DENSO Corporation Executive Agrees to Plead Guilty to Price Fixing and Bid Rigging on Auto Parts Installed in U.S. Cars

Executive Also Agrees to Serve Significant Prison Time

WASHINGTON—An executive of Japan-based DENSO Corporation has agreed to plead guilty and to serve time in prison for his role in a conspiracy to fix prices and rig bids for heater control panels (HCPs) installed in U.S. cars, the Department of Justice announced today.

According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Norihiro Imai, a Japanese national, along with co-conspirators, engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of HCPs sold to customers in the United States and elsewhere. According to the charge, Imai’s involvement in the conspiracy lasted from at least as early as August 2006 until at least June 2009. According to the plea agreement, which is subject to court approval, Imai has agreed to serve one year and one day in a U.S. prison, to pay a $20,000 criminal fine, and to cooperate with the department’s ongoing investigation.

“Today’s guilty plea demonstrates the Antitrust Division’s commitment to hold executives accountable for engaging in illegal conduct that leads to higher prices for American businesses and consumers,” said Acting Assistant Attorney General Sharis A. Pozen, in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement is a top priority, and the division will continue to work with its law enforcement partners in the ongoing investigation in the auto parts industry.”

DENSO manufactures and sells a variety of automotive electrical parts, including HCPs. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle. According to the charge, Imai and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate bids submitted to, and price adjustments requested by, automobile manufacturers.

Including Imai, eight individuals and three companies have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. DENSO pleaded guilty on March 5, 2012 and was sentenced to pay a $78 million criminal fine. Yazaki Corporation, another Japanese automotive electrical component supplier, pleaded guilty on March 1, 2012 and was sentenced to pay a $470 million criminal fine. Additionally, four Yazaki executives were charged on January 30, 2012 and have agreed to plead guilty. On November 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine. Three of Furukawa’s executives also pleaded guilty and were sentenced to serve prison sentences in the United States ranging from a year and a day to 18 months.

Imai is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of FBI Headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm, or call the FBI’s Detroit Field Office at 313-965-2323.

Yazaki Corp., Denso Corp., and Four Yazaki Executives Agree to Plead Guilty to Automobile Parts Price-Fixing and Bid-Rigging Conspiracies

Companies Agree to Pay a Total of $548 Million in Criminal Fines–Includes Second Largest Criminal Fine Ever for an Antitrust Violation; Executives Agree to Serve Prison Time

WASHINGTON—Two Japanese suppliers of automotive electrical components—Yazaki Corporation and DENSO Corporation—have agreed to plead guilty and to pay a total of $548 million in criminal fines for their involvement in multiple price-fixing and bid-rigging conspiracies in the sale of parts to automobile manufacturers in the United States, the Department of Justice today announced. Four executives, all Japanese nationals, have also agreed to plead guilty and to serve prison time in the United States.

Yazaki has agreed to pay a $470 million criminal fine—the second largest criminal fine obtained for a Sherman Act antitrust violation—and DENSO has agreed to pay a $78 million criminal fine. The four executives from Yazaki—Tsuneaki Hanamura, Ryoji Kawai, Shigeru Ogawa, and Hisamitsu Takada—will serve prison time ranging from 15 months to two years. The two-year sentences would be the longest term of imprisonment imposed on a foreign national voluntarily submitting to U.S. jurisdiction for a Sherman Act antitrust violation. The fine amount and prison sentences are subject to court approval.

“As a result of the Antitrust Division’s ongoing criminal investigation of price fixing and bid rigging in the auto parts industry, more than $748 million in fines have been obtained—which already surpasses the total amount in criminal fines obtained by the division for all of last fiscal year,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement remains a top priority and the Antitrust Division will continue to work with the FBI and our law enforcement counterparts to root out this kind of pernicious cartel conduct that results in higher prices to American consumers and businesses.”

“I would like to commend the employees of the FBI’s Detroit Field Office and the Department of Justice Antitrust Division for their fine work on this very important antitrust investigation. This team has devoted countless hours to the investigation and I appreciate their devotion to the mission. The companies involved in this case conspired to the price fixing and bid rigging of automotive parts. This criminal activity has a significant impact on the automotive manufacturers in the United States, Canada, Japan, and Europe and had been occurring at least a decade. The conduct had also affected commerce on a global scale in almost every market where automobiles are manufactured and/or sold,” said FBI’s Special Agent in Charge Andrew G. Arena.

According to court documents filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Yazaki, DENSO, Hanamura, Kawai, Ogawa, Takada, and their co-conspirators carried out the conspiracies by agreeing, during meetings and conversations, to allocate the supply of the named products on a model-by-model basis and to coordinate price adjustments requested by automobile manufacturers in the United States and elsewhere. They sold automotive electrical components to automobile manufacturers at inflated prices and engaged in meetings and conversations for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme.

According to a three-count felony charge, Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere. Automotive wire harnesses are automotive electrical distribution systems used to direct and control electronic components, wiring and circuit boards in cars. Instrument panel clusters, also known as meters, are the mounted array of instruments and gauges housed in front of the driver of an automobile. Fuel senders reside in the fuel tank of an automobile and measure the amount of fuel in the tank.

