefit of U.S. consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice Antitrust Division, in a statement announcing the action. “Including today’s charges, three companies have now agreed to plead guilty to participating in this long-running conspiracy. We are not done. Our investigation is ongoing.”

NYK reaction. Today, NYK disclosed that the company and its subsidiaries have been fully cooperating with the Justice Department’s investigation since it commenced in September 2012. According to the company, the plea agreement requires that NYK and its subsidiaries will continue to cooperate fully with the investigation. NYK also expressed regret for its conduct and pledged “to make a best effort to prevent recurrence and to recover trust as a company.”

Ongoing investigation. NYK is the third company to agree to plead guilty in the ongoing investigation, bringing the total agreed-upon fines to over $135 million, according to the Justice Department. The Antitrust Division announced its first charge in the ocean shipping probe in February 2014 against Chilean shipping company Compañía Sud Americana de Vapores S.A. (CSAV). CSAV agreed to pay an $8.9 million fine for its involvement in the conspiracy.

Japanese shipping company Kawasaki Kisen Kaisha Ltd. (K-Line) was the second company charged in the investigation. K-Line was sentenced to pay a $67.7 million criminal fine in November after pleading guilty for its role in the conspiracy. Just last week, a K-Line employee, Hiroshige Tanioka, also agreed to plead guilty to similar charges contained in one-count felony information.

NYK and K-Line were among the Japanese transportation companies fined by the Japan Fair Trade Commission (JFTC) earlier this year for conspiring to fix freight rates for international ocean shipping services for automobiles. In a March 2014 announcement, the JFTC said that it had fined K-Line, NYK, Wallenius Wilhelmsen Logistics, AS, and Nissan Motor Car Carrier Co., Ltd. a total of more than 22.7 billion yen (approximately U.S. $221.7 million). It also issued cease and desist orders requiring the companies to refrain from the challenged conduct. The conspiracy was alleged to have taken place from around January 2008 until September 2012.

Companies: Kawasaki Kisen Kaisha, Ltd.; Nippon Yusen Kabushiki Kaisha; Wallenius Wilhelsen Logistics AS; Compania Sud Americana De Vapores S.A.; Nissan Motor Car Carrier Co., Ltd.

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