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

Is there anything to this?

[russotto]

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.

Re:Is there anything to this?

[White Shade]

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

Re:Is there anything to this?

[Kjella]

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

Yeah, I suspect mostly what you're looking at is capacity limitations. Remember when AMD was kicking Intel's ass in CPUs yet never came close to taking over the market? No capacity. So you build a big electronics plant, it's a success but it's only scaled to produce X units/year. To build more you'd have to start building more, which would take so long the market is gone before it is done. Instead you just rise prices, turn a nice profit but the rest of the market still earns good money on old technology. I guess from the outside it can look very much like collusion.

Re:Is there anything to this?

[sjames]

Building a new fab capable of producing the latest CPUs is a HUGE undertaking, even compared to other sorts of factories. There was evidence out there that AMD was searching high and low for more capacity.

It COULD be that you're right. That's why TFA talks about an investigation rather than a conviction. Time will tell.

Re:Is there anything to this?

[jvin248]

China won't be inexpensive for long... they have worker shortages in the industrial/manufacturing sector now. Rising wage costs soon.

Sounds Familiar

[Bob9113]

"'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.'"

Sounds like the "pro" side of the argument that I constantly hear from my corporatist / protectionist friends. "New technology is destroying the entrenched incumbents! If the existing corporations fail it will mean economic collapse! We must hobble new technology! We must buy more laws to prevent the future from coming! The future requires us to think and adapt! And -- EGADS -- TO HIRE ENGINEERS!"

Re:Sounds Familiar

[Vitriol Angst]

As much as I'm a fan of someone taking down the "corporatists" this seems like a VERY valid argument. Compare this to Internet Companies and Monopoly Phone Networks, who charge us and their competition, for using lines that the taxpayer paid for, and dragging their heals on innovation because they are perfectly happy charging you $50 a month for 1 meg DSL downloads, $50 a month for a home phone and not telling you you don't need a home phone, and about $100 a month for that Cell phone, which is ONLY starting to add tethering because startups are offering 3G internet options (Clear.com comes to mind).

We have so may more problems with companies that have one pipe into the house, getting monopolies, and paying local governments to cover up their price fixing. I pay 5 times more for Natural Gas in my home coming from a choice of 7 different private companies, who all have various strange fees and taxes and amazingly, have just about the same 5X cost as it used to be when the inefficient STATE was selling me natural gas.

Do we ask Adobe if they are Price Fixing their Designer Suites to $1600? No. They are the only one's selling Adobe Software.

If the Manufacturers are fixing prices on cheap electronic components because they don't want to go bankrupt -- let's not worry about it if it's in a foreign nation. PRICE FIXING, should concentrate on LOCAL business, and PRICE DUMPING should be our only worry from foreign manufacturers. If Toyota want's to charge $100,000 for a car -- then maybe we can get someone to build them in the US again.

Did anyone notice that Toyota closed a plant in California to move back to Japan, or that Whirlpool is shuttering a plant with 15,000 jobs to move to Mexico? If they don't raise their prices -- we should be charging a Tariff. Seriously folks, we are in huge danger of losing our Middle Class in this country because nothing is putting money in the pockets for people who WORK at making things. This is the opposite of what we should be concerned with. You don't NEED the new flat-panel TV, so why not make it more expensive so that a local competitor could rise up and sell you one cheaper?

Re:Sounds Familiar

[Bob9113]

You ask good questions. It will be fun to think them through:

this seems like a VERY valid argument.

Very agreed. My corporatist and capitalist friends are very smart, and they do not reach their conclusions lightly. I do belittle them for their conclusions, because they are wrong. But the argument has a lot of rational merit -- it just doesn't hold up to close scrutiny.

Do we ask Adobe if they are Price Fixing their Designer Suites to $1600? No. They are the only one's selling Adobe Software.

Copyright is a monopoly, and it leads to monopoly rents. That is why The Constitution specifies that the term must be limited. Some, including myself, argue that copyright should exist, but should have a duration more like Jefferson and the other Founders intended (as noted by the period of time they actually chose). Those who hold that view are, in effect, arguing that the amount of price fixing that we allow Adobe is too great -- but also that it should exist to act as a guarantee of a limited additional opportunity to profit on goods which can be copied for an arbitrarily low price.

