Competition watchdog slaps firms with record $9.3m penalty

By Grace Leong, The Straits Times, 28 May 2014

FOUR Japanese ball bearing manufacturing firms and their Singapore subsidiaries have been hit with a record penalty of $9.3 million for engaging in cartel activities to fix prices.

The Japanese companies, which are listed on the Tokyo Stock Exchange, and their local units engaged in anti-competitive agreements and unlawful exchange of information to fix prices of ball and roller bearings sold to aftermarket customers here, which use bearings for repair and maintenance purposes, the Competition Commission of Singapore (CCS) said yesterday.

The $9.3 million penalty is the highest the competition watchdog has imposed and the first time it has issued a cartel decision against foreign companies and their local units.

CCS chief executive Toh Han Li, at a briefing yesterday, said: "Our Competition Act does have extra-territorial reach in so far as the conduct impacts on the Singapore economy and Singapore businesses. So companies that engage in anti-competitive conduct overseas, like in this case, can be investigated under Singapore law.

"This is also the first time we (have) issued a decision against a manufacturing cartel. All previous decisions involved services (cartels)."

Mr Toh added that the cartel was a "secretive and sophisticated" one, where the participants "engaged in covert conduct, including referring to each participant by codenames, unlike previous CCS price-fixing cartels".

The four Japanese firms and their units are: JTEKT Corp and its unit Koyo Singapore Bearing; NSK and NSK Singapore; NTN Corp and NTN Bearing-Singapore; and Nachi-Fujikoshi Corp and Nachi Singapore. Separately, the Japan Free Trade Commission has imposed $160 million in fines against the four Japanese firms for price fixing and unlawful exchange of information, while the Australian Competition and Consumer Commission has imposed A$5 million (S$5.8 million) in fines against two of them.

CCS began investigations here in December 2011 after one of the parties filed an application for immunity under the CCS Leniency programme, an initiative that gives cartel members an incentive to come clean. Its probe found the parties, who were competitors, held meetings in Japan and Singapore where they exchanged information and agreed on prices of bearings sold to aftermarket customers here to maintain market share and protect profits.

CCS said the parties had "set an agreed price list and made a minimum price agreement for Singapore, agreed on relevant exchange rates to be applied to derive the minimum prices for Singapore, and when the price of steel began to increase, the parties agreed on percentage price increases and exchanged information on percentage price increases to be applied to aftermarket customers in Singapore".

They have two months to pay the penalties or file an appeal with the Competition Appeal Board.