Hosed! Bridgestone, Continental and Competitors Fined $174 Million In Price-Fixing Scheme
Reuters has reported tonight that Japan’s number 1 tire maker, Bridgestone, as well as German automotive supplier Continental AG (specifically its UK subsidiary, Dunlop) and three other companies have been fined a total of 131.5 million euros, or around $174 million in greenbacks, for participating in a cartel with the intent to fix prices for marine oil hose.
The fiscal smackdown comes courtesy of the European Union Competition Commission, whose commissioner, Neelie Kroes, laid down some tough words: “I will not tolerate illegal cartels and will continue to impose heavy fines on those companies found guilty of this kind of serious malpractice.”
Reported to have been running for at least 10 years, if not longer, the cartel had arranged to increase prices by at least 18% for the hose, which is designed specifically to handle oil under the surface of the ocean, and has naturally seen an increase in demand over the same period of time, with price-fixing attached. Bloomberg has a very concise description of the actual item in dispute:
A marine hose is used to transport oil between tankers and storage facilities and buoys. The hoses are bought by the U.S. military and oil companies including Royal Dutch Shell Plc, Exxon Mobil Corp. and Chevron Corp. that are involved in off-shore oil exploration.
The plot came unfurled back in mid-2007, when Japan’s #2 tiremaker, Yokohama, came forward to the authorities with the scheme. That being the case, Yokohama will be able to skip the fine since they fall under the EUCC’s whistleblowing policy.
The admission came under pressure, however, as Britain’s Office of Fair Trade and the US Department of Justice were already investigating the scheme, and had arrested three managing directors at Dunlop Oil & Marine’s offices in Houston, TX, and rounded up five others in a hotel room in San Francisco, all caught discussing the price-fixing on tape.
Bridgestone (58.5 million euro) got smacked hardest by the fine, with Conti’s Dunlop division eating 18 million euros. The other conspirators, Sweden’s Trelleborg AB, US & Italy-based Parker ITR, and all-Italian Manuli Rubber Industries SpA, make up the rest of the fine, with Parker ITR taking the second-largest hit at 25.6 million euro.
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