ford motor company v. fujikura ltd. and fujikura automotive america llc,

*Applications for Admission forthcoming.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION FORD MOTOR COMPANY,

Plaintiff,

v. FUJIKURA LTD. and FUJIKURA AUTOMOTIVE AMERICA LLC,

Defendants.

Case No. Hon.

/ KASOWITZ, BENSON, TORRES & FRIEDMAN LLP* Hector Torres Harold G. Levison Edward E. McNally Sarah Gibbs Leivick Robert W. Bosslet

1633 Broadway New York, New York 10019 (212) 506-1700 [email protected] [email protected] [email protected] [email protected] [email protected]

KIENBAUM OPPERWALL HARDY & PELTON, P.L.C. Eric J. Pelton (P40635) Theodore R. Opperwall (P31374) Ryan D. Bohannon (P73394)

280 N. Old Woodward Avenue, Ste. 400Birmingham, Michigan 48009 (248) 645-0000 [email protected] [email protected] [email protected]

Attorneys for Plaintiff /

COMPLAINT AND JURY DEMAND

2:13-cv-13055-LPZ-LJM Doc # 1 Filed 07/16/13 Pg 1 of 39 Pg ID 1

i

TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ............................................................................... 1

JURISDICTION AND VENUE ................................................................................ 3

PARTIES.................................................................................................................... 5

CO-CONSPIRATORS ............................................................................................... 6

FACTUAL BACKGROUND .................................................................................... 7

A. The Wire Harness ............................................................................................ 7

B. Ford’s Purchases of Wire Harnesses ............................................................... 9

C. The Wire Harness Industry Structure is Conducive to Collusion ................. 13

THE CONSPIRACY................................................................................................ 15

A. The Conduct of Fujikura and Its Co-Conspirators ........................................ 15

B. Fujikura Admits to Participating in the Conspiracy ...................................... 18

C. Fujikura’s Co-Conspirators Also Admit to Participating in the Conspiracy ...................................................... 21

1. Yazaki’s Guilty Plea and Other Admissions ............................................ 22

2. Furukawa’s Guilty Plea and Other Admissions ....................................... 24

D. Government Competition Authorities Investigate and Penalize Anti-Competitive Conduct .................................... 26

FRAUDULENT CONCEALMENT ........................................................................ 30

INJURY TO COMPETITION AND DAMAGES .................................................. 34

FIRST CLAIM ......................................................................................................... 34

PRAYER FOR JUDGMENT .................................................................................. 36

JURY TRIAL DEMAND ........................................................................................ 37


1

Plaintiff Ford Motor Company (“Ford” or “Plaintiff”), by and through its

attorneys, Kasowitz, Benson, Torres & Friedman LLP, and Kienbaum Opperwall

Hardy & Pelton, P.L.C., for its complaint against defendants Fujikura Ltd. and

Fujikura Automotive America LLC (“Fujikura America,” and collectively with

Fujikura Ltd., “Fujikura” or “Defendants”), upon knowledge as to itself, and

otherwise upon information and belief, alleges as follows:

PRELIMINARY STATEMENT

1. This action arises from a long-running, global conspiracy by Fujikura

and its co-conspirators to rig bids for, and to fix, stabilize, and maintain the prices

of, automotive wire harness systems and related products (“Wire Harnesses”),

from at least as early as January 2000 until at least February 2010 (the

“Conspiracy”). Wire Harnesses, the nerve center of every vehicle, are automotive

electrical distribution systems used to direct and control electronic components,

wiring and circuit boards.

2. In furtherance of the Conspiracy, Fujikura and its co-conspirators –

each automotive parts manufacturers and/or suppliers – colluded in violation of

Section 1 of the Sherman Act, 15 U.S.C. § 1, to suppress and eliminate competition

for automotive Wire Harnesses sold to Ford and other automobile manufacturers.

3. The Conspiracy has been under investigation by international law

enforcement agencies, including the United States Department of Justice (“DOJ”),


2

the Australian Competition and Consumer Commission (“Australian Competition

authority”), the Canadian Competition Bureau (“Canadian Competition

authority”), the European Commission (“EC”), the Japan Fair Trade Commission

(“JFTC”), and the Korea Fair Trade Commission.

4. The DOJ has described its investigation into price-fixing in the

automotive products industry as “the largest criminal investigation the Antitrust

Division has ever pursued, both in terms of its scope and the potential volume of

commerce affected by the alleged illegal conduct.”

5. In June 2012, Fujikura Ltd. pled guilty in the United States to

conspiring to rig bids for, and to fix, stabilize, and maintain the prices of, Wire

Harnesses sold to an automobile manufacturer in the United States and elsewhere.

Fujikura Ltd. was fined $20 million. Fujikura’s co-conspirators collectively have

agreed to pay criminal fines of $670 million in the United States because of their

participation in the Conspiracy.

6. In January 2012, the JFTC issued cease and desist orders and fines,

“surcharge payment orders,” against Fujikura Ltd. and its co-conspirators for

conspiring “in procurement of automotive wire harnesses and related products” in

violation of Japan’s antitrust laws. Fujikura Ltd. was ordered to pay a fine of 1.18

billion yen ($15.4 million). Fujikura Ltd. did not contest the fine and paid the

surcharge.


3

7. Ford is one of the largest automobile manufacturers in the world.

During the period of the Conspiracy (“Conspiracy Period”), Ford expended in

excess of $10 billion dollars in the direct purchase of Wire Harnesses in the United

States and elsewhere. During the Conspiracy Period – a time of deepening

financial crisis for the United States automobile industry – Fujikura and its co-

conspirators targeted Ford by, among other things: (i) agreeing not to compete for

Ford’s business, (ii) submitting rigged bids for contracts with Ford for the sale of

Wire Harnesses, and (iii) otherwise agreeing and acting in combination to fix,

stabilize, and maintain the prices of Wire Harnesses sold to Ford. Because of the

Conspiracy, Ford was forced to pay substantially higher prices for Wire Harnesses

than it would have paid absent the conspiratorial conduct.