The same does not necessarily hold for goods which have a significantly non-zero marginal cost of production (ie: if each unit has a significant material cost relative to its market value). For such goods, the free market laws of supply and demand are believed to be more efficient than the government at setting the price. Investors provide risk capital -- knowing that it may be lost -- in relation to their belief that they can build a competitive business. Their privilege to have such an opportunity is acquired by virtue of their willingness to risk the capital. That is, the fact that their capital is at risk is not a reason to pity them and give them a monopoly -- it is the nature of risk capital and the natural cost of entry to a capitalist free market.

When the government removes that risk, the capital provider loses his inhibition to gambling. The result is a bubble/crash cycle which is disruptive to long-term investment. This inhibition to long-term investment is self-catalyzing -- as long term investment becomes more precarious, short term investment (relatively speaking) is elevated in value. Short term investing, in turn, increases the instability of capital markets, and so the cycle continues. (roughly until the velocity of money is insufficient to continue the cycle)

Wow -- that was a helluva digression, but I enjoyed it. :)

PRICE FIXING, should concentrate on LOCAL business, and PRICE DUMPING should be our only worry from foreign manufacturers.

I tend to disagree with nationalist policies. (whew -- I could go on a digression here even bigger than the one above, but I will refrain)

Let us assume that we want to act nationalistically, for the sake of argument.

Price dumping from foreign companies means we can buy more stuff for the same number of dollars. That is generally a good thing. Overconsumption is a bad thing, but that is more a matter of our monetary policy (our interest rates are too low, too often) than of foreign nations' willingness to sell us stuff below cost. Consider if the middle east were "dumping" crude oil in the US market -- that would be a good thing, right? Same with all goods.

There is the caveat of the inefficiency of the market. Since the inputs of production are not frictionless, there is always at least some barrier to entry. In addition there are fiat barriers to entry, from zoning to patents. Because of these things, short term dumping followed by gouging can be inefficient to economies -- but this is true regardless of whether the dumper is domestic or foreign. In the foreign case, the monopoly rents charged during the gouging phase exit the nation (again, assuming we are taking a nationalist approach), so it is worse than internal dumping. But internal dumping is also inefficient. In fact, in the internal dumping case, dumping is inefficient regardless of whether gouging occurs -- if it does not, t

Re:Sounds Familiar

[JAlexoi]

You are under an illusion that price fixing is just plain pricing.
Price fixing is illegal, because it involves all major manufacturers. It's like not only Toyota charging 100'000 for a car, but Toyota having an agreement with everyone else to set prices of cars at 100'000. That is illegal, because it defeats the idea of a competitive market.
Oh, and please don't butcher the apostrophe.

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

[Anonymous Coward]

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.

But they don't really hate us; they just dislike us with some odd mixture of contempt and envy. But many Koreans really really hate the Japanese. Something about it not being that many generations ago that the Japanese overran their country and committed terrible war crimes against the civilian population. And I'm not just repeating third-hand stereotypes--I'm speaking from personal experience with Korean friends and their parents.

Re:No Stereotypes please

[m.ducharme]

But they don't really hate us; they just dislike us with some odd mixture of contempt and envy.

This may have been mostly true before the GW Bush presidency, but don't count on it now. Even your strongest allies are getting pretty sick of Pax Americana, and most everyone else has gone from contempt to hatred. There is probably still lots of envy for the Western lifestyle, but don't make the mistake of thinking that it's specifically the American lifestyle that people envy. Many people also feel that this latest economic recession marks the beginning of the end for the American hegemony, and are starting to cast their covetous eyes elsewhere.

But many Koreans really really hate the Japanese. Something about it not being that many generations ago that the Japanese overran their country and committed terrible war crimes against the civilian population. And I'm not just repeating third-hand stereotypes--I'm speaking from personal experience with Korean friends and their parents.

