Toyo Denso returned parts for defects it never inspected — its second JFTC rebuke

Toyo Denso Co., Ltd. (東洋電装), a Minato, Tokyo maker of electrical components for engines and transmissions, received a Japan Fair Trade Commission recommendation on December 24, 2025 for violating Japan's Subcontract Act. Between December 2023 and April 2025, the company returned goods from 27 small suppliers worth ¥5,630,020 including shipping — citing defects — while in many cases never inspecting incoming goods at all.

The JFTC itemized four rejection rationales. It returned products classified as needing no intake inspection, citing defects it had never looked for; returned goods for defects 'immediately discoverable' under a full inspection — flaws its own intake should have caught; rejected lots that had passed sampling inspection without agreed return terms; and rejected other passed lots on the mere possibility of defects. Separately, 57 suppliers warehoused 907 of its molds free through order droughts; 16 paid to retrieve 221 of them — the buyer's tooling, shipped back at the supplier's expense.

This was the company's second formal rebuke under the same law. In September 2019 the JFTC found Toyo Denso had retroactively applied a price cut to parts ordered before the new unit prices were agreed, deducting ¥15.68 million from 32 suppliers. It repaid both times — the 2019 sum within days, the 2025 returns by November 7 — yet the conduct escalated from price cuts into a full taxonomy of rejections. The 2025 remedy orders storage and retrieval fees in amounts the JFTC must confirm, board resolutions, and, unusually, periodic compliance audits by the company's legal staff.

¥5.63M in returns and shipping repaid to 27 suppliers; storage and retrieval fees still owed on 907 molds warehoused by 57 firms, 221 of them billed back to 16 suppliers

Intake without inspection turns quality control into a one-way ratchet: the buyer books what it likes and returns the rest, at the supplier's expense.

Rejecting already-passed lots — some on a mere possibility of defects — shows the returns followed convenience, not evidence.

Charging suppliers to retrieve the buyer's own molds extends the asymmetry from goods to capital: even giving tooling back became the supplier's cost.

Prompt repayment in 2019 changed nothing about procurement behavior; restitution without process reform just resets the cycle.

A buyer that accepts deliveries without testing them has no defect claim left — only pretexts. Regulators read skipped inspections and returned passed lots as cost-shifting, not quality control.

Toyo Denso repaid the ¥5,630,020 in returned goods and shipping by November 7, 2025, before the recommendation issued. The December 24, 2025 recommendation adds storage fees for the 907 molds and the retrieval costs borne by 16 suppliers, in amounts to be confirmed by the JFTC, alongside board resolutions, regular legal-department audits, training and notification duties. Asahi Shimbun flagged the earlier case explicitly: in September 2019 the JFTC had ordered repayment of ¥15.68 million in retroactive price cuts, making this the company's second Subcontract Act action in six years.