Nippon Chemi-Con: Code Names and Cover Stories for Capacitor Prices

In the Nippon Chemi-Con capacitor price fixing case, the company admitted suppressing competition for components sold to customers in the United States and elsewhere. The Justice Department’s account of the criminal case described the indictment’s allegations: competitors agreed on prices in meetings, sold capacitors under those agreements and concealed the arrangement with code names and misleading explanations to customers. The electronics makers buying those components lost the benefit of suppliers competing for their business. If you handled the quotes, the pattern is familiar: the price agreed with rivals becomes the price defended to the buyer.

What Nippon Chemi-Con Admitted

In its May 2018 guilty plea, Nippon Chemi-Con admitted conspiring to suppress and eliminate competition for electrolytic capacitors from at least as early as November 2001 to January 2014. The Justice Department reported that eight companies had pleaded guilty in the capacitor investigation.

The plea’s account of the sales reached components sold directly into the United States and components incorporated abroad into products bound for the United States. The capacitor price could therefore enter the American supply chain before the finished product crossed the border. An international sales employee’s knowledge of a quote and its destination can connect a competitor discussion to that business.

Electrolytic capacitors store and regulate electrical current. They go into computers, televisions, car engine and airbag systems, home appliances and office equipment.

What Is Price Fixing?

Price fixing means competitors agree on prices instead of setting them independently. In the Nippon Chemi-Con criminal case, the indictment described agreements reached during meetings and other communications, followed by capacitor sales made under those agreements.

Bid rigging and price fixing meet at the customer quote in this case. The Justice Department’s account of the indictment described misleading justifications for both prices and bids submitted to customers. For an employee familiar with those submissions, the useful connection is between what competitors discussed and what the customer received.

Code Names Hid the Agreement, Explanations Sold the Price

According to the Justice Department’s account of the indictment, Nippon Chemi-Con and its co-conspirators used code names and gave customers misleading justifications for their prices and bids.

That alleged concealment puts the sales conversation inside the scheme, alongside the competitor meeting. In the government’s account, the suppliers agreed on the price, then gave the buyer another explanation for it.

For a salesperson who knew where an explanation came from, or a buyer who received it, the wording can matter as much as the amount. We examine how the explanation fits the competitor contact, the pricing decision and the transaction.

What Is the Role of Whistleblowers in Bid Rigging Cases?

Whistleblowers can connect the conversations behind a pricing decision to the bids and sales that carried it out. An insider may know what a code name meant, who took part in a discussion or why a particular explanation went to a customer. That knowledge gives meaning to records a buyer sees only from the outside.

Applied to capacitor pricing, the question is how a price pattern connects to the people who agreed on it and the instructions that put it into effect.

Different jobs offer different views. A buyer may hold the explanation supplied with a quote. A salesperson may know the discussion behind it. An employee handling international accounts may connect the component sale to a United States customer or a product bound for that market. We work with what your role lets you explain, then connect it to the records that show the agreement at work.

When Coordinated Bids Reach Government Payments

The military-fuel cases show how an arrangement between suppliers can reach a government bill. In its civil complaint against Hyundai Oilbank, the government alleged that fuel suppliers divided contract line items and agreed either to stay out of bidding or to bid high enough to lose.

The Hyundai Oilbank complaint illustrates why the supplier ultimately paid may matter as much as the bidder named on an award.

The Hanjin agreement concerns its own FCA recovery and relator provisions, which cannot establish eligibility for the capacitor prosecution.

In a component business, knowing who ultimately paid can be as useful as knowing who set the price. We examine that connection with you when the pricing records involve government purchases.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For a price-fixing matter, we examine the evidence of false government claims and the payments they caused.

Could New Capacitor-Cartel Information Support a Reward?

We assess whether your information qualifies under the Antitrust Division and Postal Service agreement with you.

Your role in the conduct, any need for leniency, and any separate buyer claim are matters for that conversation. We bring in antitrust whistleblower lawyers to assess those issues alongside what your evidence shows.

You Know What the Customer Was Told

Our whistleblower experts can follow the capacitor code name or cover story to the competitor meeting and customer quote it concealed.