8. Ford brings this action to recover damages, including three times its

actual damages, costs of suit and reasonable attorneys’ fees, resulting from

Defendants’ violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, and to

obtain injunctive relief.

JURISDICTION AND VENUE

9. The Court has subject matter jurisdiction over this action pursuant to

Section 4 of the Clayton Act, 15 U.S.C. § 15(a). The Court also has subject matter

jurisdiction over this action pursuant to 28 U.S.C. §§ 1331, 1337.


4

10. Venue is proper in this District under Sections 4 and 12 of the Clayton

Act, 15 U.S.C. §§ 15, 22, and under 28 U.S.C. § 1391(b), (c) and (d), because a

substantial part of the events giving rise to Ford’s claims occurred in this District, a

substantial portion of the affected interstate trade and commerce has been carried

out in this District, and one or more of the Defendants reside, are licensed to do

business, are doing business, had agents, are found, or transact business in this

District.

11. Defendants are subject to the jurisdiction of this Court because of

their nationwide contacts and activities.

12. This Court has personal jurisdiction over each of the Defendants

because each Defendant, either directly or through the ownership and/or control of

its United States subsidiaries: (a) transacted business in the United States,

including in this District; (b) directly or indirectly sold or marketed substantial

quantities of Wire Harnesses throughout the United States, including in this

District; and (c) were engaged in an illegal price-fixing, bid-rigging and allocation

conspiracy that was directed at, and had a direct, substantial, reasonably

foreseeable and intended effect of causing injury to the business or property of

persons and entities residing in, located in, or doing business throughout the United

States, including in this District. Defendants and their co-conspirators also conduct


5

business throughout the United States, including in this District, and they

purposefully have availed themselves of the laws of the United States.

13. Fujikura and its co-conspirators engaged in conduct both inside and

outside of the United States that caused direct, substantial and reasonably

foreseeable and intended anti-competitive effects upon interstate commerce within

the United States. Fujikura’s products are sold in the flow of interstate commerce.

PARTIES

14. Plaintiff Ford Motor Company, a Delaware corporation with its

principal place of business in Dearborn, Michigan, is in the business of designing,

manufacturing and distributing vehicles. As one of the world’s largest automotive

manufacturers, Ford expended in excess of $10 billion dollars for the direct

purchase of Wire Harnesses in the United States and elsewhere from Fujikura’s co-

conspirators during the Conspiracy Period for use in Ford vehicles.

15. Defendant Fujikura Ltd. is a Japanese corporation with its principal

place of business at 1-5-1, Kiba, Koto-ku, Tokyo 135-8512, Japan. Fujikura Ltd. –

directly and/or through its subsidiary Fujikura America, which it wholly owned

and/or controlled – manufactured, marketed and/or sold Wire Harnesses that were

purchased throughout the United States, including in this District, and elsewhere,

during the Conspiracy Period.


6

16. Defendant Fujikura Automotive America LLC is a Delaware limited

liability company with its principal place of business at 25865 Meadowbrook

Road, Novi, Michigan. Fujikura America is a subsidiary of, and wholly owned

and/or controlled by, its parent Fujikura Ltd. During the Conspiracy Period,

Fujikura America manufactured, marketed and/or sold Wire Harnesses that were

purchased throughout the United States, including in this District through its

location in Novi, Michigan. At all times during the Conspiracy Period, Fujikura

America’s activities in the United States were under the control and direction of its

Japanese parent, Fujikura Ltd.

CO-CONSPIRATORS

17. Various persons, partnerships, sole proprietors, firms and corporations

not named as Defendants in this action have participated as co-conspirators with

Defendants in the offenses alleged in this Complaint, and have performed acts and

made statements in furtherance of the Conspiracy. Discovery may identify

members of the Conspiracy not presently known to Ford. Defendants are jointly

and severally liable for the acts of their co-conspirators.

18. Any allegation in this Complaint concerning any act, deed or

transaction of any corporation or limited liability entity, means that the corporation

or limited liability entity engaged in the act, deed or transaction by or through its

officers, directors, agents, employees or representatives while they were actively


7

engaged in the management, direction, control or transaction of the corporation’s

or limited liability entity’s business or affairs.

19. During the Conspiracy, each Defendant acted as the principal of, or

agent for, the other Defendant and/or their co-conspirators with respect to the acts,

violations and common course of conduct alleged with respect to the Conspiracy.

FACTUAL BACKGROUND

A. The Wire Harness

20. Wire Harnesses are analogous to the central nervous system in the

human body, functioning as the main electrical wiring system through which

information, control functions, signals and electrical power are transmitted

throughout a vehicle.

21. A vehicle’s electrical system is powered by, and dependent on, the

battery and alternator, which supply electricity to all of a vehicle’s electrical

components. The alternator supplies power to a vehicle’s accessories – such as the

radio, lights and horn – during normal engine operation. The vehicle’s battery

supplies the initial charge, which allows the vehicle to be started, and the alternator

then supplies a constant electrical feed. The alternator also recharges the battery

during engine operations.

22. Wire Harnesses are networks of wires that carry electricity from

power sources, such as the battery or alternator, to devices that consume electricity


8

(e.g., the radio, headlights and dashboard display). Wire Harnesses also transmit

data and information (e.g., automobile speed information from the wheels and

axles to the speedometer) and are essential to operate vehicle system controls (e.g.,

heating, cooling, braking and other systems). Wire Harnesses include color-coded

wires designed to support specific electrical and electronic automotive features.

23. Related Wire Harness products include: automotive electrical wiring,

lead wire assemblies, cable bond, automotive wiring connectors, automotive

wiring terminals, electronic control units, fuse boxes, relay boxes, junction blocks

and power distributors.

24. Wire Harnesses consist of raw, coiled wire, which is cut to specific

lengths. Individual wire circuits are assembled on a jig or table, inserted into

electrical connectors (plastic and metal clips that enable snap connections to the

various electrical components), and wrapped or taped to form Wire Harnesses.

Vehicles typically contain thousands of yards of wires.

