Price fixing: antitrust & other unfair trading practices | 52

Summary

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Podcast Summary

Podcast: Down to Business English
Episode: Price fixing: antitrust & other unfair trading practices (#52)
Hosts: Skip Montreux (Tokyo, Japan) & Des Morgan (Abu Dhabi)
Date: February 13, 2012

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Episode Overview

This episode dives into the business news topic of price fixing—an unfair trading practice that undermines competition. Skip and Des explore recent high-profile cases involving Japanese auto parts makers and Korean electronics giants, unpack how antitrust laws work, and discuss related practices like government subsidies and tariffs. The discussion also offers practical business English vocabulary relevant to these themes.

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Key Discussion Points & Insights

1. Price Fixing Among Major Corporations

• Japanese Auto Parts Scandal
  • Yazaki Corporation and Nippon Denso, two leading Japanese auto parts manufacturers, agreed to plead guilty in the U.S. to price fixing charges.
  • The U.S. Department of Justice imposed heavy penalties:
    • Yazaki fined $470 million—the second largest antitrust fine in US history.
    • Denso fined $78 million.
    • Four Yazaki executives sentenced to two years in a U.S. jail.
  • Quote (Skip, 01:40):
    "Yazaki will pay a fine of $470 million, the second largest in US history, while Denso is getting away with a smaller $78 million fine."
  • The practice may have been ongoing for a decade, impacting car prices for consumers.
  • Quote (Skip, 02:03):
    "By fixing the prices that US automakers have to pay for the parts, the overall price of a vehicle rises, which...is the same as cheating the consumer."

2. Price Fixing in the Electronics Industry

• Korean Electronics Firms
  • LG and Samsung were fined by Korean authorities for price fixing ($39 million)—considered a “mere” amount compared to US penalties.
  • Secret meetings in 2008-2009 to agree on prices for products like washing machines, TVs, and laptops.
  • Quote (Des, 03:22):
    "I have an LG washing machine. I feel cheated."

3. Government Subsidies & Accusations

• Subsidies as Unfair Practice
  • Discussion on how government subsidies create unfair competition.
  • Example: Allegations of subsidies to the European aircraft manufacturer Airbus, though never conclusively proven.
  • In Focus: Chinese government is accused of subsidizing its auto parts and electronics sectors, allegedly resulting in significant American job losses.
  • Quote (Skip, 04:16):
    "The AAM claims that this practice has resulted in the loss of 400,000 American jobs since 2000 and is asking the US government to...impose tariffs on imported Chinese auto parts."

4. The Currency Factor

• Currency Manipulation (China)
  • Reference to prior episodes about China’s currency policy, which gives its exports an added advantage.
  • Quote (Des, 04:34):
    "China is already fixing its currency at an artificially low rate, which gives its industries an unfair advantage."

5. Political Impact

• Deteriorating US-China Relations
  • The tension over fair trade is not just economic but also political, as the US seeks to “level the playing field.”
  • Quote (Skip, 04:45):
    "US and Chinese relations continue to deteriorate as America tries to level the playing field, which makes this entire story not only a business topic, but a hot political issue as well."

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Notable Quotes & Memorable Moments

• On Price Fixing Severity (Des, 02:24):
  "Sounds like someone should go to jail."

  • (Skip, 02:25): "Oh, but they are, Des. Four Yamazaki executives have been sentenced to two years in a U.S. jail."

• On Competition (Des, 00:47):
  "Well, competition is at the heart of capitalism, I guess."

• On Electronics Price Fixing (Des, 03:22):
  "I have an LG washing machine. I feel cheated."

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Key Vocabulary Explained (with Context & Examples)

1. Cutthroat (Adjective) [05:19]

• Means extremely intense and ruthless competition.
• Example (Skip, 05:41): "In the story, I talked about the cutthroat PC market to show how intense the competition is between manufacturers."
• Further Example (Des, 05:56): "How cutthroat the competition is between drug companies..."

2. Antitrust (Adjective) [06:10]

• Relates to laws/measures that prevent unfair business practices and promote free competition.
• Example (Des, 06:20): "The US has strong antitrust laws, meaning it fights this type of corruption."
• Case: Dole fined for fixing banana prices in Europe.

3. Throw the book at someone (Phrase) [06:52]

• Means to punish someone as severely as possible.
• Example (Skip, 06:52): "In the story, I say that the Antitrust division imposed really strict penalties or threw the book at the two Japanese companies."

