1
Twilight of Prosecutions of the Global Auto-Parts Cartels
John M. Connor
Emeritus Professor
Purdue University
and
Senior Fellow
American Antitrust Institute
July 17, 2019
2
EXECUTIVE SUMMARY
The Auto-Parts Supercartel comprises 70 to 80 interconnected, international, automotive inputs, bid-
rigging schemes detected mostly during 2008 to 2017. Almost half of the convicted companies were
Japan-based parent firms or their subsidiaries. The connections among the cartels are provided by
overlapping corporate memberships and by the targets of collusion, 17 Original Equipment
Manufacturers (OEMs) of automotive vehicles.
Experienced antitrust officials have asserted that the Supercartel is the largest constellation of cartels
ever tackled by the world’s antitrust authorities. The truth is that “it depends.” In terms of the
number of firms and individuals convicted, it is indeed the biggest; measured by affected sales and
monetary penalties, it appears to be a close second.
The origin of these cartels is rather mysterious. Most cartels are formed after a sustained period of
falling prices and profits, but not Auto-Parts. Outside of East Asia, auto manufacturers have long
placed strong pressures on their suppliers to reduce prices of their inputs through competitive
bidding. In Japan, customary OEM loyalty to suppliers began to break down in 1999, and the great
majority of the cartels were launched during 1999-2006. Did the assemblers push too hard on price
reductions in the early 2000s, and thereby trigger supplier collusion to cope with an existential
threat?
At last count 18 jurisdictions vigorously prosecuted this supercartel, which demonstrated exceptional
duration, global reach, size, and injuriousness. Estimates for affected commerce of the Auto-Parts
supercartel range from $3.2 to $5.0 trillion. There are few reliable estimates of overcharges, but
averaging the few preliminary estimates suggests that injuries are in the range of $0.6 to $1 trillion.
Antitrust enforcement aimed at this supercartel is nearly complete as of early 2019. Canada has
definitely closed all Auto-Parts cases. In the United States, because of the U.S. five-year statute of
limitations, the DOJ’s investigations of auto-parts cartels began winding down in late 2015.
Corporate indictments elsewhere appear to be over. Although it is possible that the DOJ may nab a
couple of the 60 Auto-Parts fugitives and seek their extradition, further convictions of individuals in
the United States are unlikely. The status of several mature EC investigations suggest that most have
been closed. Brazil and Mexico still have 20-plus investigations open in 2019.
Among other observations, the Auto-Parts cases bring into focus the relationship between monetary
penalties and jail time for cartelists. For example, more than $20 billion in penalties has been
imposed worldwide on nearly 300 corporate cartelists. In North America about half of those
penalties were extracted through settlements from class-action damages suits, which is slightly higher
than the historical average. To be sure, these penalties provide some measure of restitution for the
victims of cartel crimes. But even if corporate monetary penalties rise well above the current $20
billion total; deterrence of collusion is highly unlikely. For deterrence purposes, indictments and
sentencing of hundreds of individuals in the automotive industries may have lingering effects on the
ethical behavior for would-be cartel managers.
3
Twilight of Prosecutions of the Global Auto-Parts Cartels
John M. Connor
July 17, 2019
“The auto parts investigation is the largest criminal investigation the Antitrust Division has ever pursued, ....”
(Speech by Sharis A. Pozen, U.S. DOJ, January 30, 2012)
I. Introduction
Since at least the year 2010, price-fixing investigations have been launched by at least 26 antitrust
authorities around the world targeting hundreds of manufacturers of automotive parts sold to
almost all of the world’s largest auto-assembly makers (OEMs).
1
In addition to automotive
components proper, some members of the cartels sold services to OEMs that aided the OEMs in the
distribution of finished vehicles. Some cartels conspired on direct sales of aftermarket parts or
systems of parts to auto-parts stores. Finally, the cartelized parts were resold to buyers after being
incorporated into finished vehicles; indirect purchasers include dealers (auto retailers), fleet rental
companies, and households that purchased vehicles (consumers or “end-users”).
Some of the early investigations developed from complaints of OEMs to antitrust authorities, but
the vast majority were uncovered through corporate leniency applicants.
2
Cooperation by amnesty
applicants help unearth otherwise clandestine details about how, when, and where the cartels
operated.
By 2019, nearly all antitrust investigations of the cartels were completed, and penalization has slowed
to a trickle (Greimel 2016). After 15 years of government prosecutions and 18 years of private-
damages actions, the time seems ripe to round up what has been revealed about the formerly
1
jconnor@purdue.edu. This paper is the third and likely final working paper in a series of papers on the Auto Parts
cartels. The second version is entitled: Is Auto Parts Evolving into a Supercartel?: AAI Working Paper No. 13-04 (August 28,
2013) [http://www.antitrustinstitute.org/~antitrust/sites/default/files/WorkingPaper13-04.pdf], which in turn is a
considerably revised version of Multiple Prosecutions Point to Huge Damages from Auto-Parts Cartels: AAI Working Paper 12-08.
(December 13, 2012). [http://ssrn.com/abstract=2190200]. The present version sums up on legal-economic
developments through February 2019. I thank Bert Foer, Diana Moss, and Jon Cuneo for constructive comments on
earlier drafts of this Working Paper. The cartels so far identified are characterized by a high degree of supply
substitutability in the sense that the products are made in plants controlled by parts manufacturers that are rivals in
supplying interconnected systems that are designed to be integrated by a single control mechanism. For example, Thermal
Systems covers a complicated array of pumps, fans, vents, filters, compressors, sensors, displays, and driver controls wired
together to heat and cool the air in the passenger cabin. Other products like bearings are less complicated. Not all auto
parts makers are likely to be proved to be in collusion; an announcement by Magna (2013) appears to rule out the auto-
tooling industry. Similarly, although the highly concentrated marine Auto Shipping industry is suspected of cartel conduct,
the atomistic overland shipping industry has not been investigated.
2
These include applications for full amnesty (or immunity from prosecution), amnesty-plus, and partial amnesty.
4
clandestine Auto-Parts Supercartel and to try to assess the breadth and effectiveness of antitrust
enforcement.
3
In this report, I first address the issue raised by the quote by Sharis Pozen above: In what respects
are the group of related Auto-Parts cartels the biggest seen in the history of contemporary price-
fixing schemes and prosecutions thereof?
4
Then I examine (1) the historical origins of the
discoveries of these cartels and their prosecutions; (2) the role of industry structure in facilitating
collusive conduct; (3) geographic location of collusion; (4) duration of collusion; (5) antitrust
prosecutions of the cartelists worldwide; (6) limited information on the severity and recovery of
penalties; and (7) concluding observations.
5
II. Size Measures Are Impressive
The Auto-Parts Supercartel is well on its way into the cartel record books, though it is not the biggest
in all respects. With nearly all criminal investigations exhausted and private antitrust litigation
concluded, the shape and size of these illegal schemes is known with a fair degree of certainty.
The U.S. DOJ’s top antitrust official called Auto-Parts the “largest criminal investigation” ever
pursued by the Division. European Commission officials reportedly have referred to Auto-Parts as
the “Cartel of the Century” (Niemeyer et al. 2018), and antitrust experts agree that it is one of the
biggest groups of cartels ever prosecuted. Antitrust prosecutors and judicial systems uniformly treat
the dozens of individual automotive-inputs cartels as belonging to one grand, overarching set of
interrelated collusive schemes. – a Supercartel. At the core of the Supercartel are archetypal
precision components supplied to manufacturers that assemble and brand finished vehicles – the
OEMs. At the periphery are other industries that supplied inputs indirectly (e.g., Polyurethane Foam)
or post-manufacturing services (Ro-Ro-Auto Shipping).
6
Six dimensions of the size of Auto-Parts enforcement challenges have been proposed. First, Pozen
(2012) cited three: (1) the “scope,” (2) the “affected commerce,” and (3) the high dollar amount of
corporate fines being imposed (Pozen 2012).
7
“Scope” can refer to product breadth or to (4)
geographic extent. Second, a retrospective article in a legal-economics journal suggests that the Auto-
Parts cartels were perhaps the largest U.S. antitrust litigation by citing evidence on two more
indicators: (5) the high number of companies charged (48 at the time) and (6) the large numbers
executives indicted (then 65) (Burtis et al. 2018).
8
3
Moreover, it is now becoming clear that since the beginning of the Trump administration, the U.S. anticartel effort has
been throttled back (Connor 2019a). This is not the case about the non-U.S. antitrust authorities, where assertiveness
seems less diminished.
4
Pozen’s DOJ colleague Scott Hammond reiterated in a Detroit speech in March 2013 that Auto-Parts will be the largest
cartel conviction in the history of the Division [http://bearingcode.com/newupdates2013.html].
5
Eight tables of detailed data are at the end of this paper.
6
In other words, there is room for disagreement by regulators or those who chronicle this supercartels as t the precise
list of products to be included. This report may take a rather inclusive view of the Supercartel’s composition.
7
I interpret the term “scope” to mean the number of markets with non-substitutable goods that were investigated or
convicted. A Global Competition Review commentary agrees with (or perhaps paraphrases) Pozen. “The Auto Parts
investigation, the largest ever cartel investigation in terms of the number of corporate prosecutions....” (Higbee et al
2018). Pozen also cited a possible fourth characteristic of size, namely, the substantial coordination of the DOJ with the
Japan FTC, the EC, and the Canadian Bureau of Competition. This possible indicator of size is not transparent and
therefore not measurable with public data.
8
Burtis et al. (2018) also cite the number of parts products involved (“more than fifty”), but this is scope.
5
It is apparent that when writers refer to the automotive-parts cartels they are employing a supercartel
concept. Size comparisons are facilitated by my previous work in conceptualizing supercartels
(Connor 2013). Most of the many intertwined and overlapping auto-parts cases clearly seem to
qualify as the world’s third supercartel, following the infamous Bulk Vitamins cartels of the 1990s
and the Banking collusion scandals a decade later (Connor 2008, 2014).
9
Supercartels are unique and
uniquely large. They are: (1) global in scope, (2) have a large number of distinct products (i.e.,
separate cartels) that have partially overlapping corporate membership, and (3) direct their price
fixing at customers in one vertical production-distribution channel. In short, supercartels have
wheels within wheels.
10
(1) Scope
When enforcement scope is mentioned, it most commonly refers to the number of separate markets
affected by collusion. More than 200 auto parts identified by unique SKUs (part numbers) were
subject to bid rigging. However, many of the parts were bundled into integrated “systems,” and it
was these systems that were the objects of bid rigging.
11
It now appears that no fewer than 70
separate Auto-Parts and related automotive markets were investigated for collusion. By mid 2019, 70
Auto-Parts cartels had been penalized, and ten cases were remaining resolution.
12
However, 70 to 80 is slightly shy of the number of Banking supercartel markets, which is 88. Auto-
Parts is the second largest number of product markets of any of the historical supercartels.
13
Moreover,
the evolving Generic-Drug cartels prosecutions could easily exceed Auto-Parts.
14
(2) Affected Commerce
The Auto-Parts cartels had enormous dollar sales during their collusive conduct periods.
Unfortunately, reliable information on sales of many automotive components and systems seem to
be proprietary within the industry. Estimates of affected commerce can be obtained for about three-
fifths of the cartels. Some estimates from decisions of antitrust authorities (e.g., Trucks in South
Korea) are fairly precise, as are some from public sources (e.g., Trucks in the EU), are fairly reliable.
While a few market estimates are quite rough, affected sales for about 49 of the cartelized markets
amount to $3.2 trillion (measured in current or nominal dollars). Projecting these sales to the total of
the 70 condemned cartels and adjusting for inflation would likely to raise sales to the $4 to $5 trillion
range.
15
9
Admittedly, decisions regarding the product or temporal boundaries can be tricky and require expert judgment.
10
Readers, please note that this is not a bad pun about the auto-parts cartels: no wheel-parts makers have been accused.
11
For example, the cartel often called Occupant Safety includes safety belts, air bags, steering-wheel assemblies, g-force
sensors, radar, lidar, ultrasonic detectors, automatic brakes, controls for setting these components, connective wiring,
computers, and in the most advanced cars software to integrate “autopilot” and self-driving capabilities.
12
As of early 2019, a dozen or so of the 113 companies are still awaiting to be fined in in the near future by Brazil and a
few other tardy antitrust authorities. However, many have been dismissed from prosecution by antitrust authorities that
do not announce case closings.
13
By definition an ordinary cartel affects only a single well-defined market and industry. I judge that since 1990 only
three other supercartels can be identified: Bulk Vitamins, Banking, and probably the Lava Jato cartel centered in Brazil
14
A recent press report says that 300 drugs are currently under investigation, and quoted an experienced antitrust
attorney saying: “This is most likely the largest cartel in the history of the United States,” Nielsen said” (Rowland 2017).
15
No matter the exact figure, cartel penalties will average less than 1% of affected commerce – a very low severity by
historical standards.
6
Despite this large sales estimate, it is not certain that the Auto-Parts cartels are the highest in sales,
mainly because the Banking supercartel, though bigger, is not comparable.
16
(3) Geographic Extent
Scope could possibly refer to geographic extent of prosecutions. The affected commerce of most of
the Auto-Parts cartels was geographically global in scope. Forty-nine of the proven-guilty Auto-Parts
cartels (70%) were organized on a global scale
17
– a much higher proportion than for international
cartels in general.
18
Consequently, the number of antitrust authorities engaged in Auto-Parts
investigations was very large.
Besides North America and the EU,
19
virtually all of the guilty Auto-Parts cartels colluded in Asia
(seven nations), predominantly East Asia plus a few in South Asia and Turkey. Fifty-three of the 70
penalized cartels (76%) operated in the United States and at least 28 of the convicted cartels (40%)
had sales in the EU (and several more EC decisions are in the pipeline). It also appears that they
infected the auto-assembly industries in Australia, Mexico, Brazil and South Africa.
20
In total, the
national assembly industries of 29 nations were affected by collusive conduct, and 16 antitrust
authorities investigated at least one cartel (including five EU NCAs). However, the number of
antitrust authorities that prosecuted Banking was 33, so Auto-Parts is not close to a world record by
this measure of scope.
21
(4) Number and Amount of Monetary Penalties Imposed
Within three years of the first raids in September 2013, a total of almost $2.0 billion in corporate
fines had been imposed.
22
Five years later, monetary penalties had reached $20.7 billion – second in
terms of a world record.
23
However, some extreme projections of penalties in Diesel Emissions imply
that Auto-Parts cartels’ penalties will surpass the Banking supercartel, which had $30 billion in
penalties.