Although I'm sure you're right, I think the GP was trying to say that despite how the Koreans and Japanese feel about each other, Korean and Japanese corporations (and the people who run them) are far less concerned about recent history than they are about improving their margins. With South Korea being even more capitalistic than the US, it wouldn't surprise me at all if the Korean corporate culture had put aside their hatred in pursuit of more profit.

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?

Re:No Stereotypes please

[digitalunity]

You're spot on about international companies, and even countries are this way sometimes. Money has no boundaries.

During the Iran-Iraq war, we sold weapons to Iran through Israel. Talk about weird.

Weapons produced in the US have found their way all over the world to places we don't really like, yet we sell them because they pay.

Korean and Japanese companies may be competitors, but if they find a way to collude and make more money, I wouldn't trust them not to do it as far as I can throw them.

Re:No Stereotypes please

[Low Ranked Craig]

People the world over should not draw conclusions from the media. If I were to use the US media as my primary source of information, I would think that some of these so-called other countries are simply regions of America that I've not been to. I'd also think that anyone that doesn't live on the east or west coast lacks teeth and sleeps with their guns and their sisters. Point of fact, I have most of my teeth and I only sleep with one of my guns. My sister sleeps with my brother.

Re:No Stereotypes please

[newdsfornerds]

ADM conspired with Japanese and European corporations to fix prices. I know it's true from watching The Informant!

Re:No Stereotypes please

[couchslug]

"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."

Shit, we killed over a million Vietnamese a few decades back, and now Intel had a chip fab there. Given the overall results, the US got all the capitalist outcomes it wanted, got Viet Nam as a barrier to Chinese expansion (see 'Sino-Vietnamese War"), and did it without winning the war.
Practicality and profit motivate sensible people quite strongly.

Re:No Stereotypes please

[m.ducharme]

People like you need something better to do with their time.

People like you are the reason that the rest of the world has (unjustly) stereotyped American people as ignorant and arrogant.

Re:No Stereotypes please

[mano the shark]

I'm just waiting for the $20 voucher off of my next $1,000+ purchase if this goes to settlement.

Re:No Stereotypes please

[Anonymous Coward]

People like you are the reason that the rest of the world has (justly) stereotyped American people as ignorant and arrogant.

FTFY

Re:No Stereotypes please

[azenpunk]

Really, the other guns don't get jealous? Or do you rotate them out night after night? Gun safe = harem!

Re:No Stereotypes please

[Hognoxious]

Blah. The elites (and to a certain extent the upper middle classes) of any country or culture resemble and relate to their counterparts in other countries and cultures much more than they do to the rank and file of their own societies.

And guess who makes the decisions that matter... [hint: it ain't the peasants or the guys on the factory floor]

Re:No Stereotypes please

[tyrione]

-1 flamebait? Really Slashdot, really?

Common sense, Slashdot? Really?

Re:No Stereotypes please

[sourcerror]

People the world over should not draw conclusions from the media. If I were to use the US media as my primary source of information, I would think that some of these so-called other countries are simply regions of America that I've not been to

They're not yet, but it seems you're working on it really hard. :p

Re:No Stereotypes please

[JAlexoi]

Most, if not all, Palestinians "hate" Jews and Israel. But when Israel was building the "security " wall a lot of subcontractors were Palestinians and Palestinian companies. Stereotypes crash and burn when talk comes to money.
There is an old saying: Business is business.

Re:No Stereotypes please

[nobodie]

The latest generation of Koreans are envious and imitative of Japanese culture. Japan is no longer an enemy for Asians of the modern world. Japan is also a source for ideas, products to be copied and reverse engineered today for the parents of the gen whatever crowd that I teach. This is also true here in China where the older generation watches the sorriest war movies you can imagine (we are talking production, script, everything, i mean pitiful excuses for motion pictures) with total involvement and the current gen is online checking out Japanese porno and TV shows. So, both ideas can be exemplified if one chooses, but the reality is that in the near future there will be no war memory. Nanjing, comfort women, all that will be about the same as Genghis Khan for this generation. I speak from teaching university level students of both cultures here in China where they are divided by culture and language but still coexist fairly happily as long as the money keeps flowing.

