November 7, 2013
On my daily media sweep, this new working paper by the American Antitrust Institute (AAI) caught my eye, largely based on the sheer scale of the figures. According to this new paper, 19 new price-fixing cartels involving auto parts are currently under investigation with more than 75 companies identified to date as targets or potential targets of the ongoing global antitrust probes (and $2 billion in corporate fines imposed, and rising).
While the auto parts cartel (or rather cartels) has been in the media for the past few years now, this paper is an intriguing look at the potential origins of this cartel, how it worked, suppliers’ relationships with automakers (and how they may have coordinated the cartel), past auto parts related cartels and international antitrust enforcement efforts to date, including by the Canadian Competition Bureau. Well worth a read: AAI Working Paper – Is Auto Parts Evolving Into a Supercartel?
Abstract:
“In a working paper issued today by the American Antitrust Institute (AAI), John M. Connor, AAI senior fellow and professor emeritus at Purdue University, argue that the auto parts industry as evolved into a ‘supercartel.’
Connor, a cartels and antitrust expert, conducted new research into the industry and after a large number of price-fixing investigations have been launched in the past two years by at least five antitrust authorities around the world targeting industries manufacturing mechanical and electrical automotive parts. Four of the five antitrust authorities are now employing criminal laws and procedures to unearth information. The U.S. Investigation was described by U.S. Department of Justice (DOJ) Acting Assistant Attorney General for Antitrust Sharis Pozen as “’…the largest criminal investigation the Antitrust Division has ever pursued, both in terms of its scope and the potential volume of commerce affected by the alleged illegal conduct.’
The working paper, ‘Is Auto Parts Evolving into a Supercartel?’, details how 19 separate cartels are currently under investigation, most of them global in scope. More than 75 companies have been identified so far as targets of antitrust authority probes, with that number likely to grow as more prosecutions are finalized.
As of August 2013, a total of almost $2.0 billion in corporate fines have been imposed — an amount that has doubled in eight months. Because in addition dozens of private suits have been filed, there is a good chance that corporate monetary penalties eventually may climb to $5 billion or more. Individual penalties are also escalating.
‘The many auto parts cases seem to be evolving into the world¹s second supercartel, like the infamous Vitamins cartels of the 1990s,’ explained Connor. ‘Supercartels are unique in that they are global in scope; and have a large number of distinct products, with partially overlapping corporate membership; and direct their price fixing at customers in one vertical production-distribution channel. In short, supercartels have wheels within wheels.’”
For a copy of the new paper see: AAI Working Paper – Is Auto Parts Evolving Into a Supercartel?
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