25. A vehicle’s wiring system is organized into multiple Wire Harnesses.

Wire Harnesses provide organized connection points for multiple wiring

configurations. As illustrated below, the Wire Harness features wires and cables

bound into a bundle, which provides protection against deterioration or damage

from vibration, abrasions and moisture:


9

Photograph of a wire harness

26. Wire Harnesses are purchased and installed by Ford and other

automakers, or “original equipment manufacturers” (“OEMs”), in new vehicles as

part of the automotive manufacturing process.

B. Ford’s Purchases of Wire Harnesses

27. During the Conspiracy Period, Ford entered into contracts with

Defendants’ co-conspirators, including Sumitomo Electric Industries, Ltd.

(“Sumitomo”) and certain of its subsidiaries, and Yazaki Corporation (“Yazaki”)

and certain of its subsidiaries, for the purchase of Wire Harnesses.

28. Ford’s purchases of Wire Harnesses in North America during the

Conspiracy Period were directed by Ford’s purchasing team located in Dearborn,

Michigan.


10

29. Ford’s purchasing team negotiated the prices, quantities and

conditions that governed Ford’s purchases of Wire Harnesses to be installed in all

Ford vehicles manufactured in North America.

30. During the Conspiracy Period, Ford’s purchasing team issued requests

for quotations (“RFQs”) to manufacturers of Wire Harnesses, including Fujikura

America and its co-conspirators.

31. An RFQ identifies the specifications of the Wire Harness to be

produced, and requests a proposal from the supplier detailing the supplier’s ability

to manufacture and supply the Wire Harness, including information about cost,

design, engineering and logistics.

32. Ford issued RFQs for Wire Harnesses on either a per-model or per-

platform basis. An automobile model refers to a particular line of vehicles, such as

the Ford Explorer or Ford Focus, which is manufactured by a single automaker.

An automotive platform is a common set of structural, design, engineering and

production parameters, including major components such as the chassis, used for

more than one model. Because of the time necessary for the engineering and

design of Wire Harnesses, Ford generally issued RFQs for the manufacture and

supply of Wire Harnesses years before commencement of the manufacture of the

vehicle model or platform covered by the RFQ.


11

33. In response to RFQs, suppliers of Wire Harnesses submitted price

quotations, also known as bids, which would be evaluated by Ford for purposes of

selecting a supplier for the Wire Harnesses for the model or platform at issue.

34. Ford’s sourcing of the Wire Harnesses for its 2013 vehicles built on

the CD4 platform is illustrative of Ford’s sourcing process during the Conspiracy

Period. The 2013 CD4 platform was used for, among others, the Ford Fusion and

Lincoln MKZ models. Ford issued an RFQ for the CD4 Wire Harness in March

2009 (“CD4 RFQ”). After two rounds of bidding that Ford believed at the time

were competitive, the supplier was selected in October 2009, and commercial

production was scheduled to begin in June 2012.

35. To assist in assessing the bids from suppliers, Ford developed a

program which attempted to calculate the expected price of Wire Harnesses based

on, among other things, an estimate of the supplier’s cost of production and a

reasonable profit margin. While Ford would attempt to estimate the cost of

manufacturing and supplying the Wire Harnesses, to a certain extent, Ford was

substantially dependent on its suppliers to provide accurate part, material, labor

and other cost information.

36. Beginning in 2006, in an attempt to increase transparency in the

pricing of Wire Harnesses, Ford developed cost models to be used with individual

suppliers, including Fujikura America. The cost model required the supplier to


12

identify the prices proposed by the supplier for each Wire Harness component, and

other related costs such as labor and overhead. This information and data enabled

Ford to compare the supplier’s bids to its internal cost estimates, and to other

suppliers’ bids for purposes of negotiating the Wire Harness price. Many

suppliers, including Fujikura’s co-conspirator, Sumitomo, resisted Ford’s efforts

and refused to consent to the use of a cost model or to provide increased

transparency regarding their input costs and pricing.

37. Even in cases where the supplier furnished the information and data

required by the cost model, Ford’s ability to obtain accurate information about the

supplier’s actual cost of Wire Harnesses was still limited in certain material

respects. Ford remained dependent on supplier-provided data concerning the cost

of Wire Harnesses, particularly with respect to the cost of components that were

purchased by the supplier for use in the Wire Harnesses and not purchased by

Ford, as well as certain internal supplier costs, such as total labor costs and

overhead.

38. In addition, affiliates of Fujikura’s co-conspirators manufacture or

“draw” their own wire, which rendered it difficult for Ford to ascertain the actual

costs to those suppliers of copper wire, one of the major input components in the

manufacture of Wire Harnesses. This lack of transparency provided Fujikura and


13

its co-conspirators an opportunity to attribute inflated prices to input costs, and to

conceal their conspiratorial manipulation of prices.

39. During the Conspiracy Period, Ford purchased in excess of $10 billion

dollars of Wire Harnesses in the United States and elsewhere.

C. The Wire Harness Industry Structure is Conducive to Collusion

40. Highly-concentrated markets are susceptible to collusion and other

anti-competitive practices. During the Conspiracy Period, the Wire Harness

market was highly-concentrated – both in the United States and globally – and was

conducive to bid-rigging, allocation and price-fixing agreements.

41. Fujikura and its co-conspirators have dominated the Wire Harness

market throughout the Conspiracy Period. In 2009, during the Conspiracy Period,

the top four automotive Wire Harness suppliers controlled approximately 77% of

the global market, and the top seven controlled approximately 88% of the global

market.

42. The global Wire Harness market in 2010 was $26.9 billion, according

to Research in China, an international market research and market data firm.

43. High barriers to entry in the Wire Harness market exist principally

because of the requirement of large capital investments in plants, machinery and

technical expertise. These barriers to entry facilitated the formation and

maintenance of the Conspiracy.


14

44. A new entrant into the Wire Harness market faces a lengthy and costly

start-up process, requiring substantial capital costs associated with manufacturing

plants and equipment, energy, transportation, a distribution infrastructure and

skilled labor. A supplier also must develop the reputation that it has the capability

to produce, over an extended period, the necessary volume of supply, meeting

OEM, regulatory and safety standards for quality and consistency.