4. Subsidy/Subsidize (Noun/Verb) [07:30]

• Government financial support to make products cheaper.
• Example (Des, 07:42): "Chinese government is unfairly subsidizing the Chinese auto parts industry."
• Des notes not all subsidies are unfair (e.g. UAE supports basic foods for consumers).

5. Tariff (Noun) [08:10]

• A tax placed on imported goods.
• Example (Skip, 08:10): "The AAM wants the US Government to put tariffs on imported Chinese auto parts."

6. Level the playing field (Phrase) [08:54]

• To make competition fair/equal.
• Example (Des, 08:57): "The US is trying to make it fair or to level the playing field."

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Important Timestamps

• 00:47: Reflection on competition and capitalism.
• 01:23-02:33: Case details on Japanese auto parts price fixing and penalties.
• 02:48-03:22: Korean electronics industry fined for price fixing.
• 03:31-04:16: Government subsidies and US job losses due to foreign competition.
• 04:34-04:45: Currency manipulation and its impact.
• 05:19-09:31: Vocabulary explanations with business context.

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Takeaway

This episode delivers a focused exploration of price fixing, antitrust law, and unfair trading practices—covering both the mechanics of these abuses and their broader economic and political impact. Using real-world cases, the hosts not only report the news but also arm listeners with relevant business English vocabulary and usage.

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Transcript

[A]

Hello everyone. This is Skip Montreux reporting in from Tokyo, Japan.

[B]

And this is Des Morgan, still in Abu Dhabi.

[A]

Welcome to a new episode of down to Business. English so how have you been, Des?

[B]

Not too bad an expensive month this month though, as I think I need to get a new computer. The DVD player has gone and it's become really slow.

[A]

A new computer. I see something that's all silver, metal and shiny with a very, very big.

[B]

Oh yeah, I know. With a big lit up Apple on the case. Apples are too expensive anyway.

[A]

I suppose it's because Apple has no real competition. Whereas in the PC market, competition is cutthroat.

[B]

Well, competition is at the heart of capitalism, I guess.

[A]

That may be true, but I know of two Japanese auto parts firms that don't agree with you, Des. No, and that is our story for today. So let's do it. Let's get D2B down to business with price fixing and why it's not okay for two competing companies to agree on prices in secret, as well as one other unfair but fairly common trading practice.

[B]

What's this all about?

[A]

Well, two of the largest auto parts makers in Japan, and in fact the world, Yazaki Corporation and Nippon Denso, have agreed to plead guilty in the US to price fixing charges.

[B]

And America has pretty strict antitrust laws, don't they?

[A]

That they do. And the U.S. department of Justice's Antitrust division has really thrown the book at those two companies. Yazaki will pay a fine of $470 million, the second largest in US history, while Denso is getting away with a smaller 78 million dollar fine.

[B]

Why so much?

[A]

The investigating team believes that this practice could have been going on for up to 10 years. And of course, by fixing the prices that US automakers have to pay for the parts, the overall price of a vehicle rises, which in effect is the same as cheating the consumer.

[B]

Sounds like someone should go to jail.

[A]

Oh, but they are, Des. Four Yamazaki executives have been sentenced to two years in a U.S. jail.

[B]

Wow. Well, I hope they like the food.

[A]

No sushi in US prisons. However, this problem isn't limited to just the car parts market.

[B]

Though I'm guessing electronics would be an area where this practice would flourish.

[A]

Well done, Mr. Morgan. The two big Korean electrical and electronics giants, LG and Samsung, are being fined by the Korean antitrust authorities for price fixing. But that fine is for a mere $39 million.

[B]

Yes, almost nothing.

[A]

The Korean regulators found that the two firms had held secret meetings in 2008 and 2009 to agree on prices for washing machines, flat screen TVs as well as laptop computers.

[B]

I have an LG washing machine. I feel cheated.

[A]

But there is another related unfair trading practice that has been in the news recently.

[B]

Okay, go ahead.

[A]

When a government subsidizes an independent company or sector, what they are in fact doing is making that company or industry unfairly competitive for rivals who don't receive a similar subsidy.

[B]

Boeing has been accusing Airbus of this practice for years.

[A]

Maybe because Airbus has been doing it for years.

[B]

Never proven, though.

