‘Cartel’ of 16 Defendants Face Antitrust Class Action Over Alleged Inductor Price Fixing

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Another proposed class action lawsuit alleges a “cartel” of 16 defendants violated federal antitrust laws through a scheme to fix the price of inductors sold and shipped to the United States between January 2003 and December 31, 2016.

The lawsuit describes inductors as electronic components that store energy in the form of a magnetic field. Everything from smartphones to missile systems contain inductors, and the market for which is worth approximately $3.86 billion, the case says. According to the lawsuit, the conspiracy run by the below defendants has netted them control of more than 75 percent of the worldwide inductor market:

The allegations detailed in the lawsuit stem from the December 1997 Information Technology Agreement (ITA), which removed tariffs on the worldwide trade of certain IT products, such as inductors. A month after 29 countries signed the ITA, the case says, import prices for inductors sank significantly, a slide that the lawsuit says continued until October 2003 when China signed onto the ITA. From here came two major price spikes in July 2008 and April 2009, in the midst of the worldwide recession. Ultimately, the import prices of inductors hit a high watermark again in August 2014, from which time the lawsuit says prices, while sinking slightly, have never fallen as low as their point before 2003.

 So, what gives? The lawsuit attempts to explain:

Increases in demand do not explain huge increases in the Import Price Index for inductors. For example, analysts noted that in March of 2009, the global market for passive electronic components generally had declined by 18% compared to the previous year and that by March of 2010, demand for passive electronic components had declined by an additional 13 percent. As noted above, contrary to sliding electronic component demand in these years, the Import Price Index for inductors spiked. In Japan, exports of passive components fell from 1,130,000 million yen in 2007 to 705,372 million yen in 2009, according to data available from MITI, the Japanese Ministry of International Trade & Industry.

While use of inductors in smartphones and [advanced driver assistance systems] increased in the years that followed, the costs of manufacturing these products declined. For example, by 2015, Air Core Inductors (inductors consisting of a coil wrapped around a ceramic core) occupied approximately 40% of the market were much easier to manufacture than other types of inductors. Yet the Import Price Index for inductors in 2014-2015 was at levels that vastly exceeded those of 2009-10.”

The only plausible explanation, the complaint asserts, is conspiratorial activity among the defendants.