Japanese manufacturer Denso to pay fine related to collusion and price fixing

Alleged transgressions involved the supply of parts for five different Nissan and Toyota vehicles between 2004 and 2010.
Hundreds of such cases investigated by the Competition Commission have yet to be settled. Image: Shutterstock

Japanese car parts manufacturer Denso Corporation has agreed to pay a fine of R447 258 in terms of a settlement agreement reached with the Competition Commission related to alleged collusion to fix prices, divide markets and tender collusion.

The settlement agreement, which has been confirmed as an order by the Competition Tribunal, follows a Competition Commission investigation launched in October 2014 into allegations of collusion by 63 automotive component manufacturers involving 310 separate instances of alleged collusion and 92 automotive components.

The large number of firms and components involved in the alleged collusion resulted in the commission inviting the implicated firms to settle the cases against them, while warning that those that elected not to settle would be referred to the Competition Tribunal for prosecution.

Terms

In terms of the settlement agreement with Denso, the corporation has agreed, among other things, to refrain from engaging in conduct in contravention of the Competition Act in the future and to continue to implement and monitor a competition law compliance programme.

Among the alleged transgressions of the Competition Act uncovered by the investigation was that Denso and global vehicle spark plug manufacturer and supplier NGK Insulators (NGK) had colluded to fix prices, divide markets and tender collusively in contravention of the act.

These alleged transgressions related to the supply of parts for five different Nissan and Toyota vehicles between 2004 and 2010.

Although Denso has agreed to the terms of the consent agreement, it does not admit liability in respect of the conduct as alleged by the commission.

The commission has in turn agreed to enter into the consent agreement with Denso without an admission of liability because of the insignificant nature of the effects of Denso’s conduct in South Africa.

The commission reported in July that it had referred NGK Spark Plug Company and its South African subsidiary to the Competition Tribunal for prosecution for alleged contraventions of the Competition Act.

Read: NGK Spark Plug Co referred to Competition Tribunal for prosecution

The tribunal confirmed on Wednesday that this case has been referred to the tribunal but a date has not yet been set for it to be heard.

Spark plugs

The commission said spark plugs are one of the components that have been subjected to collusive behaviour by automotive components manufacturers such as NGK.

It said the investigation into the conduct of NGK found that, from at least 2008, NGK colluded with Denso Corporation in contravention of the Competition Act when responding to a request for quotation issued by Fuji Heavy Industries for the supply of spark plugs for the AR18 engine installed in its Subaru Impreza, Subaru Forester and Subaru Legacy vehicles sold in South Africa.

It said NGK Limited is a global player in the market for the manufacture and supply of spark plugs to original equipment manufacturers (OEMs).

The commission is seeking an order from the tribunal to levy an administrative penalty equivalent to 10% of the annual turnover of either NGK Limited or NGK SA.

Japanese automotive component company Sumitomo Electric Industries (SEI) became the first company to finalise a settlement agreement flowing from this investigation by the Competition Commission when it agreed in August 2020 to pay a fine of R437 278.38 for fixing the price of automotive components and collusive tendering.

The commission’s investigation into SEI revealed that during 2003 SEI and Denso Corporation met and/or held telephone conversations to discuss and agree to set the prices in terms of which they would respond to the tender or request for quotation issued by Toyota in respect of the standard body electrical control units (ECUs) for the 2009 Toyota Prius, 2010 Toyota Verso, 2010 Toyota Auris and 2011 Toyota Yaris.

Another 272 cases yet to be settled

Competition Commission spokesperson Siyabulela Makunga confirmed in July this year that the commission has to date finalised a total of 71 cases in the automotive components sector, recorded 38 initiations linked to settlements and is yet to settle 272 cases.

Makunga said between July and September 2020 fines totalling R3 487 039 were paid by Sumitomo, Yazaki, Mahle GmbH, Panasonic and T.RAD in settlement of the 71 cases.

Apart from the Denso Corporation case, it appears no further cases related to automotive parts manufacturers and distributors have been finalised.

Competition Commissioner Tembinkosi Bonakele said in 2014, when the investigation was launched, that its probe into this pervasive collusive conduct joins similar investigations launched in other jurisdictions internationally.

Read: SA launches competition probe of auto parts suppliers

Bonakele stressed the commission would prioritise the investigation of cases that involve automotive components that are in vehicles assembled in and supplied to the South African market.

The automotive components alleged to have been part of the price fixing, market division and collusive tendering included inverters, electric power steering motors and systems, glow plugs, rear sunshades, pressure regulators, pulsation dampers, purge control valves, accelerator pedal modules, power management controllers, evaporative fuel canister systems, knock sensors, spark plugs and clearance sonar systems.

These components were supplied to a number of OEMs, including Toyota Motor Corporation, Daihatsu Motor Company, Nissan Motor Company, Isuzu Motor Limited, Fuji Heavy Industries, Honda Motor Corporation, Suzuki Motor Corporation, General Motors Corporation, Hyundai Motor Company, Yamaha Motor Corporation, Volvo Car Corporation, Mazda Motor Corporation, Mitsubishi Motor Corporations and Ford Motor Company.

Read: Record SA auto component exports in 2020 despite Covid-19

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COMMENTS   1

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It is obvious something is rotten and it includes the primary brands. for example:

I bought the OEM headlight ballast for VW Touareg on EBay delivered in four days out of Croatia with full VAT and taxes for less than a fifth of what VWSA quoted.

Electric window and door cluster controller for Toyota for a seventh the local price.

VWSA and TSA are either complicit or completely and hopelessly incompetent.

End of comments.

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