April 18, 2013
On April 4th, the Competition Bureau announced what was at the time a record bid-rigging fine in Canada of $5 million (see: Japanese Motor Vehicle Component Supplier to Pay Record $5 Million Bid-rigging Fine).
Earlier today, the Bureau announced that Yazaki Corporation, a Japanese supplier of motor vehicle components, was fined $30 million by the Ontario Superior Court of Justice, for participating in a bid-rigging cartel involving motor vehicle components. In particular, the Bureau’s allegations in this case, in which Yazaki plead guilty to bid-rigging under the Competition Act, were that Yazaki coordinated bids with competing suppliers of wire harnesses supplied to Honda and Toyota (with an affected volume of Canadian commerce of approximately $260 million).
In making the announcement, the Interim Commissioner said:
“Cartelists must be penalized for defrauding Canadians. … The record fine in this matter underscores the seriousness of bid-rigging offences and sends a strong message that companies need to comply with the law.”
The Bureau reiterated that it is relying on its Immunity and Leniency Programs in this case and is cooperating in its ongoing auto parts investigation with international antitrust agencies, including in the United States, European Union, Japan and Australia.
In the U.S. in January, 2012, Yazaki plead guilty with DENSO Corporation and agreed to pay a total of $548 million in relation to the sale of auto parts in the United States (see: here). Yazaki agreed to pay a $470 million fine, the second largest criminal fine for a Sherman Act antitrust violation. Four Yazaki executives were sentenced to imprisonment ranging from 15 months and two years.
Some antitrust enforcement officials have described the ongoing auto parts cartel as a decade-old “keiretsu” of price-fixing and project allocation among some of the largest and most venerable auto parts suppliers in Japan, and which may involve upward of 60 or more products. A “keiretsu” is a Japanese word that, if translated literally, means a “headless combine” and is a term used to refer to a type of corporate structure in which multiple organizations combine, often by taking small holdings in one another.
As of January, 2013, the U.S. DoJ’s Antitrust Division alone had collected nearly $800 million in fines from its investigation (including the record $470 million against Yazaki).
In Canada, under section 47 of the federal Competition Act it is a criminal offence to agree to not submit a bid or tender, agree to withdraw a bid or tender already made (an offence recently added to the Competition Act as a result of 2009 amendments), or submit a bid or tender arrived at by agreement. In essence, the Competition Act prohibits most types of agreements or arrangements between competing bidders or tenderers (with the exception of bids or tenders arrived at by agreement that are disclosed to a tendering authority in advance, which allows for certain bid consortia agreements provided that they meet the requirements of the Act).
Violation of the bid-rigging offences of the Competition Act is subject to unlimited fines (i.e., fines in the discretion of the court) and/or imprisonment for up to 14 years. Recent changes to the sentencing provisions of the Criminal Code have also eliminated conditional sentences (i.e., sentences served in the community or “house arrest”) for some Competition Act offences, including criminal conspiracy agreements and bid-rigging.
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