Auto parts price-fixing probe rattles industry

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With an eye toward eliminating competition and maximizing profits, they exploited an industry that experts say is in some ways vulnerable to collusion: There are a finite number of purchasers and suppliers, there's steady pressure among companies to cut prices  and car parts, unlike certain products that have a great deal of variability, are generally standardized and homogeneous.

The firms will just make more money if they're able to reach and stick to an agreement to collectively charge higher prices so that customers can't get them to bid against each other," said Spencer Weber Waller, director of the Institute for Antitrust Consumer Studies at the Loyola University Chicago law school. The problem is, of course, it's a felony in the United States."

The Justice Department first publicly surfaced aspects of the investigation when FBI agents in Detroit raided the offices of Denso Corp, Yazaki North America and Tokai Rika. All three companies have pleaded guilty to their roles in price-fixing and bid-rigging schemes.

Since the raids, the probe has broadened to encompass about $5 billion worth of auto parts, including seat belts, ignition coils, steering wheels, air school bag , windshield wipers and rubber parts that dampen vibration.

Similar cartels have formed in industries ranging from oil and gas to cement and vitamins, though there's debate among economists about how long they can last, given the constant incentive for one member to cheat the others and the tendency to collapse under their own weight as they keep growing, said Daniel Crane, a University of Michigan law professor..
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