[A]

True. But returning to the auto parts industry, the alliance for American Manufacturing, or aam, has accused the Chinese government of providing unfair subsidies to tire makers and auto, electrical and electronics suppliers at the expense

[B]

of US companies, no doubt.

[A]

Exactly. The AAM claims that this practice has resulted in the loss of 400,000American jobs since 2000 and is asking the US government to take action and impose tariffs on imported Chinese auto parts.

[B]

And as we discussed in a show way back in November of 2010, China is already fixing its currency at an artificially low rate, which gives its industries an unfair advantage.

[A]

U.S. and Chinese relations continue to deteriorate as America tries to level the playing field, which makes this entire story not only a business topic, but a hot political issue as well.

[B]

That it does. And now it's time for us to get D2V down to vocabulary.

[A]

I will start things off today with the adjective cutthroat, which is used to describe when a competition or market is really intense. Imagine two people cutting each other's throats because the competition between them is so strong they are literally willing to kill the other to survive.

[B]

Wow, strong image.

[A]

Yes, it should help listeners to remember cutthroat. Now, in the story I talked about the cutthroat PC market to show how intense the competition is between manufacturers. Can you give another example, Des?

[B]

Yes. A further example would be how cutthroat the competition is between drug companies, with all of them trying desperately to come out with the next big drug.

[A]

Of course, the pharmaceutical industry is intensely cutthroat.

[B]

Now, I have the key adjective to understanding the story.

[A]

Antitrust, which can of course be divided into the prefix anti and the root trust.

[B]

Yes, and it means to maintain free competition by stopping businesses agreeing on product supply or pricing. In the story, I say that the US has strong antitrust laws, meaning it fights this type of corruption.

[A]

A good example would be in October 2008 when Dole, an international Fluchtimport, were fined 60 million euros for fixing banana prices in several northern European states.

[B]

Bananas really is nothing safe, it seems

[A]

not Now I'd like to talk about the phrase to throw the book at someone, which means to give someone the most serious penalty that can be applied to a crime. In the story, I say that the Antitrust division imposed really strict penalties or threw the book at the two Japanese companies.

[B]

You hear it a lot in police dramas where the police officer will threaten to throw the book at a criminal unless he or she cooperates.

[A]

My co worker threw the book at me last week because I didn't refill the copy machine when it ran out of paper.

[B]

Well, that is a bit of an annoying thing to do, I suppose. Anyway, moving on, I have the noun a subsidy and the verb to subsidize, which both mean to make something unnaturally cheaper than it really should be, which

[A]

in the case of exports can be considered an unfair practice.

[B]

In the story, Skip talked about how the Chinese government is unfairly subsidizing the Chinese auto parts industry.

[A]

That's right. But not all subsidies are unfair. Doesn't the UAE government subsidize basic foods in the UAE market?

[B]

It does. Yes. It subsidizes the basics that people need to live across all the makers of that product.

[A]

I see. Now I have the countable noun tariff, which is an additional tax that a country applies to an importance to limit its supply. In the story, I say that the AAM wants the US Government to put tariffs on imported Chinese auto parts. In other words, they want to raise the price of Chinese auto parts being imported.

[B]

We have talked about tariffs before, but it's such a common business word that it's worth reviewing. In India Part 1, which we released in August last year, I talked a lot about how prior to 1991, India had lots of quotas and tariffs on imported goods.

[A]

I remember that story.

[B]

My final item is the phrase to have a level playing field or to level the playing field, which means when competition is fair or equal. In the story, Skip says that the competition between the US and China is unfair. So the US is trying to make it fair or to level the playing field.

[A]

It's kind of like when we used to play chess together when you lived in Japan. Remember how I used to give you a two piece advantage to level the playing field between us?

[B]

Actually, I remembered exactly the other way around.

[A]

Well, anyway, that is all the vocabulary for today.

[B]

Thanks to everyone for downloading down to Business English today. We hope you enjoyed today's topic on different antitrust practices.

[A]

Yes, thanks everyone. Before we sign off, I'd like to mention that if you have any additional questions about the words and phrases used in today's episode. Please feel free to post a question on either the down to Business English Facebook page or our group.

[B]

Or you can send us an [e-mail] that's downtobusinessenglishmail.com thanks again, everyone.

[A]

And thank you, Des. See you next time.

[B]

Thank you, Skip. Take care. Bye.

[A]

The music in today's show comes from Mivio's Music Alley. Check it out@music miyo.com.