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Toyo fined $120 million in price fixing conspiracy

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WASHINGTON—Toyo Tire & Rubber Co. Ltd. has pleaded guilty and will pay a $120 million fine for two separate conspiracies to fix prices of anti-vibration rubber and driveshaft parts installed in cars sold in the U.S. and elsewhere, the Department of Justice said.

The charges are a result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry.

Toyo—with U.S. subsidiaries in Franklin, Ky., and White, Ga.—has agreed to cooperate with the department's ongoing investigation. The plea agreement is subject to court approval.

“The antitrust division continues to pursue any illegal conduct in the industry,” a Department of Justice spokeswoman said.

A two-count felony charge filed in the U.S. District Court for the Northern District of Ohio in Toledo on Nov. 26 said the company engaged in a conspiracy to allocate sales of, to rig bids for and to fix the prices of automotive anti-vibration rubber parts as early as March of 1996, until as late as May 2012. Toyo sold those parts to Toyota Motor Corp., Nissan Motor Corp., Fuji Heavy Industries Ltd. (Subaru) and some of their subsidiaries, affiliates and suppliers.

The second charge highlighted a separate conspiracy from January 2006 until as late as September of 2010 to allocate sales of, and to fix, raise and maintain the prices of automotive constant velocity joint boots it sold to U.S. subsidiaries of GKN P.L.C., a British automotive parts supplier.

In both charges, the Department of Justice said Toyo participated in meetings and conspired to noncompetitive pricing, then sold automotive anti-vibration rubber products to various companies in the U.S. and elsewhere and accepted payment for those products using noncompetitive prices.

Toyo is charged with price fixing in violation of the Sherman Act, the Department of Justice said. It carries a maximum penalty of a $100 million criminal fine for corporations, but the maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine. The Department of Justice would not say how it arrived at the sum of $120 million.

The Department of Justice would not confirm if Toyo executives would serve jail time in conjunction with the plea agreement. In September, Masao Hayashi and Kenya Nonoyama each were charged with one felony count of conspiracy to fix prices, a violation of the Sherman Act. Neither of the two Japanese nationals' employers was identified in the charging document. Both are listed as executives with Toyo or its subsidiaries in documents on Toyo's website.

A 2010 Toyo news release names Hayashi as president of Toyo Automotive Parts Inc., Toyo's Franklin-based subsidiary. A 2012 Toyo release identifies Nonoyama as general manager, original equipment sales department No. 2.

On Nov. 27, the DOJ reached a plea agreement with Stanley Electric Co. Ltd., a Tokyo-based company. The firm agreed to pay a $1.44 million criminal fine for its participation in a conspiracy to fix prices of lamp ballasts installed in cars sold in the U.S. and elsewhere.

Including Toyo and Stanley, 23 companies and 26 executives have been charged in the DOJ's ongoing investigation.

All 23 companies either have pleaded guilty or have agreed to plead guilty, and they have agreed to pay more than $1.8 billion in fines. Twenty of the 26 executives have been sentenced to serve time in U.S. prisons or entered into plea agreements for significant prison sentences, the DOJ said.