As a global criminal investigation into price fixing among auto suppliers spreads, the lead investigator says the size and scope of the alleged wrongdoing could far exceed the normal $100 million statutory limits on fines for those found guilty in the United States.
John Terzaken, director of criminal enforcement in the U.S. Justice Department's antitrust division, told Automotive News last month that the investigation that began in early 2010 now involves regulators on four continents looking at an unspecified number of companies.
One Japanese company, Furukawa Electric, has agreed to a $200 million fine -- twice the normal statutory limit -- and three of its executives are to serve prison terms after pleading guilty to their roles in the conspiracy.
"The limits [on corporate fines in the Sherman Antitrust Act] can be exceeded when we can demonstrate certain things, like whether the gain or loss involved in the activity is greater than the $100 million. There are also sentencing guidelines and multipliers that come into play," Terzaken said.
The law and federal sentencing guidelines allow judges to impose fines in antitrust cases that are twice the illicit gain from the illegal activity, or twice the loss of the victims of the crime. In an industry where all of the top 100 suppliers have global annual sales exceeding $1 billion, the fines could grow rapidly.
The Justice Department's antitrust division is dedicating "significant resources" to its investigation, which Terzaken characterized as the largest criminal antitrust investigation in U.S. history in terms of the value of products involved.
"Because of the size of the commerce involved, we're talking about some pretty significant fine levels," Terzaken said.
Valerie Suslow, an expert in antitrust law and a professor of business economics at the University of Michigan, said global investigations of what she called "international cartels" taking anti-competitive actions are becoming more frequent.
"It is regrettably common," Suslow said. Since the mid-1990s, "there has been a continuous stream of international cartel convictions. These companies, depending on where they've fixed prices, can face fines in a variety of countries."
Steve Bolerjack, an antitrust lawyer for Ford Motor Co. for 26 years who is now an antitrust defense attorney with Dykema Gossett in Detroit, said auto suppliers have historically been concerned about price fixing, but prevention efforts were largely on cruise control. That is changing as the industry investigation broadens, he said.
"For years, people thought the compliance was working, and then to have this [investigation] splayed out all over the papers. Until early 2010, everybody was just assuming that there was nothing bad going on industrywide," he said.
Bolerjack added that a supplier's employees and executives "have to know what the laws are and what they can and can't do."