45. The Wire Harness market is also characterized by inelastic demand,

which facilitates collusion. “Elasticity” refers to the sensitivity of supply and

demand to changes in price. Demand generally is considered “inelastic” if an

increase in the price of a product results in only a minimal, if any, decline in the

quantity of that product sold. The purchaser of such products typically lacks the

option to purchase alternative, less costly products of similar quality, and is

compelled to continue to purchase the subject product despite a price increase. For

a cartel to profit from raising prices above competitive levels, demand must be

relatively inelastic to price increases. Otherwise, increased prices would result in

declining sales, revenues and profits, as customers purchase substitute products or

decline to buy altogether. Inelastic demand allows suppliers to raise their prices

without triggering customer substitution and lost sales revenue.

46. The demand for Wire Harnesses is inelastic because the product is an

essential vehicle component for OEMs and accounts for a relatively small fraction


15

of the total vehicle cost. When Fujikura and its co-conspirators raised Wire

Harness prices far above the competitive level, the demand for vehicles, and hence

the demand for Wire Harnesses, was little affected. The higher prices from

collusion unlawfully increased the profits of Fujikura and its co-conspirators.

Moreover, with inelastic demand, even small reductions in capacity below the level

that would otherwise prevail can result in substantial and sustained price increases.

THE CONSPIRACY

A. The Conduct of Fujikura and Its Co-Conspirators

47. During the Conspiracy Period, Fujikura and its co-conspirators

formed an international cartel to suppress and eliminate competition for Wire

Harnesses by agreeing to: (a) rig bids for Wire Harnesses; (b) allocate customers,

markets, contracts and supply of Wire Harnesses; and (c) fix, stabilize, and/or

maintain the prices of Wire Harnesses.

48. In furtherance of the Conspiracy, Fujikura and its co-conspirators

participated in meetings, conversations and communications in the United States

and abroad to discuss bids and price quotations for Wire Harnesses to be submitted

to Ford, and whether to refrain from soliciting Ford business, or refrain from

seeking to submit or submitting any bids and quotations to Ford.

49. Fujikura and its co-conspirators attended industry events that provided

the opportunity to meet, disguise their improper discussions and perform acts in


16

furtherance of the Conspiracy. For example, Fujikura and its co-conspirators

regularly attended the annual North American International Auto Show in Detroit,

Michigan and the Automotive Aftermarket Products Expo in Las Vegas, Nevada.

50. During those and other meetings, conversations and communications,

Fujikura and its co-conspirators agreed to allocate among themselves the supply of

Wire Harnesses sold to Ford and other purchasers on a model-by-model or

platform-by-platform basis.

51. During those meetings, conversations and communications, Fujikura

and its co-conspirators agreed to coordinate price adjustments requested by Ford

and other purchasers.

52. Fujikura and its co-conspirators limited their production capacity for

purposes of restraining competition for the Wire Harness business of Ford and

other purchasers.

53. Fujikura and its co-conspirators held meetings and conversations in

the United States and elsewhere to monitor and police the bids and prices agreed

upon, and other terms of their agreement, pursuant to the Conspiracy.

54. Fujikura and its co-conspirators undertook measures to maintain the

secretive nature of their unlawful conduct, including, but not limited to, using code

names and meeting at changing private residences and remote locations.


17

55. Fujikura and its co-conspirators submitted bids, price quotations and

price adjustments to Ford and other purchasers in accordance with their

conspiratorial agreements.

56. As a result of their conspiratorial agreements, Fujikura and its co-

conspirators at times declined to bid, or submitted bids that were deliberately non-

competitive, in response to RFQs received from Ford and other purchasers.

57. The operation and effects of the cartel on Ford is exemplified in the

responses to the CD4 RFQ that Ford issued in March 2009. The CD4, a global

platform, provided an opportunity for the prevailing supplier to supply Wire

Harnesses for Ford vehicles manufactured around the world. This RFQ offered a

substantial and attractive opportunity for Defendants to obtain important Ford

business.

58. During the first round of bidding, Fujikura America submitted a

completely non-competitive bid, which included non-competitive price quotes for

wire and labor. That bid achieved the intended objective of the members of the

cartel -- Fujikura America was not invited to participate in the second round of

bidding.

59. Fujikura’s co-conspirator, Sumitomo Electric Wiring Systems, Inc.

(“Sumitomo Electric Wiring”), a subsidiary of co-conspirator Sumitomo, pursuant

to the agreement among the conspirators, refused to submit any bid. This refusal


18

was based on the claim that the company was not interested in rapid growth and in

assuming responsibility for a large volume of Wire Harness business. The

disclosure of the Conspiracy underscores that this claim was pretextual.

60. Because Fujikura and its co-conspirators subverted the CD4 RFQ

bidding process, Ford agreed to pay, has paid, and is continuing to pay an

artificially inflated and non-competitive price for CD4 Wire Harnesses.

61. During the Conspiracy Period, Ford was damaged substantially as a

result of the Conspiracy because it was forced to pay supra-competitive prices for

the Wire Harnesses that Ford purchased from Fujikura’s co-conspirators. This

substantial harm was caused by, among other things, Fujikura and its co-

conspirators’: (a) submission of rigged bids in response to Ford’s RFQs; (b)

allocation of Ford’s Wire Harness business; (c) fixing of prices charged to Ford for

Wire Harnesses; and (d) limitation of the conspirators’ production capacity

resulting from their conspiratorial agreement not to bid on Ford business.

B. Fujikura Admits to Participating in the Conspiracy

62. On June 21, 2012, Fujikura Ltd. pled guilty to a one-count felony

charge for its role in the Conspiracy to rig bids for and to fix, stabilize, and

maintain the prices of, Wire Harnesses sold to an automaker in the United States

and elsewhere. According to the guilty plea, Fujikura Ltd.’s involvement in the


19

Conspiracy lasted from at least as early as January 2006 until at least February

2010.