(5) Number of Corporate Cartelists Indicted
16
Going back to the 1990s, the previous record-sales commodity cartels were those in Bulk Vitamins; Auto Parts
surpasses the Vitamins supercartel by quite a bit (Connor 2008). Sales of the Banking supercartel are definitely higher, but
historically economists do not compare financial sector sales with industrial real products (Connor 2014). Better
measures like value added are not available.
17
Global cartels are those that fixing prices on two or more continents; operations on three or four continents are
typical.
18
In the PIC data set, only 17% of the convicted cartels were global in geographic scope (Connor 2014: 12). But in Bulk
Vitamins, 15 of the 16 (94%) were global.
19
Assembly of 100,000 or more light vehicle units annually in 2010 covers 15 of the EU Member States.
20
The major exceptions were Algeria, Argentina, and Egypt.
21
Air Cargo reached 15.
22
In December 2012, I predicted that fines and other penalties would probably reach at least $5 billion. “At this rate
these cases are evolving, there is a good chance that monetary penalties eventually may climb to $5 billion or more.”
(Connor 2013: 2).
23
Casting back 30 years, the current world record holder is the LIBOR and related Foreign Exchange supercartel, which has
accumulated $32.8 billion in penalties.
7
I expect about 450 to 500 corporate cartelists eventually to be indicted in Auto-Parts. Already there
are 320 corporate fines imposed on the cartels’ corporate participants
24
, ten more signed consent
decrees, 11 grants of immunity, and 113 companies still under investigation.
25
As of early 2019, a
scores of companies are still awaiting to be indicted or fined in in the near future by Brazil and a few
other tardy antitrust authorities. The number of corporate indictments in Auto-Parts is clearly a world
record.
26
(6) Number of Individuals (Cartel Managers) Indicted
The number of individuals indicted worldwide in Auto-Parts reached 190 by mid 2019. Of the 190
indictments of executives, 169 (89%) were sought by the U.S. DOJ.
27
The individuals indicted in the
Banking supercartel totaled 105, so Auto-Parts is by far in the leading supercartel by this metric.
Individual U.S. fines are token (median $20,000), but custodial sentences are the highest recorded.
The DOJ has so far imposed prison penalties on 68 Auto-Parts executives. As of mid 2019, total
U.S. incarceration is 1175 months (an average of 17.3 months for each incarcerated individual).
About 60 executives indicted by U.S. prosecutors (36%) are fugitives awaiting sentencing.
28
An
additional 100 Auto-Parts managers involved in four cartels have been indicted by Brazil.
29
III. Origins of Collusion and the Investigations
A. Remote Causes
The remote causes of the price-fixing behavior may lie in the customary organization of many
Japanese suppliers of components to brand-name manufacturers; these organizations are called
keiretsu. Vehicle-assembly manufacturers historically fostered close, trusting relationships with a
small number of relatively small auto-parts suppliers (Dawson and Kendall 2013). Auto
manufacturers often have significant equity in their suppliers, work closely together on technological
standards and design, share proprietary technology, and “enjoy the right of first refusal for newly
developed technology” (ibid.). In other words, members of a keiretsu share a consensus view that
incumbent suppliers deserve protection from competitive rivalry.
24
This the count of fining decisions, not companies; because some companies were fined across several cartels, there are
only 151 unique parent companies or parent groups receiving fines (Connor 2019). In Banking, the number of cartelists was 222
(Connor 2014).
25
Historically 95% of indicted hard-core cartelists are convicted. This does not include at least a dozen guilty amnesty
recipients likely to be penalized in privates suits soon. Note that this is a count of penalties and likely penalties, so serial
colluders are double counted.
26
The Banking supercartel had 222 banks indicted (Connor 2014, 2016b).
27
There is a small amount of double-counting of the executives, because a dozen or more were indicted for multiple
counts of bid rigging in multiple schemes. Three individuals that were indicted, after substantial cooperation, had their
charges were dismissed.
28
The U.S. justice system will typically keep looking for these fugitives for up to ten years, but nearly all of them –
especially those near the end of their careers – will evade arrest and extradition. If one counts fugitives as having zero
months in prison, then the 128 indicted executives were sentenced to a mean average of 9.2 months in prison.
29
Brazil will likely charge more than 200 company managers in total, though imprisonment is not customary, and their
fines are usually paid by their employers. Japanese prosecutors sought and received criminal sentences for nine
executives in the Auto Bearings cartel; however, the Japanese courts suspended incarceration or converted the three-year
prison terms to probation.
8
Keiretsu are a modern-day, looser version of the Japanese zaibatsu, which flourished from the 1920s to
1945, and of which 16 were formally dismantled and outlawed in 1946-1947 by U.S. occupation
authorities (Caves and Uekusa 1976). Zaibatsu and keiretsu
30
can be described as conglomerates
31
with
important horizontal and vertical relationships that may be informal, contractual, or reinforced by
cross ownership; they may be united by a holding company that controls a major bank.
32
Many
zaibatsu were revived or tolerated by the authorities in the 1950s in order to supply the allies in the
Korean War. Several keiretsu were newly formed or first began growing rapidly at this time.
33
Cracks in the keiretsu system serving the automotive sector first began around 1999 when Renault
took over struggling Nissan (Dawson and Kendall 2013). In June 1999, the Renault-Nissan Alliance
appointed a new hard-charging CEO, Carlos Ghosn, who emphasized extreme cost-cutting
measures as a principal strategy to improve profitability.
34
Nissan’s keiretsu was disbanded and
replaced by open-source bidding for Nissan parts and components. In order to stay price-
competitive, Toyota and Honda shifted to open bidding too, initially outside of Japan. Collusion in
four Japanese auto-parts cartels began in the year 2000.
The second blow to the keiretsu system occurred in 2005 when the Japanese Fair Trade Commission
instituted a formal corporate leniency program for cartelists (JFTC 2005). This program, modeled on
programs adopted by other antitrust authorities as early as 1993, offered powerful monetary
incentives for cartel participants to confess their own transgressions, denounce fellow conspirators,
and normally cause the collapse of the cartel. “[Japanese] companies fingered in other cartels
worried they’d be burned again if they didn’t step forward,” said Kazuhiko Takeshima, former head
of the JFTC (ibid.). The leniency program was contrary to widely held notions of oligopolistic
cooperation among leading Japanese businesses, especially keiretsu members. In January 2009, the
JFTC and three other antitrust authorities opened investigations into price fixing of
undersea/underground cables; two of the suspects were Furukawa Electric and Sumitomo Electric.
30
The major difference between the two seems to be that zaibatsu were controlled by and named after extended families
(Mitsui, Mitsubishi, Sumitomo, etc.), whose assets were seized in 1946, whereas keiretsu are organized by a single final-
product manufacturer or manufacturing group. Additionally, the former tended to emphasize tight vertical integration by
a single supplier, whereas the latter accommodated a small number of suppliers that had a degree of rivalry in R&D.
31
Besides a big bank, holding company, and international wholesale trading firm, each Keiretsu usually includes insurance,
shipping, and a wide variety of manufacturing companies.
32
For example, the Tokai (or Toyoda) Group is led by the Tokai Bank and includes the Daihatsu, Suzuki, and Toyota
auto manufacturers. Toyota sponsors a supplier group known as Kyohokai that encompasses 200 parts suppliers (Jie et
al. 2013). While ostensibly an information-sharing organization, meetings and outings offer opportunities for collusion.
After being convicted for price fixing of wiring harnesses and related safety equipment in 2011, Fujikura Ltd., after
strengthening its internal antitrust compliance program, withdrew from Kyohokai activities. The major change from the
1920s is that family control has been replaced by holding-company shareholder control.
33
Toyota and Honda are examples. Toyota Group owns in Toyota Motor Corp., and TMC has majority or controlling
shares in auto-parts suppliers Denso Corp., JTEKT Corp., Tokai Rika Co., Kanto Auto Works, Aichi Steel Corp, Aisin
Seiki Co., Ltd and others. Toyota’s bank was known as Toyo Trust and Banking until 2001 when it merged with two
other banks to become UFJ Bank (now Mitsubishi UFJ Financial Group, Inc.). As of early 2013, Denso and Tokai Rika
Co. were convicted and JTEKT was a suspect in bid rigging. Honda owns 15% of Yamashita Rubber Co., a defendant in
the Rubber Anti-Vibration Parts cartel.
34
Carlos Ghosn was initially appointed COO of Nissan Motors by Renault in June 1999 and became CEO and
President of Renault in 2005. In the late 1900s he earned the sobriquet “Le Cost Killer” after restoring Renault to
profitability through plant closings and other cost-cutting measures. He is co-author of the book Shift: Inside Nissan's
Historic Revival (http://uk.askmen.com/celebs/men/business_politics_60/76_carlos_ghosn.html). In October 2016,
Mitsubishi Motors joined the Renault-Nissan Alliance. In 2019, Mr. Ghosn was arrested and imprisoned in Japan for tax
evasion.
9
Both companies made auto wiring harnesses as well as cables. Both companies sought and received
leniency from the JFTC for offering full cooperation in the Wiring Harness cartel (ibid.).
35
They may
have applied for immunity elsewhere; neither company has yet been indicted by the DOJ for price
fixing in Wiring Harness.
B. Proximate Events
How the current wave of auto-parts antitrust prosecutions began is uncertain (Bird and Bird 2012).
One story is that an EC investigation was prompted by the complaints around 2009 of several EU
automobile manufacturers (“OEMs”); the OEMs said that some manufacturers of automotive wire
harnesses were refusing to bid competitively on Requests for Proposals issued by the OEMs. This
scenario is a typical way of detecting a cartel before leniency programs became nearly the sole
method in the late 1990s. Other sources say that in late 2009 a whistle-blower approached the
Canadian Competition Bureau (“the Bureau”) to apply for amnesty (Johnson Winter 2012). The
Bureau sent requests for information to five other auto-parts suppliers and shared its findings with
other antitrust authorities. If this event was the initial impetus for the Auto-Parts investigations, it
reinforces the widespread dependence of antitrust authorities on leniency programs to generate
cartel cases.
Whatever the initial impetus, in late February 2010 three antitrust authorities conducted coordinated
international raids of auto-parts companies’ headquarters worldwide. The Japan Fair Trade
Commission (“JFTC”) raided DENSO offices in Japan, and the Antitrust Division of the U.S.
Department of Justice (DOJ) raided three auto-parts manufacturers, including DENSO
36
. The
industry or company targets of the EC’s raids in February 2010 were initially unknown, but later
revealed to be the EU headquarters of four wire-harness manufacturers, including DENSO.
37
Spokespersons for the JFTC and DOJ later announced that their raids were part of a wide-ranging
investigation of collusion beginning as early as January 2000 in several auto-parts industries.
Convictions began in late 2011.
38
The U.S. DOJ fine announced in September 2011 in Wire Harness
was the first in Auto Parts; Japan was the second authority to fine an Auto-Parts cartel, also Wire
Harness, in January 2012.
In early 2010, the DOJ, EC, and JFTC initially raided manufacturers of three auto parts: Wiring
Harnesses, Fuel Senders, and Instrument Panel Clusters. Probably aided by Amnesty-Plus programs
39
,
further cartels were investigated: Aftermarket Sheet Metal
40
in 2010; Aftermarket Auto Lights in July
2010; Occupant Safety Systems and Auto Refrigerants in February 2011; Auto Bearings, Aftermarket Auto
35
Under “Amnesty-Plus” a company guilty of price fixing in industry A, but which does not qualify for immunity in that
cartel (“Cartel A”), can confess its involvement in a cartel in industry B, offer evidence and full cooperation, and qualify
for full amnesty in Cartel B as well as enhanced leniency in Cartel A.
36
Besides Canada, other early movers may have included South Korea and Australia.
37
The four targeted firms were Leoni AG, S-Y Systems, Yazaki Corp., and DENSO. This history is summarized in Part
D. of the 2
nd
Consolidated Complaint, In re Automotive Parts Antitrust Litigation (August 2014).
38
The U.S. DOJ fine announced four Auto-Parts fines in 2011 the first in February 2011 in Aftermarket Auto Lighting;
Japan was the second authority to fine an Auto-Parts cartel, in Wire Harness, in January 2012.
39
The DOJ’s Amnesty-Plus offers immunity to company under investigation for price fixing if it is the first to supply
information about a second cartel about which the DOJ has no information
40
This cartel was apparently discovered by U.S. private plaintiffs, and the role of government investigations, if any, is
unclear.
10
Lights
41
, and Small Electric Motor Components in July 2011; New Auto Lights in March 2012; Thermal
Systems in July 2012; and Auto Marine Shipping in September 2012. Eventually, up to 80 auto-parts and
related cartels were detected (see list in Table 1).
42
The Canadian Competition Bureau was likely involved in the Auto-Parts investigations from about
2009. By about 2012, Canada was joined by the Australian, Mexican and South Korean antitrust
authorities, and all seven were cooperating with each other. Later, the German Federal Cartel Office,
China, South Africa, South Korea, Singapore, and Brazil detected the global Auto-Parts cartels and
some unique domestic cartels operating in their own territories. That makes 12 jurisdictions
representing 40 nations, which I believe is the second-largest number of cartel-prosecuting antitrust
authorities.
43
Press reports and some cartel-fine decisions have identified several amnesty recipients. Furukawa
Electric Co. was granted immunity in the Wiring Harnesses cartel by the JFTC; Denso Corp. was
granted immunity in the Thermal Systems cartel by the JFTC; JTECK Corp. was granted immunity in
the Auto Bearings cartel by the JFTC; DENSO got a free pass in the EC’s Thermal Systems, Alternators,
and Spark Plugs prosecutions; Sumitomo Electric was awarded amnesty by the U.S. and EC
authorities; VW’s MAN Group was immunized in Trucks ;Mitsui’s MOL was the EC’s (and probably
the DOJ’s) immunity recipient in Auto Shipping. These companies saved billions of dollars in fines.
Doubtless a few more leniency and “leniency-plus” recipients will be revealed in a few years.
44
Clearly, close cooperation and coordination among these far-flung antitrust authorities has greatly
aided in the rapid dissemination of information needed to begin the multiple investigations.
Consider this statement by experienced antitrust experts on investigations in Canada:
“Massive enforcement resources appear to be at play in the ongoing auto parts inquiry which, from
early estimations, appears poised to become the biggest cartel case in history. From documents filed
with the Ontario courts, we know that the Bureau’s investigation began with the wire harness raids
in February 2010 and has grown exponentially since then. The size of the Canadian inquiry is
remarkable — as of October 2011, the Bureau claims to have:
• 10 co-operating parties in the inquiry;
• issued at least 15 “target” letters and numerous subpoenas (“Section 11 orders”); and
• granted 164 markers to its co-operating parties across a broad range of products” (Low and
Halladay 2012: 4).
