Japanese Manufacturer Fined For Involvement In Car Parts Cartel

Japan’s Yazaki Corporation, an international electrical automotive parts manufacturer, has been fined by the Australian government for a whopping AU$46 million, after being found guilty of running a cartel in parts supplies.Yazaki is one of the largest car parts manufacturers in the world, with a specialization of electrical components, such as electrical cables, dashboard instruments and meters.

The decision vindicates the appeal made by the Australian Competition and Consumer Commission’s (ACCC), who launched a counter-argument against the original fine decided by the Federal Court back in 2017, which amounted to AU$9.5 million.

According to the ACCC, Yazaki and their Australian subsidiary, Australian Arrow, engaged in cartel-like conduct and price fixing, with the primary impact felt by wire harnesses used in manufacturing the Toyota Camry models from 2003 to 2009.

The case against Yazaki was first brought to the Federal Court back in 2012, after it was discovered that Yazaki and Sumitomo Electric Industries, another Japanese company, had come to an agreementĀ  to fix their prices on automotive parts and market shares across the world.

The evidence for the case came from Sumitomo, which cooperated with ACCC for the case. The appeal court’s judges found the two companies guilty, saying that they agreed to respect each other’s incumbency across the world, and set prices that would have their incumbents retain their positions in particular geographic markets across the world. The collusion was deceptive, and included misleading TMC Toyota about the nature of their responses.

Cartel conduct is regarded as the most pernicious, or subtly harmful, breach of competition law, and it is usually done with such discretion that it’s hard to identify, the judges say.

ACCC Chairman Rod Sims spoke on behalf the rest commission, saying that they welcome the verdict. They appealed to the trial judge, believing that the original fine of AU$9.5 million was not enough to deter Yazaki or other businesses in engaging in cartel behavior and operations in the future. The ACCC’s appeal argued that a penalty of between AU$42 million and AU$55 million.

Mr. Sims explains that cartel conduct is illegal not just because it’s cheating, detrimental to consumers and other businesses alike, but also because it can hamper healthy economic growth.