Screens & Feeders

$3 million fine for bearings price fixing

According to proceedings brought before the Federal Court by the Australian Competition and Consumer Commission (ACCC), meetings took place from at least 2000 to May 2011 between the Australian subsidiaries of three Japanese bearings suppliers ? NSK Australia, Nachi Australia and Koyo Australia ? to discuss confidential information, including pricing plans. 
The Australian-residing Japanese executives of these companies, who referred to their group as the ?Southern Cross Association?, would typically meet in Japanese restaurants in Sydney and Melbourne for the purposes of maintaining or controlling the price of bearings to their aftermarket customers. 
An ACCC statement specifically referred to two incidents in which NSK Australia was alleged to have fixed its prices. In the first incident, in May 2008, it stated that NSK Australia increased its prices by four per cent as per an agreement reached at one of these meetings. In February 2009, NSK Australia increased its prices a further 10 per cent as per a Southern Cross Association meeting. 
However, the statement noted that in the first incident, it was not known whether NSK Australia would have maintained its planned 2008 price increase regardless of the meetings, and also noted that in the second incident, the price increase had already been announced to customers.
The Federal Court has now ruled that NSK Australia will pay a total of $3 million for its involvement in cartel conduct in relation to the price of bearings in Australia. According to the ACCC statement, NSK Australia received a significant discount on its penalty for co-operating during the investigation.
Restoring trust
NSK, the Tokyo-based parent company of NSK Australia, released a statement that stated the company would ?devote every effort to restoring the trust of all stakeholders and the public?, and that it did not anticipate that the penalty would result in a revision of its business forecast for the 2014?15 financial year.
?We express our sincere regret for the concern this matter has caused our shareholders, customers and other stakeholders,? the statement read. ?NSK and its subsidiaries regard the situation with utmost seriousness and have taken and will continue to take comprehensive measures with the help of outside experts and others to ensure strict compliance with all applicable laws and regulations during our corporate activities. We will devote every effort to restoring the trust of all stakeholders and the public.?
The bearings supplier has also been ordered not to engage in similar cartel conduct for a period of three years and to implement a competition and consumer law compliance training program.
Significant shares in bearing market
The Federal Court also fined Koyo Australia, which is part of the JTEKT Corporation headquartered in Nagoya, $2 million for its involvement in the cartel in October 2013.
Following inquiries from Quarry, the ACCC declined to comment on the status of Nachi-Fujikoshi Corporation subsidiary Nachi Australia in its investigation.
According to the ACCC, for each year during the period from 2007 to 2011, the collective value of bearing products imported into the Australian bearings market by all manufacturers was approximately $370 million to $400 million. NSK Australia has a 10 per cent to 13 per cent share of the Australian bearings market.
ACCC chairman Rod Sims said that cartels cheated consumers and other businesses. ?Although the conduct involved in this case did not directly affect bearings used in the manufacture of vehicles, the conduct did affect the price of bearings used for aftermarket applications such as repairs to vehicles,? he said. ?The ACCC will continue to tackle cartel conduct with the full force of the law.?
Source: Australian Competition and Consumer Commission, NSK

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