The last figure is particularly impressive and would, under normal circumstances, reflect years of
enforcement efforts. Clearly it encapsulates the enormous scope of the automobile manufacturing
supply chain, and the effects of “amnesty plus” applications”. However, the 164-product claim may
41
This cartel was apparently discovered by U.S. private plaintiffs, and the role of government investigations, if any, is
unclear.
42
The vast majority of the 80 Auto-Parts cartels are parts/components manufacturers with overlapping membership in
schemes that rigged bids against OEMs. However, a few fail to meet the previous definition. For example, auto-parts
distribution in India and auto importers in Indonesia were not organized by manufacturers; leasing autos in Switzerland
was comprised of subsidiaries of OEMs, not suppliers. Finally, a few cartels (in Spain, Korea, Turkey, and Pakistan)
comprised of OEMs colluded on the selling or rental prices of cars, not parts.
43
The largest is the global cartels Air Cargo (13 authorities) (Connor 2019).
44
A complete list awaits several probable EC decisions and developments in private U.S. suits.
11
be exaggerated by failing to group many of the items into the integrated systems that OEMs used to
issue tenders.
45
The number of well-defined Auto-Parts markets is in the 70 to 80 range.
C. The Belated German Diesel Emissions Scandal
The most recent, and still largely unresolved, Auto-Parts investigation was initially known as the
German Diesel-Engine Emissions case (a/k/a “Dieselgate” and “BlueTEC”). Initially focused on
fraudulent statements to environmental regulators in Europe, the scandal has moved beyond
German-based auto and parts makers, beyond conduct just the EU, and by touching upon
allegations of collusion has moved beyond simply fraudulent misrepresentation of the extent of
pollution created by diesel engines.
The scandal was unveiled in May 2014 as investigations of the California and U.S. environmental
protection agencies were launched into illegal claims (and mislabeling of) nitrous oxide emissions
from certain VW diesel motors (Connor 2017).
46
These agencies found evidence that as early as 2008
VW had inserted software into electronic control devices that intentionally “defeated” accurate
measurement of NO
2
emissions; that is, intentional distortion of pollution testing had gone on for at
least ten years and perhaps longer.
47
By the summer of 2015, federal U.S. environmental regulators
were threatening to withhold permission for VW to sell 2016 diesel-engine cars until discrepancies
over emissions levels were resolved (DOJ 2018). As late as July 2015, internal communications show
that senior VW executives agreed to continue trying to deceive those regulators. Finally, on
September 3, 2015, VW officially admitted that it had installed defeat devices on its diesel cars.
The legal repercussions for VW have been severe (ibid.).
48
In March 2017, VW AG pled guilty to
defrauding U.S. and California environmental agencies and violating the Clean Air Act. It paid a U.S.
civil fine of $2.8 billion. Other U.S.-imposed mandatory cash restitution of $5,000 to $10,000 per
vehicle cost VW an additional $17.5 billion. Since then nine VW executives have been charged
criminally. For example, Oliver Schmidt and James Liang were sentenced to prison and in 2019 were
serving sentences of 84 and 40 months, respectively. On May 3, 2018, an indictment of former VW
CEO Martin Winterkorn was unsealed charging him and the entire Management Board of VW with
criminal conspiracy to defraud the United States (ibid.). Several of those charged are fugitives. As of
May 2019, VW has paid $33 billion in fines and compensation to buyers of affected vehicles,
including fines by German State Prosecutors and the Dutch and Italian antitrust agencies. While
representative actions have been filed, most EU buyers remain uncompensated.
49
Suits by diesel car
owners in the EU are demanding $11 billion. Besides fraud indictments, Fiat Chrysler and Renault
45
Many of these parts may be available separately for used auto repairs, but the multi-part systems contained in Requests
for Proposals are the appropriate product markets for bid rigging against OEMs.
46
Initial emissions discrepancies on VW cars were discovered in 2013 tests by the U.S.-based International Council on
Clean Transportation, which informed the California and U.S. environmental authorities of the results. In September
and October 2015, a German auto club found excessive emissions from diesel motors on certain models of new cars
sold by VW, Renault, Volvo, Jeep, Fiat, Hyundai, GM-Opel, Mazda, Ford, Mercedes, and Citroen (The Guardian 30 Sept.
2015).
47
An unconfirmed report says that one former employee told French prosecutors that cheating by Renault on emissions
tests had been in place since 1990 (TheLocal.fr 16 March 2017).
48
For VW’s managerial response to Dieselgate, see Jung and Sharon (2019).
49
“In Europe, VW refused to settle with governments or consumers in Germany, Ireland, Italy, the Netherlands, Spain,
Switzerland, and the United Kingdom, and treated court cases that arose there as a nuisance and waste of time” (Jung
and Sharon 2019: 8).
12
have had large “voluntary” recalls of their diesel cars, and Porsche executives are under investigation
for bribery and tax evasion (France 24 May 28, 2019). In 2019, authorities in 21 jurisdictions are
investigating violations of environmental laws.
The status of antitrust investigations into diesel emissions is more difficult to gauge. Three antitrust
authorities criminally fined VW or its managers (the DOJ, Netherlands, and Italy) about $6 million
(EU 2019). The German Federal Cartel Office and the EC competition-law directorate are
investigating whether scores of “technical committees” were in fact platforms for quantity-reducing
collusion. One set of allegations concerns limiting the sizes of tanks that contain emissions-cleansing
chemicals for diesel motors. After Daimler applied for leniency, the EC issued a Statement of
Objections to three auto manufacturers (Daimler, BMW, and VW) in April 2019; severe fines on
two or three of the auto makers are expected in 2020.
50
The antitrust authorities of Australia and the
Netherlands are investigating.
In this report, because it is unclear whether fraudulent conduct by auto makers and parts
manufacturers (notably Robert Bosch GmbH) arose from or is linked to collusive conduct,
monetary fines and cash compensation related to diesel emissions will be shown and discussed
separately from other antitrust penalties (see Table 7).
51
In any case, Dieselgate has ensnared seven
of the world’s leading automobile manufacturers and two of their suppliers; monetary penalties
(almost all non-antitrust) to date amount to an extraordinary $31.8 billion, with VW bearing the
brunt.
IV. Industry Structure and Conduct
A. The Auto-Parts Cartels Are Historically Unusual
If one goes back 30 years, the number of auto-supply industries convicted of illegal cartel behavior is
rather small, given the large size of the automotive sector. I have scoured a large scale data set of
international cartels
52
and found ten
53
that for various reasons do not, in my judgment, qualify for
membership in the Supercartel (see Table 1 for reasons). Some of the related cartels do not compare
to the mostly mechanical-electrical manufactured parts in the current wave. Perhaps the most
comparable predecessor is Auto Glass (a/k/a Carglass), a 2004-2005 cartel that resulted in record EU
fines of $1.76 billion.
54
The current 2000-2014 wave of 80 Auto-Parts cartels is listed in Table 2.
55
50
A popular investigative magazine revealed that EC fines of up to €3 billion (approximately $3.5 billion) are being
considered (Der Spiegel April 7, 2019).
51
Much of the costs of resolving consumer complaints involves repairs for recalled cars and extended repair warranties.
These are not cash compensation, but some OEMs are valuing them at almost equal to cash payments.
52
The Private International Cartels (PIC) data set has unrivaled legal-economic information on more than 900 cartels and
7000 cartelists.
53
Two more were investigated but dropped or cleared by the authorities. In one unique case (Aftermarket Auto Air
Filters), the DOJ was misled by a putative whistle-blower later indicted for lying to investigators. A third alleged cartel
(Automobiles, Canadian imports to US) was dismissed after one company settled.
54
Other possible predecessors are the Indian Tires, Canadian Auto Imports, Auto Manufacturing in Turkey, and FEFC Shipping
cartels are cases in point. Even Automotive Refinishing Paint is not comparable because customers were auto body shops,
not auto OEMs. I hesitantly include the Truck Manufacturing in EU cartel in the Auto-Parts supercartel.
55
Several began before 2000 and a few continued slighted beyond 2012, but all seem to overlap at least in part with the
2000-2012 period.
13
The 80 auto-industry cartels that have formally investigated beginning in 2010 (including the 70
found guilty of cartel conduct) comprise about 6% of the total number of international cartels
detected in the past 30 years (Connor 2019). One possible reason that few auto-parts cartels were
observed in the past is because of the large resources expended on procurement by a relatively small
number of presumably “sophisticated” buyers. Auto manufacturers tend to have procurement
specialists who develop expertise in the supply conditions in the industries from which inputs are
purchased. That is, knowledge about cost conditions was symmetrical. Why that symmetry in
bargaining over prices broke down is yet to be revealed.
Another factor that frequently provokes the formation of cartels is financial stress in the industry.
Of the 70 Auto-Parts cartels with information on their first year of operation, 57 (81%) were
launched during 1999 to 2006. Automotive production worldwide in 1999-2006 was rising from
about 53 million units to 73 million in 2007 (Statistica 2018). Annual production in the United States
in 1999-2007 was in the range of 16 to 18 million units – an historical high for the industry
(Cutchner-Gershenfeld et al. 2015: Figure A).
56
Demand for parts would have risen proportionately.
While there are no reliable, comprehensive profit data for the OEMs, net revenues and gross
margins tend to rise when demand and production rise, so there is little evidence that the OEMs
were financially stressed in 1999-2007. Comparable information about the OEMs’ input suppliers’
financial performance is unavailable, but ought to be hitched to that of their customers.
B. Industry Structure Facilitates Bid-Rigging
At least three-quarters of the Auto-Parts cartels involved rigging the bids of the OEMs (Connor
2019). Except for small numbers of buyers and the vaunted sophistication of their procurement
managers, industry structure and customary practices make many auto-supply industries fertile
ground for overt price fixing. For the products alleged to have been price-rigged, there are few
suppliers in a given geographical production region. For example, the four Japanese suppliers of
Auto Lighting Products control well over 90% of U.S. national supply. Similarly, the top four wiring-
harness suppliers control 77% of the global market (Sedgwick 2013). For 14 cartels, sources indicate
that their median share was 95% (Connor 2019). To some extent, automakers’ policies of running
qualification programs for suppliers created barriers to entry and ultimately contributed to a high
degree of supplier concentration for assembly plants in most markets.
Moreover, “Competitors regularly meet at a variety of events, such as trade fairs or workshops
organized by OEMs, which creates opportunities for illegal discussions” (Bird & Bird 2012). The
auto industry’s labor market has a reputation for being segmented from that of other industries.
Managers and executives of auto suppliers and their clients tend to move jobs by circulating to other
companies in the auto subsector. Legal sharing of technical information between rival suppliers may
morph into sharing of sales transactions, prices, or information on future plans.
However, countervailing these oligopolistic conditions is the fact that automakers are also few in
number and have a reputation for being tough, well informed buyers. Indeed, in the language of
business management, the OEMs are the captains of a complex vertical distribution channel.
57
Auto
56
During the Great Recession, global production fell from the 2007 peak by 15%. During late 2007 to 2010, annual U.S.
production fell to 9.5 to 12.5 million.
57
Far upstream in this subsector are makers of raw materials (iron and bauxite mines, rubber plantations, petroleum
extraction, and the like), commodity materials manufacturers (raw steel and aluminum, rubber, plastic, etc.), and further
14
parts suppliers tend to work closely with the assemblers on product designs because of frequent
model changes. Unlike collusive bid rigging of government tenders, there is nothing in the public
record suggesting ethical lapses by OEM procurement managers. The presumed “sophistication” of
the buyers (the OEMs) should have made collusion unlikely. Moreover, some suppliers – especially
those supplying Japanese brands -- were financially controlled by their buyers.
The auto-assembly industry is the prototypical “global industry.” That is, input-sourcing depends on
distant imports in all markets with significant auto assembly: North America, the EU, Japan, China,
Brazil, South Africa, and others. This commonality in input-supply structures is reinforced by the
tendency of parts suppliers to follow their customers with investments after new assembly facilities
are established. Indeed, there is some anecdotal evidence that Japanese auto companies in the
United States favored their home-country suppliers over even lower-cost U.S.-based suppliers
(Gearino 2015). If true, this conduct raised supplier concentration and contributed to conditions
that facilitated collusion.
The auto parts that were subject to collusion are typically bought through Requests for Proposals
(i.e., “tenders”) issued by the automakers for designs tailored to production of a particular
redesigned vehicle model to begin two to four years hence.
58
These RFPs contain tight quality and
design specifications: size, materials, connections, engineering performance. Buyers provide
expected production numbers for up to six years. The OEMs were satisfied if their auction attracted
two or three bidders, including the incumbent supplier of the component in the vehicle model being
phased out. Buyers convey their expectation that either the component’s quality will be superior to
the current part or that price will be lower (or both). When proposals (a bid) are submitted, designs
and performance standards are highly specified, so virtually the only consideration in choosing the
winner was price. Because the RFPs imposed product homogeneity, this eliminates one potential
factor that tends to frustrate the formation and smooth operation of cartels. In short, colluding over
which bidder would win was made easier. Once a bid was accepted, buyers agreed to stick with the
winner for several years (until a car model was totally redesigned), which prevents entry.
A Surcharge Order of the Japan FTC outlines how two suppliers of windshield wipers organized
one cartel. Mitsuba and Denso agreed to let one of them win an RFP from Fuji Heavy Industries in
June 2000; in September 2002 this pas de deux was repeated for Suzuki; and Nissan was the victim of
a third rigged bid in March 2003 (JFTC 2012: 2).
59
One of the more bizarre episodes was described
by the Japan FTC’s report on the Small Electric Motor Auto Systems cartel. One of the cartelists was
Calsonic Kansei, which is largely owned and controlled Nissan Motors. Calsonic/Nissan rigged high
prices on starters and generators sold only to Fuji Heavy Industries, maker of Subaru cars, and one
manufacturing of materials (sheet steel, aluminum rolls, vulcanized rubber, and plastics with various textures). The auto-
parts cartelists shape and combine these materials into finished components for sale to the OEMs. The channel ends
with final consuming households or businesses.
58
“Bids usually came in for U.S. manufacturers three years before the first model year of a proposed part's typical four-
to six-year production life. The bidding company executives allegedly aligned prices on a model-by-model basis, and
sometimes resorted to code words, meetings at home or remote locations to help keep the conspiracy secret, according
to court records” (BearingCode 8 March 2013) [http://bearingcode.com/newupdates2013.html].
