ACR-News
28 September 2011

Former executives charged in price-fixing conspiracy

THREE former executives of Panasonic Corporation, Embraco and Tecumseh have been indicted in Detroit for their role in the international refrigeration compressor price fixing conspiracy.
Ernesto Heinzelmann, former president and chief executive officer of Embraco, Gerson Veríssimo, former president of Tecumseh do Brasil Ltda and Naoki Adachi, general manager of global sales & SE group, refrigeration devices division at Panasonic Corporation, with conspiring to suppress and eliminate competition by coordinating price increases for refrigerant compressors to customers in the United States and elsewhere.

Heinzelmann and Veríssimo are charged with participating in the conspiracy from at least as early as October 14, 2004, until on or about December 31, 2007. Adachi is charged with participating in the conspiracy from at least as early as May 10, 2006, until on or about December 31, 2007. Heinzelmann, Veríssimo and Adachi are the first executives charged in the ongoing investigation into the worldwide refrigerant compressors market.

The indictments are the latest in a series of actions by authorities following raids by anti-trust authorities on a number of refrigeration compressor manufacturers' offices across Europe, the US and Brazil in February 2009. In the operation codenamed Zero Degrees, 60 federal agents in Sao Paulo searched Whirlpool offices and seized computer equipment. Unannounced raids were also carried out at the offices of Whirlpool and Tecumseh in Brazil and the US, and Danfoss facilities in Denmark, Germany and the US.

According to the indictment, Heinzelmann, Veríssimo, and Adachi carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings and conversations to coordinate price increases of refrigerant compressors in the United States and elsewhere. As part of the conspiracy, Heinzelmann, Veríssimo, Adachi, and co-conspirators sold and accepted payments for the compressors at collusive and non-competitive prices.

Heinzelmann, Veríssimo, and Adachi are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1m fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Panasonic and Embraco North America were fined a total of $140.9m in the USA in October last year over the scandal. The same two companies were each fined $1.5m by a Canadian Federal Court the following month. The previous year Embraco agreed to pay $56.5m to settle its compressor cartel allegations in Brazil. Investigations in Europe are ongoing.

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