Agency fines Japanese suppliers for fixing car part prices

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Agency fines Japanese suppliers for fixing car part prices

A Korean regulatory agency has targeted two Japanese auto parts suppliers for price fixing and fined them 11.1 billion won ($9.7 million).

The Fair Trade Commission said Tuesday that Mitsubishi Heavy Industries and Denso colluded on prices when bidding for automotive supply contracts at General Motors in 2009. The Korean regulator slapped Mitsubishi with a 7.4 billion won fine, and Denso received a 3.7 billion won fine.

The two suppliers won a GM contract to provide scroll compressors to the American automaker’s operations across the globe including production plants in the United States, Mexico and Korea. GM Korea received roughly a million scroll compressors from Mitsubishi that were installed in the company’s compact Spark and Aveo vehicles.

Mitsubishi and Denso are believed to have met on several occasions to discuss fixing prices even a year before the bidding started. The two allegedly agreed to keep the price of scroll compressors above market value in the first year while limiting the discount on automotive parts for another two years.

Denso has the largest market share in the world for scroll compressors while Mitsubishi is known to have outstanding technology for the part.

“It seems the two companies, which were likely to win the contract [from GM] wanted to avoid the past mistake of missing out on making additional profit by bidding at a much lower price,” a Fair Trade Commission official said. Such was the case in 2007, when Mitsubishi signed a scroll compressor contract with Japanese automaker Suzuki that was 600 billion won ($530 million) lower than the competition.

“Although the collusion was done overseas, we have decided to fine the companies as the parts that they colluded on affected the Korean market as well by being supplied to GM Korea,” the Korean official said.

In the GM contract, the supply of scroll compressors to the automaker’s Korean operation is estimated to be worth roughly 140 billion won.

Korea isn’t the only country that has fined Japanese suppliers for price fixing. The U.S. Department of Justice fined Mitsubishi $14.5 million in September 2013, while the Mexican government fined both Mitsubishi and Denso 72 million pesos ($3.8 million).

The Korean Fair Trade Commission said this is the eighth international price-fixing case on automotive parts that the agency has dealt with since January 2014. The commission said that regardless of country of origin or where the collusion was schemed, it will continue to monitor and regulate any international cartels.

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