Electronics Price-Fixing Suit Hits Major Companies

Have you been paying too much for your electronics? It’s possible – and, according to a lawsuit filed earlier this week, several major manufacturers are to blame. The companies, including Panasonic Corp., Samsung Electro-Mechanics America Inc., and Hitachi Chemical Co. Ltd., are accused of fixing circuit board component prices for almost a decade, artificially raising costs as part of a long-standing secret agreement. A class action lawsuit filed in California is now looking to represent any and all entities that purchased the affected components in the U.S. in the last few years.

What have the companies allegedly done?

This isn’t the first lawsuit to hit these electronics companies claiming they’re trying to fix the market. Earlier this year, two suits were filed in California federal court accusing Panasonic and several other businesses of forming a cartel to control worldwide aluminum and tantalum prices. This, allegedly, was in response to a decline in demand for capacitor products brought on by competition from newer technology. The lawsuits claim that the agreement – said to have come to light through a series of written communications between the companies – directly contributed to a rise in the price of tantalum electrolytic capacitors equal to around $24 per thousand units since 2004. Those costs, sadly, will have been absorbed by consumers, with higher prices for components reflected in higher prices for electronic devices.

This week’s lawsuit makes similar claims. Panasonic, along with defendants such as Sanyo Electric Group Ltd. (a Panasonic subsidiary), Kemet Corp., and Matsuo Electric Co. Ltd., allegedly exchanged sensitive information to aid the cartel, and contributed to the decrease in aluminum electrolytic capacitor prices since 2004 from almost $7 per thousand units to a little over $1 per thousand. This decrease, along with the increase in tantalum prices, benefitted the companies but almost certainly hurt consumers, the suit says.

How long has this been going on?

Although these remain only allegations – the suit’s been filed in the U.S. District Court for the Northern District of California and will now be heard by a judge – the legal complaint claims that the secret agreements began at least as early as January 2005, and the companies have slowly altered the markets in direct violation of the Sherman Antitrust Act.

This is also not the first time Panasonic and Sanyo have been accused of price-fixing. Last year, both companies pled guilty and paid millions in criminal fines after being accused of fixing automotive parts and computer battery cell prices. It’s a worrying trend – and those accusations are cited in the new lawsuit as support for the newest claims.

So why are these lawsuits only now being filed?

Shuten Electronics, Inc., the plaintiff in this third and newest lawsuit, claim they only became aware of the conspiracy in March this year after foreign competition authorities became suspicious and launched their own investigation into U.S. aluminum and tantalum capacitor prices. According to the complaint:

The suit is seeking approval to represent all those who purchased the affected electrolytic capacitors from one of the defendant companies (of which there are nearly two dozen) since 2005.

These are serious allegations – especially for companies already embroiled in price-fixing claims. What’s worse, price-fixing is a deliberate act that only ever hurts consumers, and only ever benefits the companies (even competitors). Have certain electronic devices been overpriced for the last few years? We’ll have to wait and see how the lawsuit proceeds in court. Whatever happens, this is a good wake-up call for Panasonic et al; companies cannot expect to get away with collusion, and must learn to put their own loyal customers above even profit itself.