Supplier scandal is lawyers' dream (but automakers don't need help)
 | Philip Nussel is managing editor of autonews.com. |
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If you're an auto industry litigator, especially in the Detroit area, congratulations on your good fortune in securing perhaps years of top-billing legal work.
As Crain's Detroit Business has reported, the $29 billion-a-year wire harness segment of the supply chain has been the subject of a comprehensive global price-fixing probe.
Two Furukawa Electric Co. executives in the United States are going to jail, and the company is paying a $200 million fine -- a record antitrust fine for the auto industry. Several other suppliers have been implicated in the resulting civil litigation and been the target of law enforcement raids in the United States, Europe and Japan.
Two Detroit lawyers in the epicenter of the expanding scandal said last week that this is just the tip of the iceberg. They predicted more executives could go to jail and fines could get into billions of dollars.
And it's clear the probe goes beyond wire harnesses. At least two airbag manufacturers, TRW and Autoliv, have acknowledged being included in the probe by U.S. and European authorities of anti-competitive behavior.
The fallout from the Furukawa prosecution has spawned 11 federal lawsuits, including three by dealership groups.
Predictably, plaintiffs' lawyers smell a golden opportunity to extract cash from the industry. And, unfortunately or fortunately, depending on where you stand, automakers, dealers, consumers and others all will have rightful claims.
But the most interesting part of this legal morass will be what the manufacturers will do. One would think they're the real victims, with the most compelling claims for damages. But, as of last week, no lawsuits by manufacturers were reported.
Don't hold your breath, either.
You see, automakers hold ultimate power over their suppliers. They can demand reimbursements, price concessions, settlements or other penalties from a tainted supplier. Or they can terminate the supplier for cause.
The automakers won't need to employ trial lawyers to get justice.
You can reach Philip Nussel at pnussel@crain.com.
