Sheehan & Associates, P.L.C.

Cultural differences can result in costly business litigation

The U.S. Department of Justice's Antitrust Division announced that Bridgestone Corporation has pleaded guilty to price fixing on products they sold to auto makers, both here in the U.S. and overseas. The Tokyo-based company will pay a fine of $425 million. This fine comes after a three-year criminal investigation that is reported to be the largest one ever conducted by the Antitrust Division, and a total of over $2 billion in criminal fines.

Bridgestone was charged with a felony for fixing bids and prices on auto parts. These parts were sold to multiple auto makers in this country, including Toyota, Suzuki and Nissan, from 2001 through 2008.

Bridgestone's fine is more than twice what any of the other two-dozen-plus Japanese automotive suppliers who have pleaded guilty will be paying. The DOJ says the fine is so high because this is not the company's first conviction on such charges. Bridgestone paid $28 million for fixing prices three years ago in its marine hose business. A spokesman for the DOJ's Antitrust Division said that it will continue to crack down on "repeat offenders."

One Detroit attorney says that such a large federal prosecution is unique in the auto industry, which has "not previously been an object of scrutiny and criminal allegations." He contends that its record "looks very good" in comparison to that of other types of industries.

Bridgestone contends that it has been cooperating with the investigation since it was made aware that some of its employees were violating antitrust laws. In all, some 28 executives from the various auto suppliers have pleaded guilty to the charges emanating from the investigation.

One law professor notes a difference in business culture between Japan and the U.S. that is not reflected in our laws. He says that price-fixing agreements are not uncommon during difficult economic periods in other countries. However, in recent years, federal regulators in the U.S. have, as he puts it, "taken an American-style view that economic downturns are not justification for price-fixing."

Companies doing business in other countries need to ensure that they are abiding by the laws of that country. Violating those laws can result in costly business litigation not to mention unwanted negative publicity and possibly problems doing business in those or other countries overseas in the future.

Source: The New York Times, "Bridgestone Admits Guilt in U.S. Price-Fixing Case" Jaclyn Trop, Feb. 13, 2014

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