59
This Surcharge Order demonstrates the difficulty of precisely demarcating cartels. The Order identifies cartelization by
seven companies of four non-substitutable parts (generators, starters, wiper systems, and radiator/fan assemblies). The
unifying factor is small electric motors and the presence of Denso Corp. in all four sub-markets. Never did more than
four companies rig bids for a specific part; often it was only two.
15
of the smaller Japanese automakers. Thus, Nissan benefitted strategically in the auto market because
it was able to impose through collusion extra manufacturing costs on a rival’s brand.
It is noteworthy that there is a large array of inputs accounting for the major share of OEM
materials costs that was not subject to collusion. In general, these parts and components are
manufactured through vertical integration by the OEMs themselves: frames, chassis, engine motors
and manifolds, transmissions, and axels are the main examples. These parts were not procured from
independent suppliers by RFPs. A second category of parts are tires, batteries, electronic software,
inputs that can be purchased “off the shelf” when a car is launched and do not require advanced
customization.
C. A Huge Array of Products
Even at this stage, it is hard to know precisely how many markets were affected, their geographic
scope, and whether they were interrelated. This uncertainty arises in part because not all the antitrust
authorities agree on the market definitions involved. The US Government has convicted the largest
number of cartels (48), the EC only 13, and Canada 12. However, after studying the available
information, 70 to 80 markets seem to have been affected in one or more jurisdiction (Table 2).
60
An
illustration from EC prosecutions of a limited list of affected automotive parts is sketched below
(Europost 2019).
60
The list may not be exhaustive. Catalytic converters and electronic navigation & entertainment systems have been
suggested as affected auto-parts products. One source says that the DOJ is investigating 60 cartels. As of June 2019, 48
cartels had been fined by the DOJ, and 22 were penalized by other authorities (including four by U.S. courts).
16
Within some of these cartels, many products are encompassed by integrated parts systems. For
example, such a seemingly well defined product as Wiring Harnesses encompasses many related
products: automotive electrical wiring, lead wire assemblies, cable bond, automotive wiring
connectors, automotive wiring terminals, high voltage wiring, electronic control units, fuse boxes,
relay boxes, and junction blocks. Occupant Safety and Thermal Systems are similar product assemblies.
It is informative to note that no auto inputs that are typically made by the OEMs through direct
backward vertical integration were cartelized. I refer to motors, transmissions, chassis, and steel or
aluminum exterior panels; these are made “in-house” by the leading OEMs, not by independent
suppliers. There are two lessons that can be drawn this pattern. First, when inputs account for a
substantial share of material input costs (say, 5% or so), there is no scope for collusion. Vertical
divestment changes things. Perhaps it is no coincidence that collusion against GM began soon after
it sold its Delco-Remy division in 1994, against Toyota after DENSO no longer supplied a majority
of output to Toyota, etc. Any financial cost savings resulting from divestment may have backfired.
Second, by delegating manufacturing of minor inputs (say, 2% or 3% of total material inputs) to
ostensibly unaffiliated suppliers, the OEMs suffer a substantial loss of information about
manufacturing costs and a consequent loss of bargaining power over price.
61
It is not rational for
buyers to invest large resources in the technologies of procurement when an input – like nuts, bolts,
rivets, and airbags -- is a minor one.
D. Targets of Bid-Rigging
About 17 of the world’s largest, non-Chinese automotive manufacturers (OEMs) were targets of the
input-makers cartel schemes. Typically, two or three suppliers were invited through Requests for
Proposals to submit price quotes for an auto part meant to be compatible with the design for a new
car model that would be produced for three to five years in the future.
The direct auto-parts customers included GM, Ford, and Chrysler/Fiat; Audi/VW, BMW,
Mercedes/Daimler, PSA Peugeot, Renault/Nissan; and Hyundai, Kia, Subaru, Suzuki, Isuzu, Mazda,
Mitsubishi, Toyota, and Honda. In these cartels, pass-on damages were incurred by retailers and
consuming households.
62
In a few cases, a cartel colluded against OEMs after manufacturing was
complete; the Auto Ro-Ro Shipping cartel is one such case; oceanic shipping is an essential service for
large OEMs, because they all export finished vehicles to buyers across the seas. The Ro-Ro Auto
Shipping cartel raised the prices of destination charges on many specific routes with few rivals, such
as Korea-Israel
63
and Europe-Baltimore
64
.
61
I have previously emphasized the increased likelihood of input collusion when the input share is very small. See similar
comments on the Lysine, Citric Acid, and Bulk Vitamins cartels in Connor (2008).
62
In the small number of distributors’ cartels, auto retailers or consumers were directly injured.
63
The origin of Auto Shipping collusion from Korea is a “summit meeting” of nine ro-ro shipping firms in August 26,
2002 in which they agreed to “respect” historical market shares. A separate two-firm cartel began as early as March 2008
on the Israel-Japan route, which was a duopoly from 1993 to 2011 because of the Arab League Boycott of Israel. See
the KFTC Press Release “KFTC imposes sanctions on 10 international cartels of car shipping” dated August 21, 2017
[kftc.go.kr].
64
See Indictment: U.S. v. Anders Boman et al. [https://www.justice.gov/atr/case-document/file/985521/download],
detailing collusion by three employees of Wallensius Wilhelmsen Logistics in the Port of Baltimore 2004-2012.
17
V. Geographic Location Follows Location of Auto Assembly
Price fixing by the Auto Parts cartels occurred in roughly the 50 most industrialized economy of the
world but was concentrated in those nations with important clusters of automotive assembly plants
(i.e., plants operated by the automotive OEMs) (Wikipedia 2019). Collusive meetings among
suppliers generally occurred in the countries where the assembly plants were located, though the
agreements were generally approved by division directors or vice presidents at company
headquarters. If assembly was too small to support in-country or nearby parts manufacturing,
agreements were forged in Japan or other export locations. In the year 2010, based on vehicles
produced in nations that initiated antitrust investigations, shares of world production units were:
North America 13%, Latin America 7.4%, the EU 20.3%, South Africa 1%, and Asia 49%. (Based
on value of sales, the No. American and EU figures might be about 15% and 23%).
The number of Auto-Parts cartels in major regions detected (investigated) by antitrust authorities is
shown in Figure 1.
The single largest regional location of cartel operations is North America, i.e., Canada and the
United States.
65
North America is closely followed by 26 EU-wide cartels detected by the EC
66
and
nine more localized cases being prosecuted by Member States of the EU. Few, if any, more Auto-
Parts antitrust penalties are likely to emanate from the U.S. DOJ, and Canada’s investigations are
closed. However, the EC may have a couple more future decisions, possibly large-fine automotive
cartels in the pipeline (Niemeyer et al. 2018).
67
65
Canada fined at least one participant in 12 cartels, and the US DOJ fined 48 global cartels; six more cartels are
awaiting penalties from the DOJ or private suits. Both jurisdictions have one large investigation ongoing in early 2019,
the Diesel Motor Emissions case, which is mainly a fraud allegation but may also include price and non-price collusion
violations. See Connor (2017). No investigations have been revealed by Mexican authorities, but the Mexican auto-parts
industry has doubtless been affected by the cartels, because it is closely integrated with U.S. and Canadian production as
a consequence of the NAFTA Agreement.
66
The EC has taken the position that when two or three parts manufacturers colluded on the same parts against two
buyers, then two cartels existed. The DOJ and all other authorities treated this situation as one market and cartel, which
is the definition followed in this paper. The EC has fined only ten cartels as of March 2019, but as many as 23 more may
still be under investigation.
67
These close observers of the EU cartel scene suggest that other “car-related” cartel infringements to be announced
include automotive insurance.
18
1. Auto Parts: Geographic Location of
Collusion, Numbers of Cartels
0
10
20
30
40
50
60
70
80
USA &
Canada
EU-Wide EU
Nations
Asia Lat. Am. Africa Global All
March 2019
11
The Rest of the World (ROW) accounts for an additional 34 cartels that did not operate in North
America or in the EU. The Japan and Korea FTCs have brought quite a few Auto-Parts collusion
cases, 21 and 14, respectively. Brazil’s CADE has also been active in cartel enforcement, with 16
cases known to be open and perhaps a few more yet to be announced. Mexico, China, Chile, and
South Africa prosecuted 17 cartel cases.
Finally, the largest category are the 51 global cartels, each of which rigged bids in two or more
continents. Nearly all the global Auto-Parts cartels colluded in at least three continents (North
America, Western Europe, and East Asia), and more than half of the global cartels affected markets
in five or six continents. All of the Auto-Parts of the cartels penalized in the United States are global
cartels. If one were to distribute the affected markets of global cartels to single jurisdictions, except
for North America the number of cartels per region would roughly double in each regional
grouping.
The numbers of detected cartels reflect to some extent the assertiveness of local antitrust authorities.
Bids were rigged for parts sold to OEMs (or their subsidiaries) that have headquarters in the United
States, the EU, Japan, and South Korea. Yet, countries with significant auto assembly activity, such
as South Africa and Australia, have brought relatively few Auto-Parts collusion cases (three and five,
respectively). China has joint ventures involving nearly all of the known targeted OEMs, yet it has so
far indicted only four Auto-Parts cartels.
68
VI. Duration of Collusion
Longer cartel duration generally implies that, ceteris paribus, the amounts of cartel injuries will be
higher. The Auto-Parts cartels endured for above-average lives. The typical international cartel lasts
68
It is likely that the mostly Japanese-owned auto-parts cartelists faced higher levels of competition from Chinese-owned
fringe producers in China than they did in other markets.
19
for a median age of six or seven years. For the 70 Auto-Parts cartels with data, the mean and median
average duration is 109 months (nine years) -- whereas the median average of all other cartels is 60
months (five years) (Figure 2).
69
The reasons for the relative durability of the Auto-Parts cartels can only be a matter of speculation.
Being in the manufacturing sector is one likely explanation. The curious reluctance of most OEMs
to complain to antitrust authorities about bid rigging is another; notably only one OEM (Ford) is
suing for antitrust damages.
2. Median Duration of Auto-Parts vs. All
Other International Cartels
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Before
1995
1996-2000 2001-05 2006-10 2011-15 2016-18
Months
Year Cartel Discovered
August 2018 284J M Connor, Purdue U.
VII. Antitrust Prosecutions
Nearly all of the Auto-Parts cartels were investigated after leniency applications submitted to U.S,
EU, Canadian, and Japanese antitrust authorities. Today, dozens of antitrust authorities regularly
offer leniency to cartelists.
70
The leniency applicants submit detailed renditions of how a cartel was
organized: the names of corporate and individual participants, their agreements, locations and dates
of meetings, other means of communication, and other direct evidence of the conspiracy that can be
used to prove the guilt of all involved. These proffers were shared with other antitrust authorities to
the extent allowed under cooperation protocols. Evidence of close cooperation is seen in about 20
simultaneous joint raids of suspect cartelists’ headquarters during 2010-2013 by various
69
In the peak discovery period for 60 of the 70 Auto-Parts cartels – 2006 to 2015 – their duration was practically double
the duration of cartels in all other industries, though for eight Auto-Parts cartels discovered after 2015 the two subgroups
did move slightly together. The dip in Auto-Parts duration in the 2001-2005 semi-decade is the result of only two very
early discoveries of atypical automotive cartels.
70
“Part of the investigations seems to be related to what is sometimes referred to as the ‘snowball effect’ of leniency
programs. Companies that are caught in an investigation often carry out a detailed internal audit to determine whether
other business divisions are involved in illegal conduct as well. If this is the case, they typically will file a leniency
application, i.e. they will disclose this conduct voluntarily to the authorities in order to be exempt from fines for
infringements in these other business areas. Under the US ‘Amnesty Plus’ program, there is even a double incentive for
companies to make such a voluntary self-disclosure” (Bird & Bird 2012).
20
combinations of three to seven of the antitrust authorities in the United States, Canada, the EC,
Japan, Korea, Mexico, and Australia.
71
All told, 18 government antitrust authorities indicted cartels
in the Auto-Parts Supercartel.
As a rule, the first leniency applicant to fully cooperate with prosecutors is awarded full immunity
from government penalties, no matter the degree of culpability of the applicant; in other words, the
first to arrive receives amnesty. The PIC data set on Auto-Parts has identified at least 27 amnestied
cartelists, some of them awarded amnesty by multiple jurisdictions (Connor 2019).
72
The most
effective cartel leniency programs are in jurisdictions like the USA and EU that have high fines or
lengthy prison terms. While prosecutors typically extol their effectiveness in uncovering hidden
collusion, leniency programs are sometimes viewed with suspicion in countries where business
cultures and popular sentiment are at odds with competition laws. In Japan, an interview with a high
official of the Ministry of Economy, Industry, and Trade (MEIT, f/k/a MITI) indicated skepticism
of the Auto-Parts antitrust prosecutions and hostility to leniency programs (Greimel 2014). He
objected to the lack of transparency of a process that – contrary to Japanese business culture -- “pits
one company unfairly against another” (ibid.). Furthermore, many authorities then file “copycat
charges” with little additional investigation and “pile on” penalties issued by the first jurisdictions.
73
Of course, Japanese officials committed to inculcating competitive practices hold contrary views.
74
There is a logical problem facing antitrust authorities in applying leniency programs in the Age of
Supercartels. If a group of cartels qualifies as. Genuine supercartel, then under the most such
program rules, only one corporate cartelist can qualify for full amnesty (though many can qualify for
more modest cooperation discounts. But the practical result of such a rigid policy would by far
fewer cartel detections. Moreover, it may take antitrust authorities a year or more to firmly identify
the emergence of a supercartel. Similarly, if in fact a supercartel is a single beast in the shape of
many-headed Hydra, then cartel-based penalties are like lopping off a few heads rather than killing
the body: penalties formulated under a single-cartel concept will be too low because prosecutors use
far too modest estimates of affected commerce.
The first Auto-Parts conviction was announced on January 30, 2012 when Yazaki agreed to plead
guilty to three counts of criminal bid rigging, pay a $470-million fine, and cooperate with the U.S.
DOJ in convicting other cartelists.
75
The Yazaki confession was the first of hundreds of such
admissions This section lays out the outcomes of the global assault of auto-parts bid rigging.
71
To name some: Bearings, Air Flow Meters,
Anti-Vibration Devices, ATF Warmers, Fan Motors, Fuel Injection Systems, Fuel
Senders, Instrument Panel Clusters, Inverters, Motor Generators, Radiators, Starter Motors, Power Steering Assemblies, Variable Valve
Timing Controls, Power Window Motors, Windshield Washer Systems, Windshield Wiper Systems, Wire Harnesses, and Ro-Ro Auto
Shipping.
