On September 19, 2012, a Japanese freight forwarder named Yusen Logistics Co. pleaded guilty to price-fixing charges, becoming the latest company to be targeted by US antitrust authorities. In this article, we will examine the details of the case and its implications for antitrust law.
Background of the Case
Yusen Logistics Co. is a global logistics company based in Japan that operates in various countries worldwide. In 2010, Yusen Logistics and some of its competitors, including K-Line America, NYK Line, and Evergreen Line, along with other freight forwarders, were charged in the US with price-fixing for services provided to customers in the US and other countries.
The conspiracy involved industry executives who conspired to fix the prices for international freight forwarding services by agreeing to various fees and charges. These actions aimed to eliminate competitive pricing for customers and make it more challenging for new competitors to enter the market.
Charges and Guilty Plea
In September 2012, Yusen Logistics Co. pleaded guilty to conspiring with other freight forwarders to fix prices for international freight forwarding services, dating back to at least 2002 until at least 2007. The company was charged with participating in a global conspiracy to allocate customers and routes, rig bids and fix prices. The freight forwarder agreed to pay a fine of $59.4 million and to cooperate with the DOJ throughout their investigation of the industry.
Implications for Antitrust Law
The Yusen Logistics case serves as a reminder of the importance of complying with antitrust laws and the severe consequences of violating these laws. The US antitrust laws prohibit companies from engaging in price-fixing, which stifles competition by eliminating pricing competition for customers.
The case also highlights the global nature of antitrust investigations. Yusen Logistics Co. is a Japanese-based company, and the conspiracy involved freight forwarders from several other countries. This demonstrates that conduct outside the US can still fall under the jurisdiction of US antitrust authorities if it has direct and substantial involvement in US commerce.
In conclusion, the Yusen Logistics case emphasizes the need for companies to ensure they comply with antitrust laws and avoid engaging in illegal price-fixing activity. The DOJ has shown that it will aggressively pursue companies that engage in these activities, regardless of where in the world they are based. The case serves as a reminder to other freight forwarders and companies to ensure they comply with antitrust laws and engage in healthy competition in the marketplace.
On September 19, 2012, the Department of Justice announced that the Japanese freight forwarding company Yamato Global Logistics Japan Co. Ltd. agreed to plead guilty and pay $2.3 million in criminal fines for fixing prices for air cargo shipments from Japan to the United States.
The company is reported to have fixed fuel surcharges and security fees from September of 2002 to November of 2007. Apart from the criminal fine, Yamato Global Logistics Japan Co. Ltd. has already agreed to cooperate with the Department of Justice in a continuing antitrust investigation.
Currently, the investigation has led to 14 companies to pleading guilty or agreeing to plead guilty and pay criminal fines totaling more than $100 million.
Freight forwarders like the one in Japan engage in the delivery of domestic and international goods for customers. The process starts by receiving, packaging, and preparing the freight. The freight forwarder then schedules the transportation with providers such as air carriers and prepares shipping documentation.
According to the Department of Justice, the company in Japan secretly agreed to organize and impose freight forwarding fees. Scott D. Hammond, the Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program, states, “Consumers ultimately were forced to pay higher prices on the goods they buy every day as a result of the noncompetitive and collusive fees charged by these companies.”
The company in Japan is charged within violating the Sherman Act. This maximum fine for the violation of the Act is $100 million for corporations. The maximum fine can increase if the gain was twice the loss suffered by victims.
The charges were brought forth by the Antitrust Division’s National Criminal Enforcement Section, the Washington FBI Field Office, and the Office of the Inspector General under the Department of Commerce.
Source: Department of Justice