A huge price fixing scheme has broken involving Furukawa, a car part supply company that makes parts for a number of car manufacturers. The executives who participated in the price fixing scheme are facing prison terms. The company appears to have been fixing costs in more nations than previously assumed, however. Article source: Investigation deepens in auto parts price-fixing scandal

Jail sentence for crimes

Years of investigation have led to the recent conviction of many executives of the Furukawa Electric Company for price fixing. As reported by the Boston Globe, the company conspired with other companies it has relationships with to set the costs of wiring harnesses, a key part in the electronics system in cars, which may have driven up the price of passenger cars and replacement parts. Furukawa supplies several automakers.

The scheme is said to have been going on for a decade or more. Three executives of Fu-rukawa’s American division, as reported by AutoBlog, have pleaded guilty to price fixing charges, and the business has settled with the federal government. Furukawa, according to the Boston Globe, settled with the Justice Department for $200 million in fines and two of the three execs that admitted to the scheme have agreed to $20,000 fines and jail sen-tences of 15 months and one year and one day. However, the probe into Furukawa has shown that the price fixing was international in scope.

Four continents impacted

The probe into the Furukawa price fixing scandal, as reported by Crain’s Detroit Business, is expanding to more nations beyond Japan and the United States. Raids have been carried out and subpoenas issued to 19 other suppliers across six various sectors of the automobile industry in countries on four con-tinents.

The only result so far is the fine against Furukawa in America, plus the conviction of three of its executives. Officials are looking into Furukawa and other companies’ activities in Asia, Europe and Australia as well as the United States

Happens more than you know

Though price fixing, where corporations collude to keep prices of goods high, is recognized as among the worst sins in business ethics, it does occur in automotive industry and related services. According to Reuters, officials from Britain’s Office of Fair Trade are investigating the commercial vehicle divisions of Volvo, Scania and Mercedes-Benz. A raid was carried out at Mercedes’ headquarters in the U.K., and European Union authorities are in-vestigating all three.

The Detroit News reports that gas stations often do price fixing. In fact, there are five individuals, such as two managers, who are sit-ting on charges of violating Michigan’s antitrust laws who will be sentenced in Jan. These individuals, from Madison Heights, Michigan, conspired to keep gasoline pric-es high in February and March.

Sources

Boston Globe

AutoBlog

Crain’s Detroit Business

Reuters

The Detroit News