Another auto parts antitrust action filed

Posted on: November 5th, 2013 by Steve Larson
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Antitrust CasesA putative class of automobile buyers sued Hitachi Automotive Systems Ltd. in Michigan on October 3, 2013, over its alleged role in an international price-fixing conspiracy.  One week before, Hitachi agreed to shell out $195 million in a U.S. government suit over related allegations.  More than 40 co-plaintiffs said the Japanese-based company colluded with manufacturers and suppliers to artificially manipulate the stateside price of an automotive part designed to control the timing of engine valves.

Late last month, Hitachi and eight other Japanese auto parts makers agreed to pay $740 million in total fines in the largest antitrust investigation ever pursued by the U.S. Department of Justice.  The DOJ accused the companies of inflating the overall cost of cars sold in the U.S. via a conspiracy to hike up the prices of a host of parts, including windshield wipers, air conditioning systems, power steering assemblies and the valve timing control devices at issue in the instant suit.

The plaintiffs are suing under state antitrust, unfair competition and consumer protection laws, and seek to represent a class of consumer who bought or leased a vehicle containing a Hitachi-made valve timing control device since 2000.

Plaintiffs in the suit all purport to have purchased the valve timing control devices indirectly, as such devices tend to be purchased directly by the auto manufacturers, such as Ford Motor Company, Toyota Motor Corporation, and General Motors LLC, and installed into new cars.  The complaint alleges that the market for such devices has a high barrier to entry and demand for them is inelastic, which makes the alleged conspiracy more plausible.

A massive investigation into the purported cartel is underway around the globe, with officials from the Japan Fair Trade Commission, the European Commission and the DOJ are scrutinizing the array of sub-industries that make up the overall automotive industry.  The DOJ in that investigation has already yielded more than $1.6 billion in criminal fines, eclipsing the DOJ antitrust division’s total take in fines for all cases it handled in 2012.

On September 26, Hitachi admitted a one-count criminal offense in that investigation over price inflation alleged to have occurred between January 2000 and at least February 2010, according to the complaint.

That case asserted that Hitachi took part in meetings in the U.S. and elsewhere to discuss and agree upon bids and price quotations to be submitted to auto manufacturers, using code names and meeting at remote locations to keep their conduct secret, according to the complaint.

Over 27 different complaints relating to 27 different automotive parts have been filed by indirect purchasers of those parts.

The case is Adams v. Hitachi Automotive Systems Ltd., case No. 2:13-cv-14226 in the U.S. District Court for the Eastern District of Michigan.