Major Electronics Vendors Accused of Price Fixing

Lucas123 writes "After the DOJ launched an investigation last fall into price fixing by major optical disk drive manufacturers, a home electronics retail store filed a class-action lawsuit this week seeking triple damages for what it is claiming to be long-standing collusion among Sony, Samsung, Toshiba, LG Electronics and Hitachi to raise and fix prices on the drives. The suit claims the vendors used trade organization forums as meeting places to discuss the price fixing. 'These are big Asian smoke-stack industries where they're investing in big fabrication plants. You can't have a technology destroy the business,' said the attorney representing the plaintiff. 'If you fire up a big fab plant with CRT tubes, and the next generation technology destroys it, then you have a big fab plant manufacturing buggy whips. So they have to make sure the price points for these [newer] technologies ... don't destroy existing markets.'"

Comments

Re:Is there anything to this?

[White Shade]

With regards to the Japanese and Korean conglomerates; money doesn't care about history.

No Stereotypes please

[hellfire]

All I see in the story is innuendo; no hint of any actual evidence.

It's also somewhat hard to believe that the Korean conglomerates are conspiring with the Japanese ones.

I agree with you about your first assertion, but trying to support your assertion with stereotypes is silly.

Human beings the world over speak the language of money. Supposed "cultural enemies" time and time again over history have colluded to make more money. Don't dismiss this as unlikely simply because Koreans and Japanese don't get along all the time.

Stereotypically, everyone hates the Americans for being stupid and hateful and Sterotypically Americans are xenophobes, and yet everyone seems to be doing business with us when it's profitable.

Re:No Stereotypes please

[sjames]

How many million dollars would it take to convince one of your Korean friends to cooperate at arms length with a Japanese person?

Useless

[oldhack]

Why don't they go after telecom and cable? I know of nobody complaining about dvd players.

Re:"New and improved" posting technology.

[DarkOx]

This is a stupid argument being made by the lawyer. Its a basic economic problem that all manufactures face not just high tech.

You want to produce the wonder widgets. You have the facility to produce 100K widgets per year. The widgets could be build more cheaply if you make a capital investment and expand your facility, this will mean a higher percentage of the manufacturing cost would be variable, as you accounting, sales, and other front office remain the same, upkeep costs on a large plant probably don't scale linearly with plant size, etc etc. If you did this you could charge a lower price.

Ahh but what if someone develops a super wonder widget that makes wonder widgets obsolete and what if you can't easily retool your wonder widget plat to make super wonder widgets? Why you would never be able to recoup the costs! So you have a decision to make! You either invest and expand or sell fewer widgets at a higher price.

Perhaps your competition decides to expand they are ultimately going to be able to undercut you on price and will take away your market share for the remainder of the product cycle, and you might never get it back. Than again it could turn out to be a very poor investment for them if that super wonder widget is devised early on and you have capital on the sidelines available get your new plant ready. Your copetitor might go bankrupt with a plant they can nologer use, it will have been a poor investment.

Something has happen this past decade where for some reason investors think they are entitlted to profits when they make good calls but should be protected from losses when they make bad ones; THATS NOT HOW CAPITALISM IS SUPPOSED TO WORK FOLKS! You win some you lose some; if you work hard and smart you should win more than others nore than you loose/.

Re:Turn to big-scale recycling

[CAIMLAS]

I willingly look for places to properly recycle my aging computer equipment and gadgets for free and they make 100% profit off whatever they can scrape off it

And I want a pony, and a penguin, and ride on a spaceship! For Christmas, please, mommy!

I hope you realize that the reason why free recycling is not available is because it costs money. A lot of money: it doesn't turn anyone a profit (except for Office Depot, charging people $20 a box to send your computer to a Chinese dump). It's also very dirty business.

If there was actual money to be made doing recycling, there'd be a lot of people doing it.

Is this seriously a problem?

[Vitriol Angst]

Price-fixing, might be an issue when a 20 cent CD becomes a $14 Album.

But when you've got a $20 DVD player, that costs less than just buying the equivalent screws in a bag from Home Depot -- is this really a problem? Without SOME profit, these companies can dry up with the cut-throat market. Maybe PRICE FIXING, is going on, but when the take-home is less than 10% -- I think the Government should make a pass on it.

We have more of a problem in this nation of DUMPING, of things from other countries being too cheap, so that we can't afford to build anything. Slap a tariff on the cheap electronics until the US is competitive.

Price-fixing should be looked at more in terms of Monopoly Power and Jobs. All these electronics companies can go broke, and lowering the price on these components wouldn't mean that the market would buy any more DVD players anyway, and it wouldn't mean any more jobs in our country.

>> I think the ONLY reason this is an issue, is it's an easy target for regulators who don't want to go after anyone with a powerful Lobby. The only take-home lesson to manufacturers will be to spend more on lobbyists than engineers.