72
Of which 13 were identified by the EC, four by EU NCAs, and 13 by Japan, Brazil, and China. Ten probable
amnesties emanated from the U.S. DOJ, and there are likely ten more Amnesty-Plus awards.
73
“Piling on” is what lawyers call double jeopardy. However, nearly all antitrust authorities compute fines on the basis of
affected commerce in their jurisdictions, so multiple fines for the same crime are not double jeopardy.
74
Kaori Ito in MEIT’s Competition Enhancement Office noted that headquarters of Japanese companies are committed
to instilling antitrust compliance, but subsidiaries may not have gotten the message (Greimel 2014).
75
The guilty conduct was rigging multiple bids for Wire Harnesses from as early as January 2000 to Feb. 2010 (affected
commerce totaled about $2 billion), for Instrument Panel Clusters from as early as Dec. 2002 to Feb. 2010 ($73 million),
and Fuel Senders from as early as March 2004 to Feb. 2010 ($1.6 million) (DOJ 2012).
21
A. Cartel Penalties
Monetary penalties imposed on companies in each of the 80 Auto-Parts cartels are shown in Table 3.
The total monetary fines and settlements is $20.8 billion (almost $300 million per cartel on average),
which is on its way to equal to Banking (30.4 billion) as a world record amount (Connor 2014). Of
the 80 instances, ten cases have not yet been decided and two involved non-monetary consent
decrees.
As the summary in Figure 3 demonstrates, penalties were mostly announced during the years 2008-
2016. Two-thirds of the known penalties were imposed on cartels that were cracked in 2011-2013
and most of the rest appeared in 2014-2016. Fines in North America and the EU account for 17%
and 58% of total penalties, respectively; fines in the ROW amount to 11%; and private damages paid
account for 14%.
3. Cumulative Auto-Parts Fines,
by Jurisdictions, Up to Feb. 2019
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
2005-07 2008-10 2011-13 2014-16 2017-19
Private
ROW
EU NCAs
EC
USA &
Canada
Total $16.3 B
Date First Cartel Participant Penalized
As of early 2019, U.S. and Canadian fining is believed to be complete, but Brazil and some other
ROW agencies will be adding fines for a few years hence. One EC case was decided in early 2019; it
is possible that a small number may yet be announced in 2019-2020.
76
Additionally, several U.S. and
Canadian private damages suits, which often require five or six years to wrap up, are mostly settled.
77
Finally, a small number of European damages actions are in their early stages in 2019. Given these
future decisions, Auto-Parts penalties may approach $25 to $30 billion in a few years. Even if
penalties do rise to $30 billion, Auto-Parts will not surpass the Banking supercartel.
76
EC decision-making is relatively slow. The 132 EC cartel decisions with fines during 1990-2018 took an average of 3.6
years to investigate from the date raids or other press reports reported an investigation underway, and nearly one-fourth
required more than five years. Decisions that ended with cease-and-desist orders only lasted twice as Individual penalties.
77
Based on 243 international cartels, the average time from the date of discovery to the date the first member of a cartel
agreed to settle in a U.S. damages case was 4.0 years.
22
B. Corporate Penalties
At least 473 corporate investigations have been launched worldwide in the Auto-Parts cases as of
early 2019. (The final number discovered is unlikely to exceed 500). Of these, at least 316 corporate
monetary penalties were obtained (plus at least a dozen amnesty awards) by the world’s antitrust
authorities (Table 4). The range in corporate penalties is wide: specifically, 45 penalties (or 14%)
were below $1 million; another 38% of the penalties were “medium size,” i.e., above $1 million but
below $10 million; and one-third of the penalties (157 or 33%) exceeded $10 million, of which 31
were above $100 million and six above $1 billion.
Table 4 groups by ultimate parent owner all of the largest penalties paid by the top 30 offenders.
These 30 corporations and corporate groups paid or have agreed to pay a total of $18.4 billion in
criminal and civil penalties. Although the top firms account for only about 15% of the number of
parent companies, they account for a striking 88% of all the penalties paid by the 300-plus violators.
The greatest Auto-Parts offenders are a mix of famous corporations and more obscure
manufacturers.
78
Perhaps the more unexpected corporate parents in Table 4 are OEMs like Toyota,
Ford and the Renault-Nissan Alliance; they make the list because of their ownership and control of
large auto-parts companies like Toyota’s DENSO, Schaeffer’s Continental Automotive, and
Renault-Nissan’s MELCO.
Some commentators have opined that the large majority of all the Auto-Parts violators are Japanese-
owned companies.
79
While they are indeed by several measures the plurality of the lawbreakers,
Japanese businesses do not form the majority. Looking at the number of companies convicted with
monetary penalties, which total 314, a plurality of 137 (or 44%) of the penalties were placed on
Japanese-owned companies or their local subsidiaries.
80
Four other nations had significant numbers
of violators. Their nationalities are: American (9.9%), German (14.3%), French
81
(9.9%), and Korean
(2.5%). The number of companies from each of the other nations is less than 2%.
Measured by the dollar value of the penalties, the ownership distribution is more diverse (Figure 4).
The lead is still held by Japanese--headquartered companies (41% of dollar penalties). Japanese
firms’ penalties are followed by eight other nationalities: American (16.2%), German (14.7%),
Swedish (4.7%), French (4.2%), Italian (3.6%), Norwegian (3.4%), Indian (1.7%), and Korean
78
Burtis et al. (2018) identified nine of the convicted Auto-Parts companies as unlisted or non-public: Aisan Industry
Co. Ltd., Continental Automotive Electronics LLC, Corning International Kabushiki Kaisha, Hitachi Metals, Ltd.,
Maruyasu Industries Co., Ltd., Omron Automotive Electronics Co. Ltd., Sanden Corp., Toyoda Gosei Co. Ltd., and
Yamada Manufacturing Co., Ltd.
79
Burtis et al. (2018) concluded in late 2018 that of the total of 46 companies that made guilty plea agreements, “ -- the
majority being Japanese component parts manufacturers --” (p. 380).
80
These counts include some double counting of companies, if multiple subsidiaries incurred penalties. Besides the 314
corporate convictions, there are 158 additional companies that are alleged violators. Of the latter, ten were guilty and
accepted non-monetary consent decrees, 14 are known or believed to be amnesty recipients, and 136 are still under
investigation.
81
Including 24 convictions (7.6%) of the Renault-Nissan-Mitsubishi Alliance, which seems to be mostly French-
managed, but also substantially Japanese-controlled By Nissan and Mitsubishi.
23
(0.7%).
82
In the case of the smaller nationalities just listed, the great bulk of the penalties are
amassed by only one or two companies.
83
All other nationalities account for 9.6% of total penalties.
4. Corporate Headquarters’ Location
of Corporate Auto-Parts Penalties
0.0% 10.0% 20.0% 30.0% 40.0%
Other
Korea
India
Norway
Italy
France
Sweden
Germ…
USA
Japan
Mar 2019 236J M Connor, Purdue U.
Percentage of $ Penalties 2000-2019
The figures just quoted above count penalty decisions on companies, which is greater than the number of
companies penalized. That is because the Auto-Parts cartels involved a high degree of serial collusion.
84
Serial collusion is frequent and high among the top 30 (Table 4). On average, the top 30 parent
groups participated in nearly seven Auto-Parts cartels. In fact, only three of the top 30 did not engage
in multiple market collusions. The outstanding example of serial collusion is Toyota Motor Co. and
its subsidiary DENSO, which participated in at least 34 parts cartels. Ironically, Toyota applied for
and was awarded immunity in several Auto-Parts cartels.
Along with the United States, Canada was another early mover. Beginning its investigations in 2009
and ending in 2018, the Competition Bureau has imposed 16 corporate fines totaling US$128 million
– a Canadian record (Connor 2016a: Table 2).
85
Although the Bureau has done so in the past, it
indicted no individuals for price fixing in Auto-Parts.
The U.S. fine on Yazaki in January 2012 was followed quickly by the Japan FTC.
86
It fined seven
auto-parts firms a total of $215 million in late 2012. Yazaki Corp.’s fine of $127 million set a new
Japanese antitrust record. Moreover, the JFTC has referred four firms and nine executives for
criminal prosecution in Auto Bearings, the first criminal antitrust prosecution in four years. By mid
82
Companies headquartered in Western Europe account for 38.5% of total penalties, which is merely 2.5 percentage
points lower than the Japanese companies’ penalties.
83
For example, Norway’s penalties were incurred almost entirely by two shipping firms (Wilhemsen and
MøllerGruppen) and Korea’s by Hyundai Group.
84
Serial collusion is simply a count of the number of proven instances of price fixing by a single company during a given
time span. Usually the nature of the markets involved is irrelevant, but in this paper Auto-Parts is the focus. Some
instances of serial collusion qualify as legal recidivism, and all examples of recidivism are serial collusion, but the
definitions of recidivism vary by jurisdiction.
85
The Auto-Parts total is nearly half of the 1990-2015 total Canadian fines on 77 cartels.
86
Indeed, Japan began investigating bid rigging of government tenders by tire manufacturers in 2004. The South African
Competition Commission also found evidence of tire-manufacturer collusion; it fined a company in 2011 after a 2008
investigation.
24
2019, Japan had indicted large numbers of cartelists for price fixing: 115 companies and 43
individuals; however, only 30 companies were fined.
Japan’s example was amplified in Asia by the antitrust authorities of South Korea, China, Singapore,
Pakistan, Turkey, Indonesia, and India. In 2011, the Indian Competition Commission began an
investigation into whether 17 auto manufacturers were colluding on the sales of car parts to
independent dealers (Vyas and Thakkar 2013). Fifteen of them from all over the world were fined a
record $485 million in August 2014 (Connor 2019). This is the only Indian conviction in Auto-Parts.
Singapore made history in December 2013 by imposing significant fines ($7.4 million) on three
manufacturers of Auto Bearings; this was Singapore’s first international cartel conviction.
The EU, with the world’s second-largest auto industry and a large source of Auto-Parts fines, has
been relatively slow to impose them or other financial penalties (Table 3). For the 12 decisions
announced so far, EC fines amount to $7.188 billion (or 44% of total fines, excluding Diesel
Emissions).
87
The EC is already 113% higher than the U.S. total. Speculation in the trade press
suggests that 15 to 20 Auto-Parts cartels are under investigation by the EC.
88
A few of the markets
are small, but eight of them exceed estimated EU affected sales of $1 billion (Table 2).
89
Besides the
EC, eight cases have been prosecuted by EU NCAs, four of them by Germany; excluding Diesel
Emissions, fines total $550 million. Together, the two mature antitrust regions (North America and
the EU) account for $11.2 billion in Auto-Parts fines (or 68% of the world’s non-Diesel-Emissions
cartel fines).
It appears that the Wire Harness cartel provided the entrée for the largest number of antitrust
authorities to co-investigate, nine, starting with Canada in 2009. The following jurisdictions joined
Canada’s investigations: USA (2010), Korea (2010), Japan (2010), EC (2010), Australia (2013),
Singapore (2013), Brazil (2015), and most surprising China (2014), which was new and unused to
dealing with global cartels.
90
By mid 2019, Wire Harness fines totaled $1.137 billion, now the fourth
largest in penalties (Table 4A). Generally speaking, global cartels with very large affected sales are the
ones with the greatest number of co-investigators: Roll-on Roll-off Auto Shipping (14 antitrust
authorities), Windshield Wiper Systems (eight), and Power Steering Assemblies (eight).
Outside of Asia, Brazil has initiated a very large number of Auto-Parts investigations, 21 by mid 2019.
Several are geographically unique to Brazil. Chile and Mexico have initiated a small number of auto-
parts cases, as has South Africa. All told, national antitrust authorities outside of the two North
Atlantic jurisdictions account for $2.3 billion in fines, about 13% of total fines (or 17% excluding
Diesel Emissions).
87
Reliable reports in 2019 say that the EC will fine three German auto makers $3.77 billion by 2020; if correct, the EC
fines will total $11.0 billion (or 53% of world fines).
88
The EU auto-assembly industry is slightly larger than that of the United States. However, if one compares the 11
cartels that were fined by both jurisdictions, the EC’s fines are 77% higher. If one adds Diesel Emissions to the list, the EC’s
fines will be about 300% higher.
89
They are, from largest to smallest: Valve Timing Controls, Fuel Injection Systems, Motor Generators, Power Steering Assemblies,
Windshield Wiper Systems, HID Ballasts, Speed Sensors Assemblies, and Steering Angle Sensors. I suspect that only half or less of
these eight will be decided.
90
Beginning in 2013 peculation began to mount that the new China antitrust authority was soon going to investigate
price fixing in the automobile industry (Telegraph 2013).
25
To summarize, U.S. fines total $3.4 billion and estimated sales total $463 billion, so fines severity is
less than 0.7% (1.4% including private settlements); for the EC, severity is about 0.5%; and the
ROW has roughly 0.3% severity. All are low, but the U.S. ratio is the highest. (Severity ratios are
further discussed below.)
C. Private Damages Paid
Damages awards made to private plaintiffs by courts – usually resulting from settlements in North
America – are the second-largest type of penalty for cartel cases generally and the Auto-Parts cartels
as well. Private enforcement plays a critical role in preventing or ameliorating collusion (AAI 2019).
There are four sets of purchasers that were injured by collusion of this supercartel. First and
foremost are GM, Toyota, and about 15 other OEMs (the brand manufacturers that assemble
vehicles), which were directly affected by having offers from suppliers to fulfill their Requests for
Proposals bid rigged. The OEMs comprise by far the largest segment of direct purchases, but the
auto parts were also sold directly to distributors for aftermarket sales of parts.
91
Indirect purchasers
include buyers of finished vehicles that contained one or more cartelized component: franchised
dealers and end-users.
92
According the PIC data set, at least 104 class-action, private damages suits were filed and have been
mostly settled (of which 42 were U.S. direct-purchaser, 37 U.S. indirect-purchaser, and 25
Canadian
93
private class actions). Because of overlapping cases, 49 of the 80 cartels (61%) were sued
by one or more injured parties in North America. The only truly direct purchaser of the parts and
components is one OEM (Ford). Class actions were formed by auto-parts distributors and other
“direct” buyers and by two groups of indirect purchasers buyers of completely assembled cars and
trucks (retail dealerships and end-users).
For many of the auto-parts cartels, each of the defendants sells parts to a very few large automakers.
