Seat belt company buckles in antitrust case

October 16, 2013

The United States Justice Department’s largest criminal antitrust investigation isn’t concerned with Microsoft or Google – it’s over seat belts, airbags, and other auto necessities. The New York Times

Takata, which just lost the biggest antitrust case in U.S. history, is still turning a profit. From Benjamin Goodger.

The investigation involved over 12 separate price fixing cases in several countries, started in January 2000, and has issued $1.6 billion in fines since 2011. Scott Hammond, of the U.S. Justice Department said in September, “Every time we discover a conspiracy involving the automotive industry, we seem to find another one.” The investigation discovered price fixing of over 30 different kinds of car parts, including seat belts, air-conditioning systems, radiators, power window motors, windshield wipers, and power steering components.

Seat belt costs have been passed on to consumers

The price fixing has affected not only car companies, but consumers who pay higher prices as a result. “The scheme directly impacted your bank account,” explained FBI Criminal Investigative Division Assistant Director Ronald Hosko at a press conference, according to Motor Trend Magazine. “These individuals and companies drove up costs for both vehicle makers and buyers, which caused you to spend more.”

Of those individuals and companies, 20 companies and 21 executives have already pleaded guilty in the U.S. Just this past September, nine Japanese automotive suppliers and two former executives pleaded guilty to conspiracy and agreed to fork over more than $740 million in fines. (The case has already made headlines, and history: Two years ago, Japanese company Furukawa Electric paid the largest antitrust fine in U.S. auto industry history for its role in price fixing electric wire harnesses.)

The price-fixed auto parts were sold to U.S. automakers as well as U.S. subsidiaries of Asian automakers, including Fiat SpA affiliate Chrysler Group, Ford and General Motors, Honda, Mazda Motor Corp, Mitsubishi, Nissan, Toyota, and Subaru.

Company officials to be fined, but company still turns profit

According to the Justice Department, auto parts company execs met “face to face” or spoke by phone to “reach collusive agreements, reported Reuters. American Gary Walker, a former sales director at Takata, will pay a $20,000 fine and spend 14 months in prison on a one-count felony charge that he “engaged in a conspiracy to fix the prices of seat belts” sold to a selection of those automakers, “collud[ing]… to rig bids, fix prices and allocate supply.”

In addition to the $71.3 million fine, Takata’s chairman and CEO, Shigehisa Takada, will receive a 30 percent salary cut; other directors will receive a 15 percent cut. The company itself will experience a $72 million loss in its July-September earnings; still, however unbelievably, Takata does expect a net profit for the financial year ending March 2014.