63. In its Plea Agreement, Fujikura Ltd. admitted that, if the United States

had proceeded with its case against Fujikura Ltd. at a trial, the United States would

have presented evidence sufficient to prove:

[4](b) [From at least as early as January 2006 until at least February 2010, Fujikura Ltd.],1 through certain of its employees participated in a conspiracy with other persons and entities engaged in the manufacture and sale of automotive wire harnesses and related products, the primary purpose of which was to rig bids for, and to fix, stabilize, and maintain the prices of, automotive wire harnesses and related products sold to an automobile manufacturer in the United States and elsewhere. In furtherance of the conspiracy, [Fujikura Ltd.], through certain of its employees, engaged in discussions and attended meetings with co-conspirators involved in the manufacture and sale of automotive wire harnesses and related products. During such meetings and conversations, agreements were reached to (a) allocate the supply of automotive wire harnesses and related products sold to an automobile manufacturer on a model-by-model basis, (b) rig bids quoted to an automobile manufacturer for automotive wire harnesses and related products, and to fix, stabilize, and (c) maintain the prices, including coordinating price adjustments requested by an automobile manufacturer, of automotive wire harnesses and related products sold to an automobile manufacturer in the United States and elsewhere.

(c) During the relevant period, automotive wire harnesses and related products sold by one or more of the conspirator firms, and equipment and supplies necessary to the production and distribution of automotive wire harnesses and related products, as well as payments for automotive wire harnesses and related products, traveled in interstate and foreign commerce. The business activities of the defendant and its co-conspirators in connection with the production

1 All emphasis supplied unless otherwise indicated.


20

and sale of automotive wire harnesses and related products that were the subject of this conspiracy were within the flow of, and substantially affected, interstate and foreign trade and commerce.

(d) The conspiratorial meetings and conversations described above took place in Japan, and automotive wire harnesses and related products that were the subject of the conspiracy were sold to an automobile manufacturer by [Fujikura Ltd.’s] United States subsidiary [Fujikura America], which is located in the Eastern District of Michigan.

64. Wire Harness “related products” were defined in the Fujikura Plea

Agreement as cable bond, automotive wiring connectors, automotive wiring

terminals and fuse boxes.

65. At the June 21, 2012 hearing during which Fujikura Ltd. pled guilty to

violating the Sherman Act, the authorized representative of Fujikura Ltd. described

the Conspiracy as follows:

During the period of the conspiracy, which is from approximately January 2006 to February 2010, certain employees of the company engaged in discussions and attended meetings with competitor companies involved in the manufacture[] and sale of automotive wire harnesses and related products.

During such meetings and conversations, agreements were reached to A, allocate the supply of automotive wire harnesses and related products sold to an automobile manufacturer on a model by model basis; B, to rig bids quoted to an automobile manufacturer for automotive wire harnesses and related products, and C, to fix, stabilize and to maintain the prices, including coordinating price adjustments requested by an automobile manufacturer of automotive wire harnesses and related products sold to an automobile manufacturer in the United States, and that manufacturer is Subaru of Indiana Automotive, Incorporated.


21

During the relevant period, automotive wire harnesses and related products sold by one or more of the conspirator firms and equipment and supplies necessary to the production and distribution of automotive wire harnesses and related products, as well as payments for automotive wire harnesses and related products, traveled [in] interstate and foreign commerce.

The business activities of the company, Fujikura Limited and its co-conspirators in connection with the production and sale of automotive wire harnesses and related products that were the subject of this conspiracy, were within the flow of and substantially affected inte[r]state and foreign trade and commerce.

The meetings and conversations described above took place in Japan, and automotive wire harnesses and related products that were the subject of the conspiracy were sold to an automobile manufacturer in the United States, that is Subaru of Indiana Automotive by the company’s United States subsidiary, which is located within the Eastern District of Michigan.

As an enterprise, Fujikura [Ltd.] employed more than 5,000 individuals during the relevant time period. Fujikura sales of automotive wire harnesses and related products affecting an automobile manufacturer in the United States totaled approximately $32 million during the period of January 2006 to February 2010.

66. Fujikura Ltd. was fined $20 million.

C. Fujikura’s Co-Conspirators Also Admit to Participating in the Conspiracy 67. Fujikura’s co-conspirators, Yazaki and Furukawa Electric Co., Ltd.

(“Furukawa”), and certain of their executives, also have pled guilty or otherwise

admitted their participation in the conspiracy.


22

1. Yazaki’s Guilty Plea and Other Admissions

68. On January 30, 2012, Yazaki agreed to plead guilty to three counts of

violating Section 1 of the Sherman Act for its participation in the Conspiracy.

According to the DOJ press release describing the three-count felony charge:

Yazaki engaged in three separate conspiracies: to rig bids for and fix, stabilize and maintain the prices of automotive wire harnesses and related products from 2000 through 2010; to rig bids for and fix, stabilize and maintain the prices of instrument panel clusters from 2002 through 2010; and to fix, stabilize and maintain the prices of fuel senders from 2004 through 2010. All three conspiracies involved products sold to customers in the United States and elsewhere.

As part of its guilty plea, Yazaki agreed to pay a fine of $470 million – the second

largest criminal fine ever imposed for an antitrust violation. Yazaki pled guilty

and was sentenced on March 1, 2012.

69. On March 26, 2012, four Yazaki executives, Tsuneaki Hanamura

(“Hanamura”), Ryoji Kawai (“Kawai”), Shigeru Ogawa (“Ogawa”) and Hisamitsu

Takada (“Takada”) – each of whom held managerial positions at both Yazaki and

Yazaki North America during the Conspiracy Period – pled guilty to violating

United States antitrust law. The DOJ issued four separate one-count felony

charges against Hanamura, Kawai, Ogawa and Takada, alleging that “each

engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices

of automotive wire harnesses and related products sold to customers in the United

States and elsewhere.”


23

70. Ogawa and Takada, both of whom served as directors of Yazaki North

America during portions of the Conspiracy Period, were each sentenced to 15

months in prison, and Hanamura and Kawai were each sentenced to two years in

prison. The DOJ stated that “[t]he two-year sentences would be the longest term of

imprisonment imposed on a foreign national voluntarily submitting to U.S.

jurisdiction for a Sherman Act antitrust violation.” Each of the four executives

agreed to pay a $20,000 criminal fine.

