By on January 30, 2012

It was the early 2010, the Toyota witch hunt was in full swing. While Toyota executives were burnt at the stake grilled on the Hill, Denso’s U.S. offices were raided by the FBI. Denso is a major automotive parts supplier, and a member of the Toyota family. The raid was part of an on-going investigation into alleged anti-trust violations. Or so they said.

After the NHTSA, NASA and the National Academy of Sciences could not find a ghost in the machine, the Department of Justice also cleared out its case file. For a fee.

Denso and the DoJ cut a plea deal. Denso will pay a fine of $78 million “based on charges that it violated antitrust laws in connection with sales of certain automotive components” to one of its customers, Denso said today in a statement.

The fine will hit the books as a (hopefully) non-recurring one time charge in the third quarter of the fiscal year ending March 2012. It is said to have “no material effect on the Company’s financial forecast for the fiscal year.”

Internally, there is some finger rapping: Denso’s chairman, president and some board members and executive directors have to “voluntarily return 30 percent to 10 percent of their compensation for a three-month period starting in February 2012.”

Another supplier, Yazaki Corp., did not get off as easily. The company agreed to plead guilty to U.S. charges and pay a $470-million fine, says the LA Times. Even more painful, four of its executives are to serve prison terms of up to two years, the paper says.

 

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14 Comments on “DoJ To Denso: Pay $78 Million, Go Forth And Sin No More...”


  • avatar
    TonyJZX

    i don’t get it

    if they found no “ghost in the machine” why are they being fined?

    is this a ray la hood style shakedown?

    • 0 avatar
      VA Terrapin

      I believe the “ghost in the machine” has to do with allegations of the Camry having sudden unintended acceleration issues.

      Going back to Denso, this seems to be one in a number of price fixing cases involving auto parts companies. Yazaki, another Japanese auto parts company, agreed to pay a fine of $470 million.

      Given the terms of the settlement that Denso and Yazaki reached with the DOJ, I’m disinclined to believe that the Feds are using this to try to hurt Toyota. My guess is that Denso and Yazaki actually did commit price fixing, and they decided to cooperate with the DOJ once they got caught.

    • 0 avatar
      Steven02

      TonyJZX,
      There were Toyota defects that were recalled in other markets before they were recalled in the US that had to do with sticky pedals and the floor mats. That is why Toyota was fined for those defects.

      This is different, although the article wouldn’t make you think so. Denso and other Japanese suppliers were apparently involved in a price/bid rigging scandal. You can read more here.

      http://www.businessweek.com/news/2012-01-30/yazaki-denso-agree-to-price-fixing-conspiracy-guilty-plea.html

      • 0 avatar
        highdesertcat

        That is also my understanding that they were involved in a price/bid rigging scandal at a time when US parts manufacturers and Chinese parts manufacturers were also bidding on those same contracts.

        They fixed the prices to keep the other competitors out. But with the quality issues involving US parts manufacturers like the CTS gas pedals, rusting frames, badly welded shafts, etc, and the poor quality of Chinese-made parts, it may turn out that they did the buyers a great favor providing quality parts at fixed prices.

        I’m not saying it’s right. I’m saying we had far fewer problems with their parts than we did with the US-made and Chinese-made parts, which cost more.

  • avatar
    jandrews

    They are being fined because it’s a lot better than having egg all over your faces if you’re a government agency.

    The bottom line with the Toyota “scare” is that the media made a big hullabaloo out of a problem that didn’t exist, people are stupid, and due to the ruling in the court of public opinion, the Obama administration had to do…SOMETHING! DON’T JUST SIT THERE!

    The problem was, instead of coming out and laying down the truth (old people, one of Toyota’s prime demographics, can’t drive and were stomping the gas), we’ve gotten a three ring circus instead.

    Throughout all of this, I drove the two vehicles I still have today:

    - 2003 Toyota Matrix 190,000mi and change, nothing but routine maintenance.

    - 2009 Toyota Tacoma, 22,000mi and change, nothing but routine maintenance.