According to a two-count felony charge, DENSO engaged in conspiracies to rig bids for and to fix, stabilize and maintain the prices of electronic control units (ECUs) and heater control panels (HCPs) sold to customers in the United States and elsewhere. An ECU is an embedded system that controls one or more of the electronic systems or subsystems in a motor vehicle. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle.

According to four separate one-count felony charges, Hanamura, Kawai, Ogawa, and Takada each engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of automotive wire harnesses and related products sold to customers in the United States and elsewhere. The department said that the individuals participated in the conspiracies at various times from at least as early as January 2000, until at least February 2010. During the conspiracies, the individuals held the following positions: Hanamura was a branch manager at Yazaki North America in Columbus, Ohio, and a Honda division sales manager in Japan; Kawai was director of Toyota Sales of Yazaki North America in Lexington, Ky., and vice division head of Yazaki’s Toyota Business Unit in Japan; Ogawa was assistant section manager and later section manager in Yazaki’s Honda Business Unit in Japan, and branch manager in Yazaki’s Honda Sales Unit and later director at Yazaki North America in Columbus; Takada was assistant manager in Yazaki’s Toyota Business Unit, director of Yazaki North America in Lexington, and manager of a sales department of Yazaki’s Toyota Business Unit in Japan. According to the plea agreements, which are subject to court approval, Ogawa and Takada have each agreed to serve 15 months in a U.S. prison. Hanamura and Kawai have each agreed to serve two years in a U.S. prison. Each of the four executives has also agreed to pay a $20,000 criminal fine. According to the plea agreements, Yazaki, DENSO, Hanamura, Kawai, Ogawa, and Takada have all agreed to assist the department in its ongoing investigation into the automotive parts industry.

On Nov. 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine for its role in the wire harnesses price-fixing and bid-rigging conspiracy. Three of Furukawa’s executives also pleaded guilty. The court sentenced two of the executives to 15 and 18 month prison sentences, to be served in the United States. Sentencing of the third executive, who agreed to serve a year and a day in prison in the United States, is scheduled for Feb. 28, 2012.

Yazaki and DENSO are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation. Hanamura, Kawai, Ogawa and Takada are also charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine for both a company and an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charges arise from an ongoing federal antitrust investigation into bid rigging, price fixing and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or the FBI’s Detroit Field Office at 313-965-2323.

White Collar Crime Stories: Success of Antitrust Enforcement

Success of DOJ/FBI Partnership

What are the two greatest investments for most Americans? Homes and vehicles. And the FBI is working alongside our partners in the Antitrust Division at the Department of Justice (DOJ) to make sure consumers aren’t defrauded by artificial increases in car prices or deflation of home values as a result of antitrust practices.

For example: in September, a Japanese auto parts company with operations in the U.S.—along with three of its executives—agreed to plead guilty in federal court in Detroit to a price-fixing and bid-rigging conspiracy with other companies involving the sale of parts to automobile manufacturers. The victims in this case? Other auto parts dealers who were shut out of the bidding process, car manufacturers who paid higher prices for auto parts, and ultimately, American car buyers who paid more for the price of a car.

A second example: As of October, 18 real estate investors have pled guilty in connection with two separate conspiracies to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in Northern California. When real estate properties are sold at these auctions, the proceeds pay off the mortgage and other debt attached to the property. These conspiracies cause the homes to be sold for less than they would go for at a fair and competitive auction. This lower price directly affects anyone in that neighborhood trying to sell their home.

Of course, antitrust violations go beyond auto parts and real estate. Recent criminal antitrust investigations have involved a number of industries, including freight-forwarding, concrete-mixing, optical disks, refrigerant compressors, and electronic LCD panels.

Antitrust activities raise prices and suppress competition, hurting businesses who play by the rules as well as consumers who pay more for products or services. And increasingly, profits from antitrust conspiracies to go foreign companies, which can impact the ability of U.S. businesses to remain competitive in the world market.

DOJ’s Antitrust Division is charged with civil and criminal enforcement of federal antitrust laws, and FBI investigators work jointly with DOJ antitrust prosecutors at several regional DOJ antitrust offices. In the mid-1990s, that partnership really took off when we embarked on a highly aggressive antitrust enforcement program, focusing resources on long-range investigations involving national and international conspiracies that greatly impacted U.S. commerce.

Antitrust violations include:

■Price-fixing—when competitors agree to raise, lower, or maintain the price at which their products or services are sold;

■Bid rigging—an agreement that competitors work out ahead of time about who’s going to be awarded a contract and at what price; and
■Market allocation—involving agreements among conspirators on how to divvy up market share, either geographically or by customer.

To conduct antitrust investigations, we use the full arsenal of investigative tools available to us in all criminal cases, including the execution of search warrants on businesses, interviews, analysis of hard copy and electronic records, court-authorized electronic surveillance, and cooperating witnesses.

Importance of international cooperation. A vital piece of our antitrust effort is increased support and assistance from our foreign law enforcement partners—the Department of Justice currently has in place antitrust cooperation agreements with approximately 10 countries, including Russia and China.