Because the necessary requirement of “numerosity” is absent, class actions by the auto makers are
unlikely. Rather, as suggested by antitrust lawyer Andrew Lee, “A lot of automakers want to preserve
their relationships with some of these suppliers” (Baumann 2012). Indeed, in late 2013 Ford Motor
Co. seems to have developed a legal strategy that other direct purchasers are likely to follow
(Sedgwick 2013). On July 16, 2013, Ford became the first of two OEMs to file a suit in Auto Parts. It
sued Fujikura Ltd. for treble damages for wiring harnesses supplied for its Ford Fusion sedan, even
though Fujikura lost the bid. However, Ford and Fiat Chrysler appear to be unique in openly suing
for antitrust damages. Rather, legal commentators surmise that most auto manufacturers will
privately negotiate cash compensation from non-winners in the bidding rings, but will demand extra
units, future discounts, better warranties, or other qualitative concessions from their suppliers that
colluded against them. A small number of damages suits have been filed by buyers of Trucks in the
EU, but decisions are mostly a few years in the future. No information on Auto-Parts legal actions
has surfaced outside of North America and the EU. Some of the Japanese OEMs with long
historical ties to their suppliers may do nothing.
91
Aftermarket sales are for repairs or upgrades of vehicles. Direct buyers include wholesale distributors to auto-repair
shops and to auto-supply retailers for end users who do their own repairs.
92
End users include fleet rental agencies, households, businesses, and governments.
93
In Canada, direct and indirect cases are joined.
26
From the three groups of North American class-action suits, settlements totaled $2.893 billion.
94
The severity of the Auto-Parts settlements is on par with historical standards, and may be above
average given that the largest volume direct purchasers (the OEMs) opted out of the class and did
not sue in court for compensation.
95
The only minor exception is Ford Motor Co. Rumors in the
trade press suggest that the OEMs are negotiating in-kind compensation (free parts deliveries) in lieu
of cash. It is unlikely that the market value of such in-kind compensation will ever be revealed.
96
The majority of injured parties reside outside North America, but the legal systems for obtaining
compensation there are underdeveloped. Moreover, because the press is unfamiliar with such suits,
news of private damages cases filed there are typically underreported. Private damages actions are
few in number because typically only single damages are permitted, class actions are relatively
difficult to organize, and contingency fees are generally not permitted to fund legal and consultancy
costs of litigation in other jurisdictions.
97
Nevertheless, for at least one market, these cases are
growing quickly in the EU and other parts of Western Europe.
98
The outlier is the 170 private
damages cases have been filed in Europe seeking compensation for overcharges in the massive
Trucks cartel case.
99
As of March 2019, there are no reports of private plaintiffs obtaining significant
damages awards in any Auto-Parts cases outside of North America.
D. Individual Penalties
As of early 2019, 192 executives have been indicted for price fixing in the Auto-Parts cartels, nearly
all of them by U.S. courts. Of the 190 indicted, 145 have been punished with court sentences: 68
have been punished with fines, 142 with prison, and 65 with both fines and imprisonment.
100
Nearly
all of the convicted cartel managers are Japanese nationals (Figure 5). Of the convicted executives,
68 were fined small amounts in the range of $5,000 to $400,000; the mean average fine imposed is
$79,000, but the median fine is only $20,000.
94
Using a narrower definition of Automotive Parts employed by the U.S. District Court of the Eastern District of
Michigan (Detroit), Davis and Kohles (2018) find that the end-payors’ suit settled for $1,036.9 million, the dealerships’
actions for $298.9 million, and the direct purchasers for $422.4 million – a total of $1,758.2 million for all three subsets
of buyers.
95
Cash settlements in North America (including direct purchasers that opted out of the class, when reported in the
press) usually are about 75% of U.S. and Canadian fines (see Connor 2012: Figure 14). However, in Auto-Parts class
reported class settlements totaled about 90% of North American fines of about $3.2 billion.
96
Because most OEMs are publicly traded and follow Generally Accepted Accounting Principles, significant
compensation ought to be revealed to stockholders. The compensation may be below some “material” effect on total
profits.
97
These practices are in transition in the EU. For example, in 2017 the Spanish Supreme Court relaxed a centuries’-long
prohibition of contingency fees. And for several years, ventures like CDC Cartel Damages Claims have been able to
launch collective suits by purchasing the possible future antitrust awards from several plaintiffs (“claims bundling”) and
using these assets to obtain financial backing, in Germany, the Netherlands, and other EU Member States.
98
Procedures for antitrust damages suits have become more plaintiff-friendly in the UK, Netherlands, Spain, Finland,
and Germany. For example, in the Netherlands ten private damages cartel cases were filed from 2010 to 2017, including
Trucks (Cornelissen et al. 2018: 184).
99
ICLG, Competition Litigation 2019 (2019: Para. 11.3) [https://iclg.com/practice-areas/competition-litigation-laws-and-
regulations/to-shop-or-not-to-shop-jurisdictional-differences-following-implementation-of-the-damages-directive]. This
report also mentions a well-financed Trucks suit by roughly 8000 members of the UK Road Haulage Association, which
is demanding more than $5 billion (ibid.: Para. 9.5).
100
Prison sentences are not synonymous with being incarcerated. Of the 142 executives given custodial sentences, 64
(45%) are either fugitives or had their sentences suspended. Three of the indicted executives had their charges dismissed.
27
5. 81 Sanctioned Auto-Parts Cartel
Executives, by Nationality
0 10 20 30 40 50 60 70
Brazil
US
Germany
Taiwan
Japan
JP Share 86% of World
Mar 5, 2016 258J M Connor, Purdue U.
The 68 U.S. prison sentences ranged from six to 84 months. Of the 68 U.S.-incarcerated Auto-Parts
executives, the mean custodial sentence imposed by U.S. courts is 17.3 months, and the median is 15
months. About 41 individuals are still awaiting to be sentenced or dismissed.
101
Japan is the only
jurisdiction that has imposed prison sentences for Auto-Parts individuals.
102
At the request of
Japanese prosecutors, nine prison sentences were imposed by Japanese courts in the Auto Bearings
cartel case; although the Japanese prison sentences were long (12 to 18 months), after being
sentenced to prison, all of the punishments were converted to probation by judges.
Unlike typical international cartel prosecutions in the past, few of the individuals held accountable
by antitrust authorities in Auto Parts have been CEOs, COOs, or CFOs of their parent companies or
even their subsidiaries (Halcom 2013b).
103
Rather, they have held titles like sales manager, director,
marketing manager, or department head of units below the corporate VP level. A fascinating
interview of “Mr. X”, a formerly imprisoned Japanese middle manager in Auto-Parts seems to explain
the thinking of many cartel managers (see Mr. X Box).
101
Dismissal usually upon the recommendation of prosecutors for guilty but exceptionally cooperative witnesses.
102
Despite having the power to do so, neither Canada nor South Korea indicted any individuals for price fixing.
103
However, in a tradition in antitrust that goes back at least 20 years, the corporate directors of the Takata, Denso, and
Yazaki companies voluntarily apologized to their stakeholders by returning significant portions of their salaries -- up to
50% for three months (Halcom 2013b).
28
A large number (at least 64) of indicted executives that are not accounted for: they are known or
suspected fugitives from U.S. courts.
104
One Japanese antitrust expert suggests that collusion may have
been fostered because many of the Japanese executives were unaware of the prison sentences
habitually laid down in the United States (Gearino 2015). Alleged Japanese cartel managers are
protected from prosecution by a widespread corporate culture that typically views price-fixing
offenses as at most misdemeanors; by a local court system comprised of judges that habitually refuse
to impose incarceration for criminal antitrust convictions, even when Japanese Government
prosecutors demand it; and by a fugitive status that cannot be ended by extradition to the United
States. Such extradition is permitted by treaty, but it is unprecedented.
105
E. The Adequacy of Agency Resources
The twilight of U.S. enforcement may reflect a diminished number of eyes in the Antitrust Division.
Observers opine that the Antitrust Division has inadequate personnel to deal with the large number
of Auto-Parts cartels (Lindell 2012).
106
The Antitrust Division secured the $744 million in fines at the
104
Rather than travel to face courts in the United States, foreign-resident executives simply avoid entering U.S. territory.
Should they fly to Guam or Hawaii, they will definitely be arrested. Flying to Australia, Canada, Germany, or the UK
may also lead to an arrest and extradition.
105
Both Japan and Taiwan have criminal antitrust laws, but despite close enforcement cooperation between Japan and
the USA, no cartel extraditions have yet occurred. Statements by Taiwanese antitrust officials indicate a public antipathy
toward the U.S. incarceration of their nationals for price-fixing crimes.
106
The author cites former DOJ attorneys as stating that because of the closure of several of its regional offices, the
Division lost one-half of its professional staff dedicated to antitrust enforcement. Lawyers representing potential
Mr. X
“The onetime high-flying executive from Japan, who lived a
comfortable expat life in the Midwest, was one of dozens of white-
collar criminals nailed by .... [the] U.S. Department of Justice ....
Today, Mr. X has done his time and is back at work with his
company [in Japan].
“For Mr. X and other Japanese sales managers stationed in
America, it was second nature for them to divvy up vehicle
components. It was the way business was always done, he said;
don't mess with your rivals' turf, and they won't mess with yours
.... a Tokyo antitrust lawyer [says] ‘Japanese may feel that the
conduct is not illegal in a subjective sense.’
“[But after the DOJ raid] .... [his] company began to play hardball.
It pressured Mr. X to plead guilty, he says .... In exchange, the
company would take care of his family while he was in jail and find
a position for him after he was freed .... In Mr. X's case, he says,
his company footed his $20,000 criminal fine and supported his
wife while he was locked up .... ‘It's like the Mafia,’ complained
one Japan-based executive at an international parts supplier”
(Greimel 2015).
29
very end of FY2013, but fell thereafter.
107
As of February 2015, the U.S. statute of limitations began
to take hold; for Wiring Harnesses at least, no further criminal charges can be brought; and many
other Auto-Parts cartels are fast approaching this limit (Knox 2015). An investigation by a leading
antitrust newsletter found that staff numbers available in Washington for cartel investigations were
down 27% in the first two years of the Trump administration (CPI 2019). By several measures, U.S.
cartel enforcement was in decline towards the end of the Auto-Parts convictions after 2016 (Connor
2019a).
VIII. Effectiveness of Penalties: Severity and Recovery
Severity and recovery ratios are simple but revealing indicators of the potential effectiveness of
punishing cartels. A Severity Ratio is the monetary penalty(ies) paid by a cartel divided by the affected
sales of the cartel or a cartel member. Although of limited forensic value, these ratios are easy to
understand
108
and useful for comparing the severity of fines across jurisdictions, across members of
the same cartel, and for a given jurisdiction through time. There is no absolute standard of
excellence for a Severity Ratio, only relative standards.
Recovery Ratios are more revealing about the deterrence value of punishments, but more difficult to
obtain because the denominator is the cartel (or cartelist’s) overcharge. If a Recovery Ratio is less
than one, compensation of injured is inadequate; if greater than one, then part of the penalty paid is
punitive (i.e., in excess of full compensation). If hypothetically the chances of being caught for a
crime are 100%, then a Recovery Ratio of 100% is ideal; if the probability of being arrested and
convicted is 20%, then a Recovery Ratio of 500% is optimal.
Reliable overcharges for Auto-Parts are few, in part because the Auto-Parts cartels are so recent that
economists have not had access to relevant data for computation of overcharges.
109
The four
(disinterested-party) overcharge rates I have found average 21% (Connor 2019).
110
This number
suggests aggregate overcharges of $700 million to $1 billion.
Table 6 collects as many Severity and Recovery ratios as can be developed from the Auto-Parts
cartels data. Severity ratios are very low in all jurisdictions. Using public affected sales data, the
median ratios of the EC and Canada are highest at 2.7% and 1.0%, respectively; U.S. severity is
lower, even adding settlements to the numerator; and the ROW is virtually zero. These are very cow
compared to international cartels penalized in the past 25 years (from Connor 2016b). When one
substitutes the inevitably lower affected-commerce data posted in the decisions of antitrust
authorities, median severity ratios for fines are much higher -- in the 10% to 40% ranges for the
more mature antitrust jurisdictions; however, private damages are very lenient by historical standards.
amnesty applicants complain that they are unable to schedule meetings with prosecutors. A recently resigned director of
criminal enforcement in the Division, John Tezaken, echoed these sentiments (Koons 2013).
107
By rushing the pleas to just before September 30
th
expired, the Division will be able to announce $1 billion in cartel
fines for the 2013 Fiscal Year (Koons 2013). Without these Auto Parts fines, announced to the press by the Attorney
General himself, 2013 would have tracked far below par.
108
Severity ratios are cited frequently by attorneys and judges as a benchmark.
109
From what I know about the private damages cases, very little transactional pricing is available and yardsticks are very
difficult to envision.
110
Bid-rigging cartels typically historically as a group exhibit slightly lower overcharge rates (about 20%) versus classic
price-fixing cartels (about 27%) (Connor 2014: Table 6).
30
The number of recovery ratios available are too few to discuss, but the low severity suggests they are
also very low.
IX. Summary
Experienced antitrust officials – referring to the 70 to 80 interconnected, international, auto-parts-
manufacturing, bid-rigging schemes discovered during 2008 to 2017 -- have asserted that they are
the “largest” cartels ever tackled by the world’s major antitrust authorities. The truth is that “it
depends.” The size dimensions chosen as a benchmark is critical. Six have been suggested (see
second section above):
• In terms of numbers of cartels, Auto-Parts is second
111
• In its global geographic reach, several previous cartels are equal
• Its affected commerce is huge, but may be second to the Banking supercartel
• Its total fine amount is second, but quite close
• The number of firms indicted is a world record
• The number of individuals indicted is also a world record.
Thus, ranking Auto-Parts by size is complicated. It is indeed the “largest” supercartel by two
measures, tied using a third dimension, second by two other criteria, and an ambiguous rank
according to a sixth measure.
The origin of these cartels is mysterious. Most cartels are formed after a sustained period on falling
prices and profits, but the automotive industries were enjoying rapid growth, peak sales, and high
profitability during the period when nearly all the Auto-Parts cartels were formed. Auto
manufacturers in Europe and North America long placed strong pressures on their suppliers to
reduce prices of their inputs, and in Japan competitive bidding was introduced by Renault-Nissan
around 1999. Did the assemblers push too hard on price reductions before collusion began and
thereby trigger collusion to cope with an existential threat? Did the Japanese automakers become
victims of the demise of a supply system that was of their own making?
Antitrust enforcement aimed at this supercartel is nearly complete as of early 2019. Canada has
definitely closed all Auto-Parts cases. In the United States, because of the five-year statute of
limitations, the DOJ’s investigations of auto-parts cartels began winding down in late 2015 (Greimel
2016). After a decade, corporate indictments appear to be over. Although it is possible that the DOJ
may nab a couple of the 60 fugitives and seek his extradition, further convictions of individuals in
the United States are unlikely. The status of several mature EC investigations suggest that most have
been closed.