71. On September 26, 2012, a fifth Yazaki executive, Kazuhiko

Kashimoto (“Kashimoto”), pled guilty for his role in the Conspiracy. Kashimoto,

who was employed by Yazaki and Yazaki North America as a manager and team

leader during the Conspiracy Period, was sentenced to 14 months in prison and

fined $20,000.

72. On April 18, 2013, Yazaki pled guilty and was fined 30 million

Canadian dollars ($29.2 million) by the Ontario Superior Court of Justice for its

participation in a bid-rigging conspiracy involving the sale of Wire Harnesses in

Canada to be installed in 2005-2006 model year vehicles. According to a press

release issued by the Canadian Competition authority, the fine was “the largest

ever ordered by a court in Canada for a bid-rigging offence.”

73. On July 10, 2013, the European Commission announced that it had

fined Yazaki € 125.3 million ($160.2 million) for Yazaki’s participation in the


24

Conspiracy. The EC also fined a Yazaki subsidiary, S-Y Systems Technologies

Europe GmbH (“S-Y Systems”), € 11.1 million ($14.2 million) for its participation

in the Conspiracy.

2. Furukawa’s Guilty Plea and Other Admissions

74. On September 29, 2011, the DOJ announced that Furukawa and three

Furukawa executives agreed to plead guilty to participating in a conspiracy “the

primary purpose of which was to rig bids for, and to fix, stabilize, and maintain the

prices of, automotive wire harnesses and related products sold to automobile

manufacturers in the United States and elsewhere,” in violation of the Sherman

Act. The Furukawa Plea Agreement defined “related products” as automotive

electrical wiring, lead wire assemblies, cable bond, automotive wiring connectors,

automotive wiring terminals, electronic control units, fuse boxes, relay boxes,

junction blocks and power distributors.

75. Furukawa’s involvement in the Conspiracy lasted from at least as

early as January 2000 until at least January 2010. Furukawa agreed to pay a $200

million fine and the three executives agreed to serve prison time in the United

States. Furukawa pled guilty and was sentenced on November 14, 2011.

76. In the September 29, 2011 DOJ press release announcing the

Furukawa guilty plea, Acting Assistant Attorney General Sharis A. Pozen of the

DOJ’s Antitrust Division stated that “[a]s a result of this international price-fixing


25

and bid-rigging conspiracy, automobile manufacturers paid noncompetitive and

higher prices for parts in cars sold to U.S. consumers.” According to Pozen, “[t]his

cartel harmed an important industry in our nation’s economy, and the Antitrust

Division with the Federal Bureau of Investigation will continue to work together to

ensure that these kinds of conspiracies are stopped.”

77. In the same September 29, 2011 press release, FBI Special Agent in

Charge Andrew G. Arena stated: “When companies partner to control and price fix

bids or contracts, it undermines the foundation of the United States’ economic

system . . . . The FBI is committed to aggressively pursuing any company

involved in antitrust crimes.”

78. On October 24, 2011, two Furukawa executives pled guilty for their

participation in the Conspiracy: (a) Hirotsugu Nagata, who was employed as Chief

Financial Officer of a U.S. subsidiary of Furukawa from January 2004 to March

2009, was sentenced to 15 months in prison and fined $20,000, and (b) Junichi

Funo, who was employed by Furukawa and a U.S. subsidiary as a sales

representative and manager during the Conspiracy Period, was sentenced to 12

months and one day in prison and fined $20,000.

79. On November 10, 2011, Tetsuya Ukai (“Ukai”) of Furukawa pled

guilty to participating in the Conspiracy. Ukai, who was employed by Furukawa


26

as a manager and unit chief during the Conspiracy Period, was sentenced to 18

months in prison and received a $20,000 fine.

80. On April 4, 2013, Furukawa pled guilty and was fined 5 million

Canadian dollars ($4.9 million) by the Ontario Superior Court of Justice for its

participation in an international bid-rigging conspiracy involving the sale of

electrical boxes, including fuse boxes, relay boxes and junction blocks in Canada

from 2000 through 2010.

81. On July 10, 2013, the EC announced that it had fined Furukawa € 4

million ($5.1 million) for Furukawa’s participation in the Conspiracy.

D. Government Competition Authorities Investigate and Penalize Anti-Competitive Conduct

82. Governmental authorities in other jurisdictions, including Australia,

Canada, the European Union, Japan and South Korea, currently are investigating

anti-competitive conduct in connection with the sale of various automotive

products, including Wire Harnesses.

83. On February 24, 2010, officials from the Competition Directorate of

the EC raided the offices of several Wire Harness manufacturers in Germany,

France and the United Kingdom. In a February 25, 2010 press release, the EC

confirmed its investigation into a “suspected cartel in the sector of automotive

electrical and electronic components suppliers.” The press release stated: “The

Commission has reason to believe that the companies concerned may have violated


27

EU antitrust rules that prohibit cartels and restrictive business practices.” Yazaki

Europe Ltd., a United Kingdom subsidiary of co-conspirator Yazaki, confirmed

that the company’s office was raided by the EC. Automotive products suppliers

Leoni AG (“Leoni”), Lear Corporation and S-Y Systems also confirmed that they

were targets of the EC’s raids.

84. On February 24, 2010, the JFTC raided the Japanese offices of

Fujikura’s co-conspirators Yazaki, Sumitomo and Furukawa on suspicion of their

participation in a price-fixing cartel involving Wire Harnesses. In 2010, these

three manufacturers had a combined 90% share of the Japanese Wire Harness

market.

85. In a June 30, 2011 announcement, Fujikura Ltd. disclosed that the

JFTC had issued the company an advance notice of disciplinary action for

violating antitrust laws related to the sale of Wire Harnesses.

86. On January 19, 2012, nearly two years after the raids, and after the

JFTC’s evaluation and assessment of, among other things, the documents, data and

other information seized from members of the Wire Harness cartel, the JFTC

announced that that it had issued cease and desist orders and “surcharge payment

orders” against Fujikura Ltd. and co-conspirators Yazaki, Sumitomo and Furukawa

for violating Japan’s antitrust laws through their participation in the Conspiracy.


28

The four companies “conspired in procurement of automotive wire harnesses and

related products . . . ordered by automobile manufacture[r]s.”

