Doug French alerted me to this story:
NEW YORK (AP) — The FBI raided the U.S. offices of three auto suppliers as part of an antitrust investigation, the agency said Wednesday.
The FBI’s Detroit office said agents raided the offices of Denso Corp, Yazaki North America and Tokai Rika. All the raids took place Tuesday evening.
Justice Department spokeswoman Gina Talamona said the department is conducting an investigation of automotive electronics suppliers. It was unclear if other companies were involved in the investigation.
“The antitrust division is investigating the possibility of anticompetitive cartel conduct,” Talamona said in a statement. “We are coordinating with the European Commission and other foreign competition authorities.”
(1) Raids are unusual in a U.S. antitrust investigation. The Justice Department prefers to lure one company with the promise of “amnesty” — and a substantial competitive advantage — by incriminating its competitors. The raids here could mean the DOJ doesn’t already have its amnesty stooge, or it could signal a larger policy shift towards more aggressive, European Union-style tactics.
(2) When Congress re-authorized the Patriot Act a few years ago, the House-Senate conference committee snuck-in a provision that added antitrust to the list of “predicate offenses” eligible for FBI wiretaps. The raids here might have been the consequence of just such a wiretap.
(3) Overall, this is bad news for auto manufacturers and consumers. A DOJ operation of this magnitude means massive fines are on the horizon — we could be looking at nine or ten figures when all is said and done — which will divert capital from the market at the worst possible time.
(4) Why auto parts? The government’s stake in General Motors is no doubt a factor. One of the most frequent targets of criminal antitrust agents are companies that do most of their business with the government or government-sponsored enterprises. Like companies that sell milk to school districts.