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Electronics supplier probe broadens

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Electronics supplier probe broadens

Harness makers raided in U.S., Japan and Europe



A global investigation into anticompetitive practices, which has resulted in government raids on several automotive electronics suppliers in the U.S., Europe and Japan, continued to broaden late Thursday.

So far, supplier offices known to be raided include: Denso in Southfield and Tokai Rika in Plymouth; Leoni in Europe, and Sumitomo Electric Industries and Furukawa Electric in Japan.

Yazaki, a private Japanese company with a North American headquarters in Canton, said its offices in Japan, as well as a joint venture in Germany and France, were visited by authorities. That's in addition to raids in Canton, Columbus, Ohio, and Lexington, Ky.

Yazaki leads the more than $16-billion global wire harness industry. Its largest rivals include Delphi Automotive, Sumitomo, Leoni and Lear.

A Delphi spokesman said the company has been contacted by the commission.

Southfield-based Lear said late Thursday that the European Commission has included the company in its investigation and that it's cooperating with officials.

"I am confident that our company is not involved in any anticompetitive practices," Lear CEO Bob Rossiter said in a statement.

More than 5,400 workers in Michigan are employed by the companies raided Tuesday.

While initial news accounts suggested that Toyota suppliers were at the heart of the probe, information from Europe shows the probe is focused on suppliers to many automakers.

The European Commission announced Thursday it had conducted raids on auto suppliers that make wire harnesses on the suspicion that the companies are involved in prohibited cartel and restrictive business practices.

Wire harnesses are bundles of wires that run through a vehicle and power stereos, power windows and other electronics.

The European Commission said the probe involved rules dealing primarily with price fixing and "market division," which can include companies agreeing not to sell the same things or in the same areas.

"This sounds to me like it has all of the earmarks of the ... classic cartel arrangement of some kind where you have people who were or should've been competitors allegedly or possibly agreeing with each other not to compete over price or customers or products," said Daniel Crane, an antitrust expert at the University of Michigan.

As businesses have become more global, there has been an increase in cooperation between the U.S. and European authorities to investigate so-called cartel behavior.

While the laws are similar, there are differences in how investigations and prosecutions are conducted. Cartel conduct is criminal in the U.S. In Europe, it is a civil matter.

Adam Hemlock, an expert in antitrust law at the firm of Weil, Gotshal & Manges in New York, said antitrust law has gone global more quickly than other areas of law. "That's because it reflects ... the fact that companies are competing in multiple jurisdictions and products move so easily between continents and countries."

Many jurisdictions have amnesty or leniency programs that reduce punishments for being the first to work with authorities on such violations. That gives companies that discover the problem an incentive to report issues.



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