Bosch Unplugged

Bosch, Admitting Price Fixing in Brazil, Turns States' Evidence

Bosch Chief Executive Volkmar Denner Source Stuttgarter Zeitung
Can Bosch Chief Executive Volkmar Denner reverse the spark-plug maker's decline in Brazil?
  • Why it matters

    Why it matters

    If Bosch is unable to reverse damage from fixing spark plug prices in Brazil, its sales, already down 15 percent in the country, are likely to fall further.

  • Facts

    Facts

    • Bosch said it colluded with Japan’s NGK Spark Plugs to set prices in Brazil between 2000 and 2013.
    • The German company makes two-thirds of its revenues from auto parts. It has already seen sales fall by 15 percent in Brazil.
    • NGK Spark Plugs last month pleaded guilty to price-fixing in the United States and will pay a $52.1 million fine.
  • Audio

    Audio

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Bosch, the German engineering and auto parts supplier, has admitted to antitrust regulators in Brazil that for years it has fixed prices on spark plugs in collusion with a Japanese competitor.

With its admission, the Stuttgart-based company hopes to get off with a smaller fine by cooperating with regulators. Bosch said it worked with NGK Spark Plugs to fix prices in Brazil between 2000 and 2013, although NGK disputes the accusation, according to news reports.

Brazilian antitrust regulators allege that “Bosch and NGK colluded for years in determining the prices and sales volume which they then presented to automakers, dealers and repair shops.” Both the Bosch German parent company and its Brazilian subsidiary admitted their roles in a joint statement to authorities.

In Stuttgart, a company spokesperson confirmed that Bosch is cooperating with investigators, but said the company could not make any statements about the proceedings. Up to now, Bosch has not made any personnel changes.

The price-fixing investigation looked at automakers operating in Brazil – including Volkswagen, General Motors, Renault, Ford, Fiat and Daimler – as well as German chainsaw and power tool maker Stihl. If authorities find Bosch and NGK guilty, the companies that paid more for spark plugs could seek compensation for damages.

Bosch is not the only antitrust violator from Germany. Siemens also contacted authorities and admitted to colluding on prices charged in mass transit contracts.

Brazil is not a major market for Bosch, but the investigation comes at a bad time.

The company, which makes two-thirds of its revenues from auto parts, is already suffering from a 15 percent decline in sales in Brazil. Through the first half of this year, however, Bosch still hoped to maintain its 2013 sales volume of €1.5 billion, or about $1.94 billion. It’s unclear how long the investigation will go on.

Bosch is not the only antitrust violator from Germany.

A year ago, the engineering and electronics giant Siemens also contacted authorities and admitted to colluding on prices charged in contracts for metros in Brazil.

With its admission, the Munich-based firm found itself caught between the fronts of Brazilian politics. For months, Siemens price-fixing made headlines. Now national and state authorities are conducting simultaneous investigations and there is no indication when they’ll finish or reach a final verdict.

Because of the ongoing probes, Siemens has little chance of any winning public contracts in the country.

Bosch, on the other hand, hopes that its admission will help bring its price-fixing investigation to a more rapid conclusion. No public agencies were hurt, only private companies. And there are fewer competitors who might be interested in influencing the investigations.

It might also be that by admitting its role in the scheme, Bosch wants to beat NGK to the draw. In a separate price-fixing probe in the United States, the Japanese company agreed last month to plead guilty and pay a $52.1 million fine, according to news reports.

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This article was translated by George Frederick Takis. Greg Ring also contributed. The author was born in Venezuela and has been reporting from Brazil as a correspondent for Handelsblatt for 20 years. To contact him: alexander.busch@terra.com.br 

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