These agreements come in very handy when our antitrust investigations lead us overseas….which happens nearly every day as more companies expand their operations worldwide.

Tips for Spotting Antitrust Schemes
Price fixing, bid rigging, and market allocation can be very difficult to detect because the agreements are usually reached in secret, with only the participants having knowledge of the scheme. We often receive tips about possible antitrust activity from business competitors, but there are some telltale signs that others might be able to recognize:
 
- Large price changes involving more than one seller of similar products but different brands, especially if the price changes happen at about the same time;
 - Statements from a seller suggesting that a particular customer or contract “belongs” to a certain vendor;
 - Fewer competitors than normal submitting bids on a project;
 - The same company repeatedly being the low bidder on contracts for a product or service, or in a particular area;
 - Bidders seeming to win bids on a fixed rotation; and
 - Unusual and unexplainable large-dollar differences between the winning bids and all other bids.
 
Keep in mind that these signs are by no means conclusive evidence of antitrust violations, just indicators that they may be. But if you do suspect someone of violating federal antitrust laws, you can report it to DOJ at antitrust.complaints@usdoj.gov or to the FBI through our Tips webpage.

EVA AIRWAYS CORPORATION AGREES TO PLEAD GUILTY AND TO PAY $13.2 MILLION FINE FOR PRICE FIXING ON AIR CARGO SHIPMENTS

WASHINGTON — EVA Airways Corporation has agreed to plead guilty and to pay a $13.2 million criminal fine for its role in a conspiracy to fix prices in the air cargo industry, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the District of Columbia, Taiwan-based EVA participated in a conspiracy to fix particular cargo base rates or fees charged to customers for certain international air shipments, including to and from the United States from at least as early as January 2003 until at least Feb. 14, 2006. Under the plea agreement, which is subject to court approval, EVA has agreed to cooperate with the department's antitrust investigation.

As a result of the department's investigation into price fixing in the air transportation industry, including EVA, a total of 22 airlines and 21 executives have been charged. To date, more than $1.8 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against the remaining executives.

EVA transports a variety of cargo shipments, including sensitive equipment used to manufacture liquid crystal display (LCD) panels, perishable commodities such as cherries and pet food, and consumer goods, on scheduled flights within Taiwan and internationally, including to and from the United States.

According to the charges, EVA and co-conspirators carried out the conspiracy by agreeing during meetings, conversations and other communications on particular cargo base rates or fees to be charged for certain international air shipments. As part of the conspiracy, the department said that EVA and co-conspirators levied cargo rates in accordance with the agreements reached, and monitored and enforced adherence to the agreed-upon cargo rates.

EVA is charged with price fixing in violation of the Sherman Act, which carries a maximum fine for corporations of $100 million. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today's charge is the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division's National Criminal Enforcement Section, the FBI's Washington Field Office, the Department of Transportation's Office of Inspector General and the U.S. Postal Service's Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division's National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI's Washington Field Office at 202-278-2000.

Former Air France Cargo Executives Indicted in Conspiracy to Fix Rates and Surcharges on Air Cargo Shipments

WASHINGTON — A Chicago grand jury returned an indictment today against two former executives of Paris-based Société Air France (Air France), for participating in a conspiracy to fix and coordinate surcharges on air cargo shipments to and from the United States and elsewhere and air cargo service rates to certain locations in the United States and elsewhere, the Department of Justice announced today.   The indictment further alleges that the former executives along with co-conspirators also agreed to refuse to pay their customers commissions on surcharges for air cargo shipments to and from the United States and elsewhere.  

 The indictment, returned today in U.S. District Court in Chicago, charges Marc Boudier, former executive vice president of the cargo division of Air France, and Jean Charles Foucault, former vice president of the cargo division of sales and marketing of Air France, with conspiring with other air cargo carriers and their officials to suppress and restrain competition for international air cargo services.   The department said that Boudier and Foucault carried out a conspiracy by fixing and coordinating rates on air cargo shipments to certain U.S. locations and elsewhere and surcharges on air cargo shipments to and from the United States and elsewhere, and refusing to pay their customers commissions on surcharges for air cargo shipments to and from the United States and elsewhere .   According to the indictment, Boudier and Foucault participated in the conspiracy from at least as early as August 2004 until at least February 2006.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment, perishable commodities and consumer goods, on scheduled international flights.

According to the indictment, Boudier, Foucault and co-conspirators carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings, conversations and communications to discuss rates for air cargo shipments to certain U.S. locations and elsewhere and surcharges for air cargo shipments to and from the United States and elsewhere.   The department said, in accordance with the agreement and understanding reached by Boudier, Foucault and co-conspirators, they issued announcements of increases on surcharges and rates.

Boudier and Foucault are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.   The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

A total of 21 airlines and 21 executives, including Boudier and Foucault, have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry.   To date, more than $1.8 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time.   Charges are pending against the remaining 17 executives, including Boudier and Foucault.

Today’s charge is the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section and Cleveland Field Office, the FBI’s Atlanta and Washington Field Offices, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General.   Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Atlanta Field Office at 404-679-9000 or Washington Field Office at 202-278-2000.