The Department of Justice is taking down the largest auto part price-fixing conspiracy, one that’s lasted more than a decade in some instances.
So far, 34 people and 27 companies have been charged with artificially driving up the prices for seat belts, air bags, steering wheels and other common car parts. Large number asides, what makes these charges significant is the number of international businesses, mainly from Japan and Australia, implicated. A Michigan grand jury on Thursday indicted an executive at a Japanese auto manufacturer for his role in the scheme running from 2003 to 2010.
Even though no one has been extradited yet, foreign citizen status can’t be used to get out of antitrust charges, according to Jennifer Driscoll-Chippendale for the Antitrust Law Blog.
Japan should not be considered a “safe haven” for individuals seeking to avoid prison in the United States for obstruction of justice or criminal antitrust violations. The extradition treaty between the United States and Japan allows extradition for any offense that is listed in the treaty and is punishable by one year of incarceration in both countries. Obstruction of justice is a basis for extradition under this “list approach.” As a result, Japanese residents accused of obstructing justice in the auto parts investigation are easy targets under the express terms of the treaty.
Other executives at Japan-based companies have pleaded guilty to antitrust laws, and the Department of Justice is on road to collect more than $2 billion in fines.
The price-fixing investigation started in 2011, and the Department of Justice has little inclination to slow down probes into the auto industry and other industries that may be guilty of antitrust issues, according to Howard Fogt of Dashboard Insights.
The U.S. Department of Justice has made it clear that there are more enforcement actions to come as it uses its leniency and leniency plus policies to widen the net of suspected criminal activity. Under these policies, there are ever-increasing incentives for companies to disclose what appears to be an apparent unending stream of industry groups that have engaged in criminal cartel activity.
Management liability specialist Kevin LaCroix notes in the D&O Diary that federal and even civil antitrust action is on the rise because of international cooperation.
One reason for the increased regulatory attention to cartel busting is that price-fixing companies have huge incentives to self-report. Over 50 countries have now adopted regulatory programs providing that a company that self-reports will receive substantial leniency credits in connection with sentencing and fines, while at the same time, a company that hangs back and is not forthcoming may face more punitive fines and penalties.
There are no indications that the price of cars or car parts will drop, but more price-fixing executives will likely be slapped with injunctions and multimillion fines before that happens.