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Yazaki ordered to pay $9.5 million for collusive conduct

24 May 2017
Read Time 3 mins reading time

The Federal Court of Australia has recently ordered Yazaki Corporation (Yazaki), a Japanese company, to pay a penalty of $9.5 million for engaging in collusive conduct in 2013 with a competitor in the supply of wire harnesses to Toyota Motor Corporation (Toyota) in Australia.

In 2015, the Federal Court found Yazaki had coordinated with a competitor on quotations issued to Toyota for the supply of wire harnesses used in the manufacture of two models of the Toyota Camry in Australia. In particular, it was held, an overarching cartel arrangement existed between Yazaki and its competitor in which the parties had agreed on the allocation and price of the wire harnesses. This arrangement was held to be in breach of the Competition and Consumer Act 2010 (Cth) (CCA) and the Competition Code (Vic) (Code).

During the trial, Yazaki argued its conduct in making and giving effect to the collusive agreements with its competitor occurred in Japan, and Yazaki therefore did not carry on business in Australia. However, Justice Besanko was satisfied, having regard to the supply of wire harnesses to Toyota, Yazaki’s business had been carried out in, or was otherwise connected to Australia. Accordingly, Yazaki’s conduct was subject to Australian competition law despite the fact substantial aspects of the anti-competitive conduct took place in Japan.

In addition to the $9.5 million penalty, Yazaki was ordered to pay 85 percent of the ACCC’s legal costs. However, the ACCC considers that significantly higher penalties would have been appropriate given the seriousness of the conduct, Yazaki’s size and the substantial turnover related to its Australian operations.

The hefty penalty imposed on Yazaki serves as a serious reminder to all traders (including those based overseas that conduct business in Australia) to ensure their staff members are aware of the boundaries and regulations set out in the CCA. There are also calls to increase some of the penalties currently available under the CCA, to further drive home a message of deterrence.  A strong and consistent enforcement message is also a priority for the ACCC. Further, Consumer Affairs Australia and New Zealand (CAANZ) has recently proposed 19 legislative reforms that will seek to expand the protections afforded to consumers under the Australian Consumer Law. A summary of CAANZ’s proposed reforms can be found in our earlier article: Recommendations made for changes to the Australian Consumer Law.

At Macpherson Kelly, our manufacturing industry expertise and on-site refresher and follow-up training courses provide the latest legal developments, practice and real-life insights in this area. We’re here to ensure that your standard practice is best practice. For more information, please contact Paul Kirton  or Kelly Dickson.

 

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Yazaki ordered to pay $9.5 million for collusive conduct

24 May 2017

The Federal Court of Australia has recently ordered Yazaki Corporation (Yazaki), a Japanese company, to pay a penalty of $9.5 million for engaging in collusive conduct in 2013 with a competitor in the supply of wire harnesses to Toyota Motor Corporation (Toyota) in Australia.

In 2015, the Federal Court found Yazaki had coordinated with a competitor on quotations issued to Toyota for the supply of wire harnesses used in the manufacture of two models of the Toyota Camry in Australia. In particular, it was held, an overarching cartel arrangement existed between Yazaki and its competitor in which the parties had agreed on the allocation and price of the wire harnesses. This arrangement was held to be in breach of the Competition and Consumer Act 2010 (Cth) (CCA) and the Competition Code (Vic) (Code).

During the trial, Yazaki argued its conduct in making and giving effect to the collusive agreements with its competitor occurred in Japan, and Yazaki therefore did not carry on business in Australia. However, Justice Besanko was satisfied, having regard to the supply of wire harnesses to Toyota, Yazaki’s business had been carried out in, or was otherwise connected to Australia. Accordingly, Yazaki’s conduct was subject to Australian competition law despite the fact substantial aspects of the anti-competitive conduct took place in Japan.

In addition to the $9.5 million penalty, Yazaki was ordered to pay 85 percent of the ACCC’s legal costs. However, the ACCC considers that significantly higher penalties would have been appropriate given the seriousness of the conduct, Yazaki’s size and the substantial turnover related to its Australian operations.

The hefty penalty imposed on Yazaki serves as a serious reminder to all traders (including those based overseas that conduct business in Australia) to ensure their staff members are aware of the boundaries and regulations set out in the CCA. There are also calls to increase some of the penalties currently available under the CCA, to further drive home a message of deterrence.  A strong and consistent enforcement message is also a priority for the ACCC. Further, Consumer Affairs Australia and New Zealand (CAANZ) has recently proposed 19 legislative reforms that will seek to expand the protections afforded to consumers under the Australian Consumer Law. A summary of CAANZ’s proposed reforms can be found in our earlier article: Recommendations made for changes to the Australian Consumer Law.

At Macpherson Kelly, our manufacturing industry expertise and on-site refresher and follow-up training courses provide the latest legal developments, practice and real-life insights in this area. We’re here to ensure that your standard practice is best practice. For more information, please contact Paul Kirton  or Kelly Dickson.