An auto parts Q&A with John Majoras
Jones Day partner John Majoras became involved in the global auto parts cartel investigation from its earliest days, advising parts maker Yazaki after the US Department of Justice announced its wire harnesses investigation with a series of search warrants and raids. Now, as the investigation slowly winds down, GCR data reporter Denise Nzeyimana asks Majoras how he saw the case unfold and what he thinks its ultimate legacy will be.
What was the first you heard about the auto parts cartel? What was your reaction at the time, and how quickly did you realise the investigation would be more expansive and complex than your typical conspiracy?
I first learned of the investigation when search warrants were executed on wire harness suppliers. As with any investigation, you learn a lot in the early days and progressively more as you have more time to investigate and develop the facts.
It wasn’t until learning about investigations into other automobile parts that it became clear that the civil litigation would become more complex because the multi-district litigation would involve multiple individual conspiracy allegations in the broader context of the auto parts MDL.
Your work for your client happened early in the government’s investigation of myriad auto parts conspiracies. What challenges or benefits did that early interaction with the government pose for you and the company?
In many respects, parts that were at issue in the early stages of the broader litigation set the stage for the procedures in the later-filed actions. So much of what we were doing initially in the civil litigation essentially became matters of first impression for the broader MDL.
As for the criminal investigation, the issues and processes were very similar to other cartel investigations. Over time it was obvious that the government’s resources were being stretched by the numerous investigations.
Can you describe the state of the auto parts industry at the time that may have created chaos in the industry – for example, the US automakers spinning off their in-house parts suppliers and opening their parts supply stream to open bidding?
My impression has never been that there was “chaos” in the industry. It became clear that suppliers fit into many categories with some making relatively few, specialised products, while other suppliers manufactured a wide array of products. Likewise, the vehicle manufacturers procured their parts in different ways and with different procedures, which could and did vary across parts.
Those factors added complications that prevented everything from being analysed on a one-size-fits-all basis, whether in the government investigations or in the civil litigation. It also, in retrospect, raises questions about whether, with so many parts at issue, they should have been handled primarily by a single MDL proceeding.
Generally speaking, other than the sheer volume of companies and conspiracies involved, what were some of the legal or logistical obstacles related to the auto parts cartels that usually are not a problem in other cartels?
Early in the civil litigation, there were efforts by plaintiffs to allege a single, unified conspiracy across the various auto parts. Those efforts were rebuffed relatively quickly, and the various plea agreements across the different parts were fairly clear in identifying activities that were specific to the parts in question. Nonetheless, there was a fair amount of litigation activity on that issue.
Aside from that, most of the challenges have been in the civil litigation. It has been a daunting docket, and a considerable burden on the court to deal with the usual miscellaneous motion practice in addition to the more substantive issues. Likewise, I think it has been a burden on the plaintiffs’ firms that have largely been consistent across the cases.
And for the later-filed cases, learning what has already transpired across very similar litigation in front of the same judge can pose a substantial learning curve and, of course, occasional frustration that a great deal of precedent has already been established long before you may have come into the case.
In your view, how is the auto parts cartel investigation different from past cartels? What lessons should enforcers and private practitioners take away from the investigation? How did the cartel test best practices?
I don’t have much to add beyond what I have already explained in terms of differences from other cartel matters. Once it is all concluded, I think there can be an interesting debate over whether the single MDL process was the right approach. Of course, at the outset, I am not sure one would have anticipated how the cases would eventually grow.
From an investigation standpoint, it is more difficult to say because I do not have insight into how the DOJ reacted and changed over the course of the different investigations. As I noted, it obviously stretched resources, particularly at senior levels.
From a best practices standpoint, senior leadership is important for consistent outcomes and due process. On the other hand, I suspect that many more junior lawyers saw some opportunities for significant involvement a lot sooner than they might have anticipated. Was it all handled as well as it could have been? I am sure there are a variety of views, and I am also sure that Brent Snyder and the other career lawyers at the Department will be able to use these experiences to good effect and will be able to apply a number of lessons to future activities. Additionally, the cooperation and interaction with foreign enforcement agencies also undoubtedly brought valuable experience and lessons.
Another question I would be interested in asking is how these cases contributed to the training in undertaking a painstaking investigation into cartel conduct. One potential offshoot of the amnesty programme – which is not just an issue in the auto parts cases – is whether the Antitrust Division’s actual investigation skills are staying honed because so much is now presented to them by amnesty candidates. Given the flurry of auto parts investigations that were running both consecutively and concurrently, it will be important for the Division to keep an eye on that issue, but they obviously don’t need me telling them what they ought to be doing.
From a private practitioner standpoint, we had to adapt quickly as the government lawyers moved from one investigation to the next. The typical pattern of the investigations, both substantively and from a timing standpoint, was noticeably different because the DOJ was so busy.
I suspect too that there were many private practitioners who were new to these types of matters and to dealing with the Antitrust Division. That may have caused occasional missteps along the way if they were trying to apply lessons learned from other types of criminal investigations, and I wonder too whether it led to any frustration by the DOJ. More than most cases, I think that experience in handling antitrust investigations and the follow-on civil litigation served clients well in the auto parts cases.