Feds' strategy: Bruise, don't break
Now that three suppliers have accepted guilty pleas to bid-rigging charges in U.S. courts, the Department of Justice's strategy has emerged.
Federal prosecutors are seeking penalties that could range up to 10 percent of the revenues generated by products in which price-fixing occurred.
For example, Yazaki Corp.'s $470 million fine -- part of its plea agreement with the Justice Department last week -- amounts to 8 percent of the company's estimated sales of wire harnesses and connectors in the Japanese company's fiscal 2010, a report issued by JPMorgan Chase & Co. showed.
Similarly, a $200 million fine levied against wire-harness supplier Furukawa Electric Co. in September amounted to 8 percent of Furukawa's global wire harness revenues.
The penalties, while substantial, aren't going to put these companies out of business.
Moreover, companies that cooperate with federal investigators often draw lighter penalties.
Of course, jail time can be a deterrent, too. Four Yazaki midlevel managers will serve up to two years' jail time for their roles in price collusion.
In the latest U.S. case, Yazaki was charged with conspiring to charge higher prices on wire harnesses and related products. Denso Corp. was charged with conspiring to rig bids for heating-control panels and electronic control units. It agreed to a fine of $78 million.
For details on the prosecutions, penalties and responses from the suppliers and their customers, see autonews.com/pricefix.
You can reach David Sedgwick at email@example.com.