112
Brazil and Mexico still have more than 20 open investigations open in 2019. Finally,
111
Information about the precise market definitions for the cartelized markets is now fairly settled, but counting cartel
markets affected requires judgment. The verbal and diagrammatic descriptions of product characteristics have largely
harmonized across jurisdictions and public and private prosecutors. However, definitional differences remain with
regard to the degree of inter-buyer substitutability and geographic market scope. Some antitrust authorities suggest that a
given supplier-buyer channel is a single market, whereas other prosecutors aver that a high degree of supplier
substitutability (products that can be easily modified and plants that can be quickly re-geared for similar parts) means
that all potential OEMs belong in the same market.
112
A dozen EC auto-parts investigations were believed to be opened in 2010 to 2013, but inaction on sending a
Statement of Facts after five or six years is quite unusual.
31
class-action damages suits in North America are also nearly completed, but the amount of
compensation for the most direct buyers, the OEMs, is publicly unavailable and is most likely
untraceable, because it is in-kind rather than in cash.
Estimates for affected commerce of the Auto-Parts supercartel range from $3.2 to $5.0 trillion. There
are few reliable estimates of the size of overcharges for these cartels, and more are desperately
needed, but averaging the few preliminary estimates suggests that injuries are in the range of $0.6 to
$1 trillion. Even if monetary penalties rise to double the current $20 billion, cartel deterrence or
cartel dissuasion is highly unlikely.
32
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36
TABLES
Table 1. Ten
“Atypical” Automotive Cartels, Discovered 1990-2017
a
Market, Geographic
Location
Firms
Authority
Discovery
Date
Collusion
Dates
Penalties
($ mil.)
Notes
Auto Batteries
manufacturing, Korea
4
KR
11/10/2004
6/03-9/04
1.6
No membership
overlap
Tires, India
5
IN
2010
2005-2010
0
cleared
Automotive Refinishing
Paint (Global?)
5
US+CA+
EU+ PVT
6/4/2001
1/93-12/00
106
3 govt. probes closed
Automotive welding
electrodes, France
5
FR
12/16/2010
2002-2005
0.133
No membership
overlap
Automobiles, Canadian
imports, US
8
US PVT
2003
1/2001-
3/06?
36
Later dismissed
Auto manufacturing &
distribution, Turkey
19
TR
9/9/2009
2006-9/2009
148
TR Record Fines
Aftermarket Auto Air
Filters, US
11
US
8/6/2008
1/1/99-
3/31/2008
0
Cleared: False
Accusation
Auto glass (Carglass), EU
4
EC
2/24/2007
2/24/2007
1757
No membership
overlap
Shipping FEFC (autos
to/from Far East), Global
4
EC
3/28/2003
1995-2003
consent
An open “shipping
conference”
a
By atypical, I mean that these cartels may not fully qualify for membership in the Auto-Parts Supercartel that is the focus
of this paper. Many predate the Supercartel’s operations that typically began about 2000. Some of the above did not
manufacture electrical or mechanical inputs for OEMs, some did not employ rigging of RFQs (e.g., Auto Air Filters), and
some did not have overlapping membership of companies with the prototypical auto-parts-manufacturing cartels (e.g.,
Welding Electrodes, Carglass).
Source: Private International Cartels spreadsheet (2013)
37
Table 2. 80 Auto-Parts Cartels, 331 Antitrust Prosecutions & Years
Market Name,
Geography
Year Antitrust Authority Began Prosecuting
a
US
CA
EC
JP
KR
BR
CN
ZA
MX
AU
US
PVT
OTH
PVT
OTH
Filters for vehicles,
aftermarket, paper,
US & CA
2011
2008
2008
Auto parts,
alternators
2013
2009
2010
2011
2016
Auto parts, wire
harnesses
2011
2009
2010
2010
2010
2015
2014
2013
2011
2012
Auto Parts, Air
Fuel Ratio Sensors
2014
2011
2012
Auto parts, fuel
senders
2014
2010
2010
2012
2013
Auto parts,
Instrument panel
clusters
2012
2010
2010
2010
2013
2015
2011
2012
Auto parts, lighting
products, new
("lamps")
2014
2012
2012
2014
2011
2013
Auto Parts, oxygen
Sensors
2014
2011
2015
Auto Parts, spark
plugs
2014
2018
2015
2014
2014
2011
2014
Auto parts,
aftermarket
lighting, US & CA
2011
2012
2009
2011
Auto parts,
Bearings, EU, US,
and JP
2013
2011
2011
2011
2011
2014
2014
2012
2012
2016,
2017
SG
2013
Auto parts,
occupant safety
equipment, new
2012
2011
2011
2015
2011
2011
2014
Auto parts, tooling,
BR
2013
2014
Auto parts, anti-
vibration devices
2012
2010
2013
2011
2016
Auto parts, thermal
systems (heating &
AC)
2013
2012
2011
2011
2015
2011
2012
Auto Parts,
electronic control
units (boxes)
2012
2013
2015
2012
2016
Auto parts, speed
sensor wire
assemblies
2012
2011
2012
38
Table 2. 80 Auto-Parts Cartels, 331 Antitrust Prosecutions & Years
Shipping, ro-ro,
auto
2012
2012
2012
2012
2016
2012
2015
2015
2017
2016
2013
2013
CL
2015,
PE
2017,
US
FMC
2012
Auto parts,
switches (steering,
wiper, etc.)
2013
2009
2014
2011
2016
Auto parts, air flow
meters
2013
2013
2013
2013
2013
2013
2013
2011
2013
Auto parts, ATF
warmers
2013
2013
2013
2013
2013
2013
2013
2011
2014,
2016
Auto parts,
driveshaft boots,
constant-velocity
2013
2011
2016
Auto parts,
electronic throttle
bodies
2013
2014
2011
2014
Auto parts, fan
motors (engine-
cooling)
2013
2013
2013
2011
2012
Auto parts, fuel
injection systems
2013
2013
2013
2013
2013
2013
2013
2011
2012
Auto parts, high-
intensity-discharge
ballasts
2013
2011
2014
Auto parts, ignition
coils
2013
2013
2011
2016
Auto parts,
inverters
2013
2013
2013
2013
2013
2013
2013
2011
2012
Auto parts, motor
generators
2013
2013
2013
2013
2013
2014
2013
2013
2011
2012
Auto parts,
radiators & cooling
fans
2013
2013
2013
2013
2013
2013
2013
2011
2013
Auto parts,
sensors, steering
angle
2013
2011
2014
Auto parts, starter
motors,
alternators, ignition
coils
2013
2013
2013
2013
2013
2014
2013
2013
2011
2013
Auto parts,
steering assemblies,
power
2013
2013
2013
2013
2013
2016
2014
2013
2013
2011
2014
Auto parts, valve
timing controls
2013
2013
2013
2013
2013
2013
2013
2011
2014
Auto parts,
window motors,
power
2013
2013
2013
2013
2013
2013
2013
2011
2012
39
Table 2. 80 Auto-Parts Cartels, 331 Antitrust Prosecutions & Years
Auto parts,
windshield washer
systems
2013
2013
2013
2013
2013
2013
2013
2011
2014
Auto parts,
windshield wipers
and components
2013
2013
2013
2013
2013
2015
2013
2013
2011
2015
Auto parts, brake
hose, non-rubber
2014
2011
2016
Auto parts, hoses,
rubber
2014
2012
Auto parts, plastic
interior trim
2015
2015
2011
2016
Auto parts, rubber
body seals
2016
2011
2016
Auto parts, shock
absorbers
2015
2015
2011
2016
Auto parts,
steering columns,
manual
2015
2015
2015
Heaters, parking &
auxiliary,
aftermarket
2015
2015
Auto parts, locks,
keys, handles
2016
2014
2011
Auto parts,
emission controls,
ceramic substrates
2016
2015
2011
2016
Auto parts, power
window switches
2016
2015
Auto parts, tubes,
steel
2016
2011
Diesel motor
emissions, US, DE,
CA, IN, and EC
2017
2017
2017
2017
2017
DE
2016,
IN
2018
Auto parts, clutch
facings (BR?)
2014
Auto parts,
clutches (BR?)
2014
Auto parts,
bumpers, BR
2015
Auto parts, spare
parts, distributors,
BR
2016
Auto parts, valves
for engines,
aftermarket, BR
2017
Automotive filters,
BR
2017
Auto leasing, CH
CH
2014
Tire
manufacturing, ID
ID
2014
40
Table 2. 80 Auto-Parts Cartels, 331 Antitrust Prosecutions & Years
Auto Parts, IN
IN
2011
Tire
manufacturing, JP
Defense Agency
2011
Auto parts, small
electric motor
systems
(generators,
starters, wipers)
2014
2012
2014
Motor Vehicle
Assembly, Kenya
KE
2010
Truck & tractor
manufacturing, KR
2013
Automobiles, new,
KR
2014
Auto parts, exhaust
systems
2015
2011
Auto
manufacturing,
small cars, PK
PK
2015
Automobile
manufacturing &
distribution, TR
TR
2009
Trucks, postal, UA
UA
2013
Tire
manufacturing, ZA
2008
Automobile
distribution,
Hyundai, BG
BG
2012
Auto parts, noise-
reduction, DE
DE
2013
Auto parts, engine
heat shields,
aluminum, DE
DE
2014
Auto parts, special
stainless-steel
buyers', DE
DE
2016
Automobile
manufacturing &
distribution, ES
2015
ES
2013
Auto parts, molded
interior, ES
ES
2016
Importing VW
cars, LV
LV
2015
Truck distribution,
UK
UK
2010
Truck
manufacturing, EU
2011
2015
UK
2010
Automobiles,
Canadian imports,
US
2003
41
Table 2. 80 Auto-Parts Cartels, 331 Antitrust Prosecutions & Years
Auto parts,
aftermarket sheet
metal, US
2010
2014
Truck
Transmissions,
Class 8, US
2010
Total 80 Cartels,
331 Prosecutions
52
26
26
23
21
22
5
5
14
16
50
49
22
a
Antitrust country (Internet symbol), PVT = Private damages cases (48 US and 48 Canada), OTH = Other authority
Note: 331 total investigations, but number of prosecutions with penalties is slightly lower.
Source: Connor (2019).
42
Table 3. Eighty Alleged Cartels, Legal Outcomes, by Date Detected, 2010-2017
Market Name,
Geography
No. of
Firms/
Execs
a
Lead
b
Author-
ity
Dis-
covery
Year
Year
Cartel
Began
Dura-
tion
(mon.)
Penalties
($ mil.)
Notes on
Prosecution
Automobiles, Canadian
imports, US
2
US PVT
2003
2001
62.0
36.4
Not in
Supercartel?
Tire manufacturing, JP
Defense Agency
10
JP
2004
2001
35.0
0
Consent
decree/warning
Filters for vehicles,
aftermarket, paper, US &
CA
11
US
2008
1999
111.0
18.5
Not in
Supercartel?
Tire manufacturing, ZA
1
ZA
2008
1999
96.0
5.46
Not in
Supercartel?
Automobile manufacturing
& distribution, TR
15
TR
2009
2006
43.0
147.6
Not in
Supercartel?
Auto parts, wire harnesses
14/13
US/EC/
JP
2009
2000
131.0
1924
First in
Supercartel
Auto parts, alternators
5/7
US/EC
2009
2000
143.0
334.0
Auto parts, switches
(steering, wiper, etc.)
3
US/EC/
JP
2009
2003
77.0
40
1
st
criminal
case in 4 years
in Japan
Truck manufacturing, EU
6
EC/UK
2010
1997
168.0
4267
Auto parts, lighting
products, new ("lamps")
5
JP
2010
2002
86.0
100.6
Auto parts, anti-vibration
devices
4/7
US
2010
1996
194.0
647
Truck Transmissions, Class
8, US
1
US PVT
2010
2002
108.0
500
Truck distribution, UK
5
UK
2010
2008
24.0
4.27
Auto Parts, spark plugs
3
US
2010
2000
155.0
214
Auto Parts, oxygen Sensors
2/2
US
2010
2000
138.0
76
Auto parts, aftermarket
sheet metal, US
3/2
US PVT
2010
2003
60.0
9.85
Auto parts, fuel senders
2/6
US/EC/
JP
2010
2004
71.0
5.90
Auto parts, Instrument
panel clusters
5/7
US/EC/
JP
2010
2002
86.0
152
Motor Vehicle Assembly,
Kenya
3?
KE
2010
?
0
Possible
consent decree
Auto Parts, Air Fuel Ratio
Sensors
2/2
US
2010
2000
138.0
13.600
Auto parts, thermal
systems (heating & AC)
13/6
EC
2011
2000
131.0
341
Auto parts, aftermarket
lighting, US & CA
4/5
US
2011
2001
85.3
100.6
Auto parts, Bearings, EU,
US, and JP
8/11
JP
2011
2004
87.0
1949
Auto parts, occupant safety
equipment, new
13/7
US/EC
2011
2005
73.0
609
Auto parts, tooling, BR
6?
BR
2011
2000
120.0
Case still under
investigation
Auto Parts, IN
15
IN
2011
?
485.3
43
Table 3. Eighty Alleged Cartels, Legal Outcomes, by Date Detected, 2010-2017
Auto parts, small electric
motor systems (generators,
starters, wipers)
4
US/EC/
JP
2011
2000
203.4
45.7
Shipping, ro-ro, new
automobiles
10/11
US/EC/
JP
2012
2000
153.2
1307
Auto parts, exhaust
systems
3
US
2012
2009
4.0
25.66
Auto parts, speed sensor
wire assemblies
2/1
US
2012
2003
86.0
2.77
Auto Parts, electronic
control units (boxes)
3/1
CA
2012
2001
60.0
44.22
Automobile distribution,
Hyundai, BG
6
BG
2012
0.0
10.75
Automobile manufacturing
& distribution, ES
21
ES
2013
?
