The U.S. Department of Justice has assessed $2.4 billion in fines on 32 auto parts suppliers and charged 46 individuals -- nearly all of them Japanese -- in the largest antitrust prosecution in U.S. history.
That's as of early last week and just in the United States. The practice is a global epidemic that stifles fair competition, inflates the cost of components for automakers, erodes investor confidence and rips off the customer.
Automakers can make it all stop right now, but will they?
As my colleague Hans Greimel reported at length last month, life simply goes on for those suppliers and their customers -- and some of the individuals convicted didn't even lose their jobs. Not one of those charges has been contested in court. Not one trial has taken place.
Incredibly, some executives under indictment are still on the job back in Japan even though they are technically international fugitives from justice.
This breathtaking scandal will continue to play out, and perhaps Justice will have to extradite some of those charged.
So what? It's questionable whether any of that will stop the anti-competitive collusion. But automakers can stop it right now. Here's how:
The manufacturers must publicly announce a zero-tolerance policy for price fixing and initiate a reward program for whistleblowers. All the purchasing chiefs need to be on board with this.
- Suppliers need to be informed, publicly, that they will lose contracts when price fixing is exposed.
- Automakers must stand firm on the final bid price of a part. In all fairness, it makes no sense to negotiate down the price after competitive bidding is finished. Suppliers contend that the practice invites price manipulation on the front end, and they have a credible point.
- The customer needs to demand, in contractual "terms and conditions," that a supplier cannot bid on contracts if it continues to employ any individual who has been indicted or convicted of price fixing in U.S. courts (and perhaps other jurisdictions).
There no doubt will be a lot of hand-wringing about all this, but the business world -- and ultimately the buying public -- deserves assurance that the industry is not inflating the cost of vehicles and that fair competition is taking place.
Is it too much to ask suppliers to terminate convicted felons or employees who ignore U.S. indictments? If so, it's time for the customers to do something about it -- publicly.