87. Defendant Fujikura Ltd. was ordered to pay a fine of 1.18 billion yen

($15.4 million) as result of misconduct occurring from at least as early as July

2000 until at least February 2010. Yazaki was fined 9.6 billion yen ($125 million)

as a result of misconduct occurring from at least as early as July 2000 until at least

February 2010. Sumitomo was fined 2.1 billion yen ($27.4 million) as a result of

misconduct occurring from at least as early as December 2000 until at least

February 2010. None of the companies contested the surcharge payment orders,

and each paid the fine imposed.

88. Sumitomo and Furukawa told authorities in Tokyo and Washington

D.C. about bid-rigging, according to a February 15, 2013 Wall Street Journal

article entitled “Japan Probe Pops Car-Part Keiretsu.” In the article, a spokesman

for Sumitomo confirmed that the company received leniency in Japan in exchange

for providing information to the JFTC.

89. In Delphi Automotive PLC’s (“Delphi”) 2011 10-K statement filed on

February 17, 2012, Delphi disclosed that it had “received requests for information

from antitrust authorities at the European Commission seeking information about

conduct by [Delphi] in connection with an investigation of automotive parts

suppliers concerning possible violations of antitrust laws related to the supply of


29

wire harnesses to vehicle manufacturers,” and was cooperating with European

authorities.

90. On August 9, 2012, the EC announced it had opened proceedings

“against suspected participants in several cartels for the supply of automotive wire

harnesses.” The EC press release stated: “This case is part of a wider effort to

investigate possible cartels in the automotive sector.”

91. On July 10, 2013, the EC announced it had imposed fines totaling

approximately € 141 million ($180.2 million) against Yazaki, S-Y Systems,

Furukawa and Leoni for their participation in the Conspiracy. In its press release

announcing the fines, the EC stated that due to their “cooperation and the extent to

which the evidence they provided helped the Commission to prove the respective

cartels,” all of the companies received “reductions of fines ranging from 20 to

50%.” In addition, the companies received an additional 10% reduction because

they “acknowledged their participation in the cartel and their liability in this

respect.”

92. Although the EC found that Sumitomo was a participant in the

Conspiracy, Sumitomo was not fined by the EC because the company received

immunity “for revealing the existence of the cartels to the [EC],” according to the

EC press release announcing the fines.


30

93. On December 13, 2012, the Australian Competition authority

announced that it had commenced civil proceedings against Yazaki and its

Australian subsidiary, alleging that, from between 2003 until at least late 2009, the

companies had “engaged in cartel conduct, market sharing and price fixing,” in the

sale of Wire Harnesses in Australia.

FRAUDULENT CONCEALMENT

94. Throughout the Conspiracy Period and beyond, Fujikura and its co-

conspirators affirmatively and actively concealed their unlawful conduct from

Ford.

95. As part of the Conspiracy, Fujikura and its co-conspirators conducted

their wrongdoing in secret, concealed the true nature of their unlawful conduct and

acts in furtherance of the Conspiracy, and actively concealed their activities

through various other means and methods to avoid detection. The Informations

filed by the DOJ to which Fujikura Ltd. and its co-conspirators pled guilty assert

that, as part of the Conspiracy, Fujikura and its co-conspirators “employ[ed]

measures to keep their conduct secret, including but not limited to, using code

names and meeting at remote locations.”

96. Fujikura and its co-conspirators affirmatively concealed their anti-

competitive conduct from Ford by misrepresenting that their pricing activities were

unilateral, rather than collusive, and based upon legitimate business purposes, such


31

as increased costs. In making those false representations, Fujikura and its co-

conspirators misled Ford and others as to the true, collusive, and coordinated

nature of their fixing of prices charged to Ford for Wire Harnesses, their rigging of

bids for Ford contracts for Wire Harnesses, their allocation of customers, markets,

contracts and supply of Wire Harnesses with Ford and others and other illegal anti-

competitive activities.

97. During the Conspiracy Period, Ford employed a confidential bidding

process for purposes of attempting to identify and select, on a competitive basis,

suppliers from whom to purchase Wire Harnesses. Fujikura and its co-

conspirators, however, completely subverted and corrupted that process. They

affirmatively presented a false and misleading appearance of competition by

submitting, under the guise of competitive bidding, coordinated and pre-arranged

complementary losing bids. By not submitting bids completely free of the

conspiratorial agreement, Fujikura and its co-conspirators deprived Ford of the

lower bids a competitive market would have provided. Through these affirmative

measures, Fujikura and its co-conspirators concealed their collusion and

successfully evaded Ford’s detection of their anti-competitive conduct. The false

appearance of competition was created by pre-arranging losing responses to Ford’s

RFQs to appear as though legitimate commercial or technical reasons – not

collusion – caused the submission of losing bids.


32

98. Certain Fujikura co-conspirators simply refused to submit any bids for

Ford business, and limited their production capacity in furtherance of the

Conspiracy by their agreements to allocate Ford business among the conspirators

such that Ford’s demand for Wire Harnesses would be met only by Yazaki and

certain other co-conspirators.

99. During the Conspiracy Period, co-conspirator Sumitomo Electric

Wiring, a subsidiary of Sumitomo, refused to bid on very attractive Ford business,

including the global CD4 program in 2009. Sumitomo Electric Wiring represented

to Ford that it was not interested in rapid growth and in assuming responsibility for

a large volume of Wire Harness business. Sumitomo Electric Wiring’s

representation appeared commercially reasonable to Ford at that time, and Ford

had no reason to suspect that Sumitomo Electric Wiring’s refusal to bid was the

result of its participation in a conspiracy with Fujikura and other Wire Harness

suppliers.

100. During the Conspiracy Period, Ford exercised due diligence in

attempting to ensure competition and to prevent collusion among potential Wire

Harness suppliers by, among other things, employing a confidential bidding

process and then carefully reviewing and evaluating the bids before awarding the

Ford business. When assessing bids or renegotiating contracts for Wire Harnesses

during the Conspiracy Period, Ford applied an evolving set of methodologies to


33

attempt to estimate the suppliers’ input costs for the manufacture of Wire

Harnesses. Ford exercised this diligence in an attempt to determine whether bids

submitted by Fujikura and its co-conspirators were competitive and commercially

reasonable.