189.1
Auto parts, fuel injection
systems
2/4
US
2013
2000
121.0
73.48
Auto parts, valve timing
controls
3/4
US
2013
2000
121.0
154.5
Truck & tractor
manufacturing, KR
7
KR
2013
2002
108.0
109.1
Auto parts, motor
generators
2/3
US
2013
2000
121.0
44.7
Auto parts, radiators &
cooling fans
4/2
US
2013
2002
87.0
51.94
Auto parts, steering
assemblies, power
6/13
US
2013
2005
82.0
64.1
Auto parts, windshield
wipers and components
4/2
US
2013
2000
121.0
139.7
Auto parts, high-intensity-
discharge ballasts
5/1
US/EC/
JP
2013
1998
139.0
141.15
Auto parts, sensors,
steering angle
2/2
US/EC/
JP
2013
2003
77.0
48.6
Auto parts, air flow meters
2/4
US
2013
2000
121.0
31.6
Auto parts, electronic
throttle bodies
2
US
2013
2000
121.0
51.66
Auto parts, window
motors, power
3
US
2013
2000
121.0
56.5
Auto parts, inverters
2
US
2013
2000
121.0
29.35
Auto parts, ATF warmers
3
US
2013
2002
87.0
26.900
Auto parts, windshield
washer systems
5/1
US
2013
2000
121.0
131.4
Auto parts, starter motors,
alternators, ignition coils
5/8
US
2013
2000
121.0
268
Auto parts, ignition coils
6/9
US/EC/
JP
2013
1998
139.0
169.4
Auto parts, fan motors
(engine-cooling)
2
US
2013
2000
121.0
31.8
Auto parts, driveshaft
boots, constant-velocity
2
US
2013
2006
56.0
32.3
Auto parts, noise-
reduction, DE
6
DE
2013
2005
120.0
84
Trucks, postal, UA
2
UA
2013
?
9.4
44
Table 3. Eighty Alleged Cartels, Legal Outcomes, by Date Detected, 2010-2017
Auto parts, locks, keys,
handles
3
US
2014
2002
116.0
21.600
Auto parts, hoses, rubber
4/1
US
2014
2004
79.0
10.100
Auto leasing, CH
9?
CH
2014
?
Information
cannot be
located;
probably
closed. Not in
Supercartel?
Auto parts, brake hose,
non-rubber
1
US
2014
2005
10.0
2.750
Auto parts, clutch facings
?
BR
2014
?
Case still under
investigation
Auto parts, clutches
?
BR
2014
?
Case still under
investigation
Automobiles, new, KR
5?
KR
2014
?
Information on
outcome
cannot be
located;
probably closed
Auto parts, engine heat
shields, aluminum, DE
4
DE
2014
2011
11.0
11
Auto parts, bumpers, BR
4
BR
2015
2000
168.0
Case still under
investigation
Auto parts, shock
absorbers
8
US
2015
1986
312.0
144
Auto parts, steering
columns, manual
1
US
2015
2007
60.0
2.500
Auto parts, rubber body
seals
2/5
US
2015
2000
155.0
179.6
Auto parts, emission
controls, ceramic
substrates
4/19
US
2015
1985
301.0
150.0
Tire manufacturing, ID
6
ID
2015
2009
36.0
12
Auto parts, plastic interior
trim
1/1
US
2015
2004
99.0
6.725
Heaters, parking &
auxiliary, aftermaket
3/3
US
2015
2007
63.0
92
Importing VW cars, LV
6/2
LV
2015
2010
48.0
8.88
Auto manufacturing, small
cars, PK
2?
PK
2015
?
?
Case still under
investigation
Diesel motor emissions,
US, DE, CA, IN, and EC
5/4
DE
2016
1993
273.0
4410
Auto parts, tubes, steel
2/4
US
2016
2003
91.3
24.5
Auto parts, spare parts,
distributors, BR
29/60
BR
2016
2003
156.0
0.078
Auto parts, power window
switches
2
US
2016
2005
96.0
7.59
Auto parts, special stainless
steel, buyers' cartel, DE
7
DE
2016
2004
142.0
239.5
Auto parts, molded
interior, ES
2
ES
2016
2010
77.0
Case still under
investigation
Auto parts, valves for
engines, aftermarket, BR
4?
BR
2017
2007
71.0
Case still under
investigation
45
Table 3. Eighty Alleged Cartels, Legal Outcomes, by Date Detected, 2010-2017
Automotive filters, BR
6/41
BR
2017
2004
101.0
Case still under
investigation
Total of 80 Cartels
356/
279
17 auth-
orities
--
--
7,620
plus
$20.8
billion
Mean, Cartels with data
4.9/ 3.5
--
--
--
108.9
$297
million
a
Number of companies that were “raided” (and still under suspicion), subpoenaed, granted amnesty,
indicted, fined, pleaded guilty, or paid settlements in private antitrust suits in any jurisdiction.
Companies dismissed or found not guilty are not counted. Some double counting (see note below).
Executives indicted, usually criminally.
b
First national authority to open an investigation; simultaneous raids by multiple authorities use
slashes.
c
Note: Nine companies agreed to pay U.S. single fines for multiple cartels. Yazaki Corp. paid $597
million in penalties for three separate cartels. Toyo Rubber paid $120 million for 2 cartels. Bosch for
three cartels. Denso/Toyota paid $78 million for two separate cartels. Hitachi paid $195 million for
nine separate cartels. MELCO and Panasonic for three cartels. Mitsuba paid $135 million for five
separate cartels (and obstruction of justice). These fines are apportioned across cartels.
Source: Private International Cartels spreadsheet (Feb. 2019)
46
Table 4. Thirty Largest Corporate Auto-Parts Penalties
Subsidiaries/Ultimate Parent Company
HQ
No.
Cartels
a
Total
Penalties
b
($ million)
Volkswagen AG
DE
7
3,197
Mercedes-Benz/Daimler AG
DE
9
2,237
Yazaki Corp.
JP
4
1,322
BMW AG
DE
4
1,112
Hitachi/DKB Group
JP
19
962
PACCAR Inc.
US
2
833
Ford Motor Co. (2000-2010)
US
7
833
ASMO North America, DENSO Corp., Toyota Motor, and
JTEKT Corp./Toyota Group
JP
34
805
Renault SA, Calsonic Kansei, Nissan Corp., Mitsubishi Electric.
Co., and Mitsubishi Corp./Renault-Nissan-Mitsubishi Alliance
FR/JP
25
715
Continental Automotive Electronics/Schaeffler KG
(f/k/a/Continental AG)
DE
6
641
Fiat SpA or FCA/Agnelli Family Holding Co. (30%)
IT
8
560
Eaton Corp.
US
1
500
Bridgestone Corp.
JP
5
466
SKF (Svenska Kullagerfabriken AB)
SE
4
446
Wilh. Wilhemsen ASA
NO
3
492
YKK Line and MELCO/Mitsubishi Group (before joining
Renault-Nissan)
JP
2
426
NTN Corporation
JP
1
388
Autoliv Inc.
SE
3
320
NSK Ltd.
JP
3
316
American Mitsuba/Mitsuba Corp.
JP
12
274
Robert Bosch GmbH/Robert Bosch Stiftung
DE
15
248
Tata Sons Ltd.
IN
2
225
Toyo Tire & Rubber Co. Ltd.
JP
5
188
Nishikawa Rubber Co. Ltd.
JP
1
180
Sumitomo Electric, Tokai Rubber, and Sumitomo
Rubber/Sumitomo Group
JP
8
130
Franklin Precision Industry/Aisan Industry Co. Ltd.
JP
3
124
Nippon Gaishi Kaisha (NGK) Spark Plug Co. Ltd.
JP
4
118
Koito Manufacturing Co., Ltd.
JP
2
110
Hyundai Motor/Hyundai Group
KR
5
99
Espar Heating/Eberspächer Group
DE
2
94
Total, Top 30
206
18,361
a
Number of penalties announced or “agreed to” by the ultimate parent firm or its subsidiaries, auto parts only.
b
Penalties imposed by early 2019. Does not include many $ billions more related to the Diesel Motor Emissions
cartel.
Source: Private International Cartels spreadsheet (2019)
47
Table 4A. Thirty Largest Auto-Parts’ Cartels Penalties
Cartel Market, Locale (if not Global)
Rank
Fines
($ million)
Total
Penalties
a ($
million)
Diesel motor emissions, US, DE, CA, IN, and EC
1
4400.6
4,401
Truck manufacturing, EU
2
4267.000
4,267
Auto parts, Bearings, EU, US, and JP
3
1818.100
1,955
Auto parts, wire harnesses
4
1137.000
1,924.0
Shipping, ro-ro, auto
5
1304.600
1,307.0
Auto parts, anti-vibration devices
6
531.360
647
Auto parts, occupant safety equipment, new
7
431.030
609
Truck Transmissions, Class 8, US
8
0.000
500
Auto Parts, IN
9
485.300
485.3
Auto parts, starter motors, alternators, ignition coils
10
325.100
417
Auto parts, thermal systems (heating & AC)
11
274.180
341
Auto parts, alternators
12
249.430
334
Auto parts, special stainless steel, buyers', DE
13
239.500
239.5
Auto Parts, spark plugs
14
151.780
214
Automobile manufacturing & distribution, ES
15
189.100
189.1
Auto parts, rubber body seals
16
130.095
179.6
Auto parts, ignition coils
17
112.945
169.4
Auto parts, valve timing controls
18
94.050
154.5
Auto parts, Instrument panel clusters
19
115.900
152
Auto parts, emission controls, ceramic substrates
20
131.800
150.0
Automobile manufacturing & distribution, TR
21
147.600
147.6
Auto parts, shock absorbers
22
117.500
144
Auto parts, high-intensity-discharge ballasts
23
70.040
141.15
Auto parts, windshield wipers and components
24
93.640
139.7
Auto parts, windshield washer systems
25
127.730
131.4
Heaters, parking & auxilliary, aftermaket
26
91.970
114.67
Truck & tractor manufacturing, KR
27
109.100
109.1
Auto parts, aftermarket lighting, US & CA
28
50.750
100.6
Auto parts, lighting products, new ("lamps")
29
58.100
100.6
Auto parts, noise-reduction, DE
30
84.000
84
Total, Top 30
17,339.3
19,848.6
Total, all 80
17,954.6
20,848.2
a
Penalties imposed by mid 2019. Includes private settlements (if any, mostly partial) and early fines of the Diesel
Motor Emissions cartel.
Source: Private International Cartels spreadsheet (2019)
48
Table 5. Twenty Leading Serial-Collusion Companies, Five or More Auto-Parts
Indictments
Parent Company
No. Cartels
a
HQ
Affinia Group Inc. (Mann+Hummel AG aqd 2016)
5
US
Agnelli Family/Fiat SpA
8
IT
BMW AG
5
DE
Bridgestone Corp.
5
JP
Daimler AG
10
DE
Delphi Corp
5
UK
DKB Group (Dai-Ichi Kangin Group, includes Hitachi and
Furukawa)
23
JP
Ford Motor Co.
8
US
General Motors Co.
6
US
Hyundai Group (Chung Ju-Yung family)
6
KR
Mitsuba Corp.
12
JP
PSA Peugeot Citroen S.A.
5
FR
Renault-Nissan-Mitsubishi Alliance
28
FR
Robert Bosch GmbH
13
DE
Schaeffler KG (f/k/a/Continental AG)
7
DE
Sumitomo Group
8
JP
Tenneco Corp.
5
US
Toyo Tire & Rubber Co. Ltd.
5
JP
Toyota Group (Including DENSO)
34
JP
Volkswagen AG
9
DE
Total Number of Prosecutions, Top 20
482
a
Mostly convictions, but a few still under investigation in early 2019. Five or more only.
Source: Private International Cartels spreadsheet (2019)
49
Table 6. Effectiveness of Penalties: Severity and Recovery Ratios
Jurisdiction
Median
Market
Severity
a
Median
Authority
Severity
b
Severity
Obs.
Median
Recovery
Ratio
Recov-
ery
Obs.
Hist-
orical
U.S. Govt.
0.51%
24.0%
27-32
--
0
16%
U.S. Govt. and Private
Damages
0.84%
40.3%
28-33
0.50%
1
32%
European Commission
2.70%
9.8%
2-10
1.87%
1
12%
Canada
1.00%
31.5%
9-10
--
0
15%
EU NCAs
0.04%
NA
3
--
0
30%
Rest of the World,
Governments
0.20%
NA
19
5.94%
2
14%
All Private Damages
0.13%
13.6%
25-32
0.50%
1
10%
All Penalties, global
Sales
0.28%
49.1%
27-44
1.35%
4
21%
a
The ratio of dollar penalties to dollar affected commerce in the penalizing jurisdiction, expressed as a
percentage. The “All Penalties” row combines penalties (and sales) across all jurisdictions for global cartels.
b
Assumes umbrella pricing effects. Excludes consent decrees and zero penalties.
Same as column a), except affected commerce is a much narrower concept of “provable” sales, which is typically
incomplete corporate sales reported by the prosecuting authority that ignores umbrella pricing — US, Canada,
and EU only.
Sources: Private International Cartels spreadsheet (Connor 2019), Connor (2016b: Figure 9).
50
Table 7. Penalties Imposed and Cash Settlements Related to Fraudulent
Diesel-Motor-Emissions Claims, 2014-2019
Company
Antitrust Fines ($ million)
Fines for
Fraud
($ million)
Cash
Settlements,
Recalls, etc.
U.S.
Government
c
EU
Other
Jurisdictions
Volkswagen AG
a
6.60
1576
e
?
7906
f
18,300
Porsche AG
b
596
BMW AG
1100
e
11.6
Mercedes Benz/Daimler AG
1100
e
US suit, 760K
cars
Opel (GM sold to PSA in
2017)/PSA Groupe
?
60,000 cars
FCA-Jeep
305
510
Renault SA
?
IAV GmbH (supplies VW)
35
Bosch AG
100
458.5
d
Ford Motor Co.
#
#
TOTAL
6.6
3776
e
?
8648.6
19,367
a
Includes Audi, VW, and Bentley and four criminally indicted officers. Also Dutch and Italian antitrust fines (EU 2018:
29). Spain antitrust soon.
b
Became owned by VW in 2015
c
Includes likely fines by the 4/2019 SEC against VW and its former CEO M. Winterkorn.
d
Includes $131 million to be paid to FCA owners in the U.S., entities in 47 states, and to State Attorneys General.
e
= estimated, expected, or pending (from reserves reported by targets)
f
Includes Audi ($900 million) and VW ($1200 million) fines by German State prosecutors (Saxony and. Bavaria). Also
CAD2 billion ($1500 million) for Canadian owners. Bloomberg (9/8/2018) predicts a total of $35 billion after German
owners are compensated. VW set aside another $6.1 billion in contingent liabilities for emissions suits in 2019, raising
the likely total to $41 billion.
Source: Private International Cartels spreadsheet (June 2019)
? = French prosecutors in DGCCRF began investigating in late 2016. Ongoing in May 2019.
# = Criminal investigation by DOJ and EPA began 4/2019
