Panasonic, Whirlpool subsidiary agree to plead guilty to price fixing of appliance compressorsBy AP
Thursday, September 30, 2010
Panasonic, Whirlpool subsidiary to plead guilty
DETROIT — Japanese electronics giant Panasonic Corp. and a subsidiary of Michigan-based appliance maker Whirlpool Corp. have agreed to plead guilty and pay more than $140 million in criminal fines for their roles in an international price-fixing scheme, the U.S. Justice Department said Thursday.ARTICLE CONTINUED BELOW
The companies conspired to fix the prices of refrigerant compressors, the government said in a written statement.
Refrigerant compressors are placed into refrigerators and freezers, take in low-pressure refrigerant, compress it and pump out a high-pressure vapor that condenses and subsequently cools the devices.
In papers filed in Detroit federal court, Panasonic and Embraco North America Inc. are accused of working to fix prices on the compressors from 2004 to 2007 in the U.S. and abroad.
The Justice Department said Embraco would pay $91.8 million and Panasonic $49.1 million in criminal fines as part of plea agreements that are subject to court approval.
Christine Varney, assistant attorney general in charge of the antitrust division said the charges were the first brought by the department in its worldwide probe of the refrigerant compressors market.
“We are committed to investigating and bringing to justice those who engage in this kind of international price fixing,” Varney said.
The Justice Department announced in February 2009 that it had opened an antitrust investigation of the compressor industry, part of a global probe of possible price fixing and other anticompetitive practices at companies that supply the cooling parts for appliances like refrigerators and air conditioners.
Authorities in Europe and Brazil at the time raided offices of several compressor producers as they investigated a possible global cartel among companies that make the equipment.
Panasonic released a written statement that said the company has fully cooperated in the investigation since the Department of Justice investigation began.
“Panasonic entered into the plea agreement after carefully taking into consideration the applicable laws and related regulations, the facts and other factors,” the Osaka-based company said in the statement. “… Panasonic takes this matter seriously and will make every effort to maintain the public’s confidence.”
Panasonic said it didn’t expect the payment to have a “material effect” on its financial outlook for the fiscal year ending March 31, 2011.
Whirlpool, meanwhile, downgraded its earnings outlook on Thursday.
The Benton Harbor-based company said it would record the $91.8 million expense during the third quarter of 2010 and expected to report earnings of $7.80 to $8.30 per diluted share compared with its previous outlook of $9 to $9.50 per diluted share.
On an adjusted basis, Whirlpool said its full-year outlook of $9.56 to $10.06 per diluted share was unchanged.
Whirlpool is scheduled to release its third-quarter earnings on Oct. 27.
Shares of Panasonic were down 9 cents to $13.58, and shares of Whirlpool were unchanged at $80.75 in trading Thursday afternoon on the New York Stock Exchange.
David MacGregor, an analyst with Longbow Research, said he wasn’t sure what impact, if any, the pleas would have on the companies’ relationship with consumers. He said it might depend on whether a large enough percentage of people hear about it.
“I don’t know to what extent the media will pick this up and run with it,” he said.
In the charging document filed in Detroit, the government said Panasonic, Embraco and other unnamed coconspirators agreed during meetings and conversations to coordinate prices of refrigerant compressors and exchanged information so they could monitor and enforce the agreed-upon prices.
The companies were charged with price fixing in violation of U.S. antitrust law.
The Justice Department said its ongoing investigation into the worldwide refrigerant compressors market is being conducted by the antitrust division’s Cleveland field office and the FBI’s Detroit field office.
Tags: Contracts And Orders, Criminal Investigations, Detroit, Government Regulations, Industry Regulation, Michigan, North America, United States, Washington