101. As a result of Fujikura and its co-conspirators’ active and effective

concealment of their criminal conduct, Ford did not discover, and could not have

discovered through the exercise of reasonable diligence, that Fujikura and its co-

conspirators were violating the antitrust laws until at the earliest February 24,

2010, the date on which the DOJ and other governmental competition authorities

publicly disclosed their investigations of Fujikura and its co-conspirators.

102. As a result of the concealment of the Conspiracy by Fujikura and its

co-conspirators, any and all statutes of limitations or repose otherwise applicable to

the claims asserted in this Complaint have been tolled.

103. Moreover, the statute of limitations governing the claims in this

Complaint was suspended, pursuant to Section 5(i) of the Clayton Act, 15 U.S.C. §

16(i), on September 29, 2011, the date the United States filed an Information in the

United States District Court for the Eastern District of Michigan, thus instituting a

criminal proceeding against Fujikura’s co-conspirator, Furukawa, to prevent,

restrain, or punish violations of the antitrust laws.


34

INJURY TO COMPETITION AND DAMAGES

104. The Conspiracy among Fujikura and its co-conspirators was intended

to, and did, suppress price competition among manufacturers of Wire Harnesses.

During the Conspiracy Period, Ford entered into many contracts with Defendants’

co-conspirators for the purchase of Wire Harnesses. As a direct result of

Defendants’ unlawful Conspiracy, Ford paid more for Wire Harnesses than it

would have paid in a competitive market.

FIRST CLAIM

Violation of § 1 of the Sherman Act, 15 U.S.C. § 1

105. Plaintiff hereby realleges and incorporates by reference the allegations

contained in paragraphs 1 through 104 as if fully set forth herein.

106. Beginning at least as early as January 2000 and continuing until at

least February 2010, Defendants engaged in a horizontal conspiracy in

unreasonable restraint of trade in violation of Section 1 of the Sherman Act, 15

U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15.

107. During the Conspiracy Period, Fujikura and its co-conspirators

engaged in a combination and conspiracy consisting of a continuing agreement,

understanding, and concert of action to rig bids for, and to fix, stabilize, and

maintain the prices of, Wire Harnesses sold to Ford in the United States and

elsewhere.


35

108. Fujikura and its co-conspirators succeeded in rigging bids, fixing,

raising, maintaining and stabilizing the prices of Wire Harnesses sold to Ford

during the Conspiracy Period.

109. In furtherance of the Conspiracy, Fujikura and its co-conspirators did

those things that they combined and conspired to do, including the following:

a. participated in meetings, conversations and communications in the United States and Japan to discuss the bids and price quotations to be submitted to Ford and others;

b. agreed, during those meetings, conversations and

communications, on bids and price quotations to be submitted to Ford and others;

c. agreed, during those meetings, conversations and

communications, to allocate customers, markets, contracts and supply of Wire Harnesses sold to Ford and others on a model-by-model or platform-by-platform basis;

d. agreed, during those meetings, conversations and

communications, to coordinate price adjustments requested by Ford and others;

e. submitted bids, price quotations and price adjustments to Ford

and others in accordance with the agreements reached;

f. sold Wire Harnesses to Ford and others in the United States and elsewhere at collusive and non-competitive prices;

g. accepted payment for Wire Harnesses sold to Ford and others at

collusive and non-competitive prices; h. engaged in meetings, conversations and communications in the

United States and elsewhere for the purpose of monitoring and enforcing adherence to the agreed-upon bid-rigging and price-fixing scheme; and


36

i. employed measures to keep their conduct secret, including, but

not limited to, using code names and meeting at private residences or remote locations.

110. The Conspiracy had the effect of restraining trade by suppressing and

eliminating competition in the global market for Wire Harnesses. The result of this

unlawful restraint on trade was artificially high prices for the Wire Harnesses sold

to Ford.

111. As a direct and proximate result of Defendants’ unlawful conduct,

Ford has suffered injury to its business or property because Ford has paid

artificially high prices for Wire Harnesses during the Conspiracy Period and paid

and continues to pay artificially high prices after the end of the Conspiracy Period.

PRAYER FOR JUDGMENT

WHEREFORE, Plaintiff prays for relief as follows:

a. A decree that the unlawful contract, combination and conspiracy alleged in this Complaint constitutes a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1;

b. Entry of a joint and several judgment for Plaintiff against the Defendants for three times the amount of the actual damages sustained by Plaintiff and the costs of Plaintiff’s suit, including reasonable attorneys’ fees, as provided by Section 1 of the Sherman Act, 15 U.S.C. § 1, and Section 4 of the Clayton Act, 15 U.S.C. § 15(a);

c. Entry of an injunction preliminarily and permanently enjoining Defendants from continuing any unlawful contract, combination and conspiracy, including that alleged in this Complaint;


37

d. An award of pre-judgment interest, as provided by Section 4(a) of the Clayton Act, 15 U.S.C. § 15(a); and

e. Such further and other relief as is just and proper.

JURY TRIAL DEMAND

Plaintiff hereby demands trial by jury on all triable issues.

Dated: July 16, 2013

Respectfully submitted,

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

Hector Torres Harold G. Levison Edward E. McNally Sarah Gibbs Leivick Robert W. Bosslet

1633 Broadway New York, New York 10019 (212) 506-1700

KIENBAUM OPPERWALL HARDY & PELTON, P.L.C. By: s/ Eric J. Pelton

Eric J. Pelton (P40635) Theodore R. Opperwall (P31374) Ryan D. Bohannon (P73394)

280 N. Old Woodward Avenue, Ste. 400Birmingham, Michigan 48009 (248) 645-0000 [email protected]

Attorneys for Plaintiff


ford motor company v. fujikura ltd. and fujikura automotive america llc,

Documents

conduct of fujikura

plaintiff complaint

torres friedman llp

jury demand

lpzljm doc

fujikuras coconspirators

hector torres harold

broadway new york