Toyota Parts Sellers Probed (by FBI)

Yikes!
U.S., Japanese and European investigators raided the offices of auto-parts suppliers tightly tied to Toyota Motor Corp. in recent days stemming from a probe in alleged anticompetitive practices.

The probes aren't connected with the Japanese auto maker's quality issues. But it comes as Toyota faces political pressure at home and abroad after a series of quality lapses.

Warrants were carried out on the Michigan offices of Yazaki Corp. in Canton, Denso International America Inc., in Southfield, and Tokai Rika Co., also known as Tram, in Plymouth, an FBI spokeswoman confirmed Wednesday.

"The Antitrust Division is investigating the possibility of anti-competitive cartel conduct of automotive electronic components suppliers," said Department of Justice spokeswoman Gina Talamona. "We are coordinating with the European Commission and other foreign competition authorities."

The European Commission, which regulates competition in the European Union, said Thursday that it had conducted so-called dawn raids—unannounced visits—Wednesday at the premises of several companies in Europe that make electrical-distribution systems for automobiles. The commission said it has "reason to believe" the companies may have broken EU rules that forbid cartel behavior.

It named neither the companies raided nor the countries in which they were located, though German auto-parts maker Leoni AG said Thursday its offices were searched. The investigation appeared to be global. The EU said it was coordinating its probe with "several other competition authorities worldwide."

Another large German automotive parts supplier, Robert Bosch GmbH, said it wasn't being investigated as part of the EU probe.

French automotive supplier Valeo said that it no longer has any wiring harness operations since it sold them to Leoni in 2007. "Valeo is not involved in this investigation," a spokeswoman said.
The EU is an active cartel-buster. Between 2004 and 2009, it ruled that 243 companies had participated in cartels, and it levied €10.1 billion ($13.67 billion) in fines. It does target foreign companies, though nine of the 10 largest cartel fines it has issued since 1969 have gone to European companies. The unlucky holder of the top spot is France's Saint Gobain Group, which was fined €896 million in 2008 for participating in an auto-glass cartel. The dawn raids suggest the EU is taking the case seriously. Under a leniency program, the first cartel participant to rat out its fellow price-fixers can escape fines. That has increased the number of cases in recent years.

In Japan, investigators searched the offices of Yazaki, Sumitomo Electric Industries Ltd., Furukawa Electric Co. and several other Japanese electric cable makers over suspected collusion, an official with the Fair Trade Commission said.

Denso, Yazaki, Sumitomo and Furukawa confirmed the probes and said they were cooperating. A Tokai Rika spokesman couldn't be reached.

Officials are looking at possible anticompetitive behavior of these companies, the people familiar with the matter said. Toyota has ownership stakes in Denso and Tokai Rika.

U.S.-based auto parts makers have for years cited frustration in attempting to win new contracts from Toyota when bidding against one of Toyota's "captive suppliers."

Toyota spokeswoman Cindy Knight said the company is still trying to determine why the FBI is investigating Denso, Yazaki and Tokai Rika.

"Toyota is aware that certain suppliers have been contacted by government officials, but we have limited information about the scope of the investigation," Ms. Knight said. "Toyota has not been contacted by authorities."

The raid came the same week as Toyota and federal automobile-safety regulators testified about problems of unintended acceleration in some Toyota vehicles.

Yazaki supplies several electronic components, while Denso makes a variety of parts including accelerator pedals that Toyota has used in its vehicles. Those pedals weren't involved in the recent recalls of Toyota vehicles based on complaints of unintended acceleration.

Tokai Rika makes a variety of safety products including seat belts, door mirrors, power windows and steering switches. — Brent Kendall, Kate Linebaugh , Charles Forelle, Peppi Kiviniemi and Nico Schmidt contributed to this article.

Source;
http://online.wsj.com/article/SB10001424052748704479404575087001494145936.html?mod=WSJ_auto_IndustryCollection