On March 1, 2012, the U.S. Department of Justice announced that Yazaki Corporation had plead guilty to three counts of bid-rigging under the U.S. Sherman Act and agreed to pay a fine of USD $470 million (see: U.S. v. Yazaki Corporation Plea Agreement).
This case relates to an ongoing global investigation of bid-rigging in the automotive parts industry and coordination among competing auto parts suppliers to rig bids for automotive wire harnesses and related products, instrument panel clusters and fuel senders sold to U.S. and international auto manufacturers between 2000 and 2010. There is currently some debate as to whether this global auto parts cartel may prove to be the largest in history.
According to the plea agreement in this case, officers and employees of Japanese firms, including high-level personnel, conspired with competing auto parts manufacturers over a ten year period, which included meetings in the United States and elsewhere to allocate markets for the sale of auto parts (in the case of this particular firm, involving over $2 billion in sales).
The defendant agreed to pay a fine of USD $470 million.
In Canada, under section 47 of the Competition Act, it is a criminal offence to: (i) agree to not submit a bid or tender, (ii) agree to withdraw a bid or tender already made or (iii) submit a bid or tender that is arrived at by agreement.
Some common types of bid-rigging that can violate section 47 include:
“Cover”, “courtesy” or “complementary” bidding: Some firms submit bids that are too high to be accepted, or with terms that are unacceptable to the party calling for bids, to protect an agreed upon low bidder.
Bid suppression: One or more bidders that would otherwise bid agree to refrain from bidding (or withdraw a previously made bid).
Bid rotation: All parties submit bids but take turns being the low bidder according to a systematic or rotating basis.
Market division: Suppliers agree not to compete in designated geographic areas or for specified customers.
Subcontracting: Parties that agree not to submit a bid (or submit a losing bid) are awarded subcontracts or supply agreements from the successful low bidder.
The penalties for contravention of the bid-rigging provisions can be severe and include unlimited fines (i.e., fines in the discretion of the court), imprisonment for up to 14 years, or both.
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