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Bearings importer slugged $2m over cartel claim

Fined: Koyo Australia, which imports bearings, has been fined by the ACCC (picture sourced from Koyo website).

Australia’s consumer watchdog wins cartel claim court case against Koyo

General News logo21 Oct 2013

KOYO Australia has been slapped with a $2 million fine after the bearings importer admitted to plumping prices of its ball and roller bearings.

The Federal Court on Friday found that in 2008 and 2009, Koyo Australia acted on two separate cartel arrangements with two of its competitors – NSK Australia and Nachi Australia – to increase the price of ball and roller bearings to aftermarket customers.

According to the Australian Competition and Consumer Commission, which launched the court action against Koyo Australia in July, bearings are an essential component in products such as motor vehicles, mining conveyors, household electrical items and farm machinery.

The ACCC said Koyo had admitted to the cartel conduct and co-operated fully with the consumer watchdog’s investigation.

The court also made orders restraining Koyo Australia from engaging in similar cartel conduct for a period of three years, and requiring it to implement a competition and consumer law compliance training program.

Documents filed with the court said the bearings aftermarket in Australia was worth up to $400 million between 2007 and 2011.

They said Koyo held between five to 10 percent of the Australian market over that period, earning between $20 million to $30 million a year.

The documents said senior executives from Koyo and several other bearing importers with small Australian market shares met between three and four times a year at restaurants in Sydney and Melbourne to socialise and swap sales information At a meeting in February 2008 at the high-end Azuma Japanese restaurant in Sydney, the document alleges members of the cartel agreed to all raise prices in response to an expected rise in steel prices and the cost of freight and insurance.

At a similar meeting at the Kabuki Shoroku restaurant in Sydney in May 2008, the ACCC alleged the members of the cartel shared information about price increases of between two and three percent.

The real increases were between three and four per cent.

In 2009 at another meeting at Kabuki Shoroku, the ACCC alleged one of Koyo’s competitors announced a 10 percent price increase despite the value of the yen falling by more than 50 per cent in late 2008.

After that meeting, both Koyo’s and one of its competitor’s prices rose by five percent.

The ACCC has also launched a case against Australian Arrow, a subsidiary of the Yazaki group, for price-fixing.

The case against Yazaki, which supplies wiring looms, is still being heard in the Federal Court.

The ACCC alleges that Yazaki and an unnamed competitor agreed to fix the price of wiring looms supplied to Toyota Australia between 2003 and 2009 for use in the Camry.

There were also other agreements that affected the pricing of harnesses for the 2002, 2006 and 2011 Camry models.

“Detecting, stopping and deterring domestic and international cartels is a priority for the ACCC,” ACCC chairman Rod Sims said.

“Cartels not only cheat consumers and other businesses, they also restrict healthy economic growth. It is crucial for the proper functioning of business in Australia that the ACCC continues to tackle cartel conduct with the full force of the law.”

According to Mr Sims, the consumer watchdog is investigating the conduct of a number of other suppliers.

Koyo Australia’s fine follows similar court action in the US recently over allegations of price-fixing that have resulted in fines of almost $US750 million against nine Japan-based car-parts suppliers.

The US Department of Justice said the price-fixing practices affected more than 25 million cars sold.

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