    Hmmmm….Toyota makes boring cars all right, but what they don’t do much of is mechanical defects…

    • 0 avatar
      carbiz

      Tin hat fitting a bit tight today, jandrews? You are, indeed, a fine example of why the U.S. has become a branch plant to Asia. Any other Asian products you’d care to buy today?
      So, you have 2 vehicles out of millions that are great. Bully for you. I sold well over 100 Impalas in my career and I can remember exactly 3 of them being a pest (blown transmissions – GM had a bad batch). Does that make me an anecdote expert? Perhaps not, but statistically, the thousand + vehicles I sold (plus the 100 or so imports) in my career are perhaps statistically more valid than your 2 car experience. Sorry.
      Toyota does not build ‘better’ cars than Detroit, only cars that the media has adored more. Somehow, in 2007 (perhaps with all the ‘teething problems’ the Avalon had, or the new Camry) the media decided Toyota was no longer to be on a pedestal, so they yanked it down and put Hyundai up there.
      Get used to it. They’ve been trashing GM for decades. Now it’s Toyota’s turn. Welcome to the big leagues, Toyota!

      • 0 avatar
        noxioux

        Um. . . Look in the junkyards. Plenty of non-anecdotal evidence to the contrary. Detroit is, and has been behind the curve for decades now. We’d probably stop trashing them, except they make it so easy.

        Sad thing is, the best anyone could come up with on Toyota was this unintended acceleration nonsense. It stank of desparation then. Details like this Denso raid/fine just make it stink worse.

      • 0 avatar
        jandrews

        Wow. You made a lot of counterpoints to points I didn’t make. Well…done?

        Let me summarize my post in a more concise fashion:

        - Toyota makes boring but still reliable cars
        - Unintended acceleration scare was just that: A scare, with no data to back it up.

        Please explain to me how all that blather you vomited up has anything to do with those two points?

        “Any other Asian products you’d care to buy today?”

        Please, enlighten me as to where the information technology device you typed this reply on was manufactured?

        It’s a global economy. Has been for some time. Please stop pretending Japanese marques are Asian, or GM/Ford are US products. Corporations exist outside of nation states these days. “Patriotism” in the form of purchase is an increasingly weak argument.

  • avatar
    Steven02

    Why do you imply that the DoJ investigation was part of the NHTSA SUA investigation? 2 of the first posts were obviously confused by this. They are clearly 2 different separate fines for separate issues.

    • 0 avatar

      Yeah, really, I would like to know the answer to this one. That was terrible writing. I like your other stuff Bertel but come on. You aren’t writing for AutoSpies. If I wanted politically charged tinfoil hat fodder and obstruction of the facts with my car news, I’d go there, or I’d listen to Rush Limbaugh.

  • avatar
    Secret Hi5

    Intentional obfuscation or bad writing? Not to mention using the word “fee” in one paragraph, and then “fine” in another.

    And isn’t the Yakuza $470M fine a bigger story?

  • avatar
    psarhjinian

    Denso is a major automotive parts supplier, and a member of the Toyota family. The raid was part of an on-going investigation into alleged anti-trust violations. Or so they said.

    Come on, this is Bill O’Reilly-type stuff. You can do better.

  • avatar
    DC Bruce

    This piece is really below the high grade established for TTAC. Apart from the snarky, suggestive style (which we can deal with), it conflates two completely separate investigations: the “unintended acceleration” problem in certain Toyota hybrid engine vehicles (possibly traced to a sticky accelerator sub-assembly some of which were supplied by Denso) and garden-variety price fixing, apparently engaged in by some parts suppliers.

    Just so you know, Bertel, the U.S. always prosecutes price-fixing criminally (U.S. antitrust laws provided for both criminal and civil penalties). Hence the FBI executing search warrants, etc. The individuals involved in making the price-fixing scheme work always go to jail if convicted. Most plea deals involve jail time as well, but with the government recommending brief sentences. Occasionally, for a small player, the government will go along with a recommendation of probation only . . . but they’ll still insist on a a guilty plea to a felony.

    In a price-fixing investigation (which, necessarily, involves multiple actors), there’s a basic rule which all lawyers involved know: the first defendant in the prosecutor’s door gets the best deal, because one settlement with an alleged conspirator (which always involves that conspirator testifying and waiving his 5th amendment immunity from self-incrimination) increases the pressure on the others to capitulate.

    The suggestion that this antitrust prosecution is part of some U.S. government/ government motors plan to harass Toyota (unlike Transportation Sec’y LaHood’s witch hunt for runaway Toyotas) is just irresponsible.

    • 0 avatar
      jandrews

      “Just so you know, Bertel, the U.S. always prosecutes price-fixing criminally (U.S. antitrust laws provided for both criminal and civil penalties).”

      Unless its done by bankers that write bigass checks to senatorial campaigns.

      But other than that, yeah.


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