Re:No Stereotypes please

[Hurricane78]

There is probably still lots of envy for the Western lifestyle, but don't make the mistake of thinking that it's specifically the American lifestyle that people envy.

To be more exact: We don’t think that the US is the Western lifestyle at all anymore. More like a theocracy. Not as bad as Iran. But getting there.
Then again, in Europe and the USA, we’re clearly headed for fascism, with the destruction of privacy and rights, for total control and industrial power.

Re:No Stereotypes please

[Hurricane78]

Otis? Is that you?

Re:No Stereotypes please

[Hurricane78]

Zero. Just a boss telling him that’s what he does, or he is fired.

Re:No Stereotypes please

[Hognoxious]

People like you are the reason that the rest of the world has (unjustly) stereotyped American people as ignorant and arrogant.

What a ridiculous comment. You totally forgot to mention obesity.

"New and improved" posting technology.

[Ostracus]

"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.'"

Point noted although I'm sure people have already noticed that the internet hasn't buggy whipped either TV or radio. Also change even new change doesn't happen overnight.

Re:"New and improved" posting technology.

[Anonymous Coward]

I'm sure people have already noticed that the internet hasn't buggy whipped either TV or radio.

Any good sales on NTSC TV sets and VCR players going on in your hometown? How about Walkmen portable cassete and CD players.

Re:"New and improved" posting technology.

[Daengbo]

Point noted although I'm sure people have already noticed that the internet hasn't buggy whipped either TV or radio. Also change even new change doesn't happen overnight.

Give it time, young Padawan.

Re:"New and improved" posting technology.

[Urza9814]

TV, Radio, and Internet are mostly separate technologies. DVD vs. Blu-Ray isn't. Radio and TV are both passive, and radio is used when you can only listen. The Internet is a very active technology. It requires interaction. Plus, if you wanted to have Internet radio in your car you'd probably need to be paying a monthly subscription fee for a cellular connection or something. DVD and Blu-Ray are both storage mediums. And they're the same size and format even - the only difference is that Blu-Ray holds a hell of a lot more. Blu-Ray _will_ replace DVD, just like DVD replaced VHS. And just like CDs replaced cassettes and vinyl (for everyone but DJs and audiophiles anyway) and 8-tracks.

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:"New and improved" posting technology.

[demonlapin]

TV is squarely in the sights of the Internet, as local stations get disintermediated. Radio is very special; TV buggy-whipped.it out of the major home entertainment slot a long time ago, and so it has adapted to providing news, opinion, and background music for cars and workplaces. The equipment is ridiculously cheap and portable. Production costs are very low - your local TV station can't afford to put together much more than the news and maybe a local culture show, so it can't compete with major network offerings, but you can have a successful local radio host for cheap, and he may be as good as a lot of the syndicated stuff. Ergo, you can capitalize on local content in a way that's hard to do with TV.

Re:"New and improved" posting technology.

[sjames]

Dumb buggy whip manufacturers try to get automobiles banned. Less dumb ones encourage excessive and useless safety regulations on automobiles. Smart ones quietly support "grass roots" efforts to prevent refineries from being built.

Re:"New and improved" posting technology.

[selven]

It's not a stupid argument, it's sarcasm. The lawyer for the plaintiff (ie. the one stating that the electronics companies are price fixing) is offering a motive because of which they would price fix.

Re:"New and improved" posting technology.

[hitmark]

mostly that BR will replace DVD as the existing DVD players sold are worn out and replaced, as a BR player can also play DVD.

thing is, DVD had a practical benefit over VHS, while BR do not have such compared to DVD. With a DVD you had instant fast forward (just select chapter), and no need to rewind. What do BR bring to the table to top that?

same thing with CD vs cassette. Instant selection of the song wanted, rather then having to FF or RW to find what one was after (later cassette players where more clever in that they looked for a low point to guesstimate where a new song started). With the CD-R one got the mix tapes of the cassette era. And with MP3, either on flash, harddrive or (more rarely) CD-R, one had a personal radio station with no annoying dj or ads.

the BR is bordering on dead for anyone but mediaphiles, or at least wont see the fast uptake that the dvd had. Instead, there will be the video file, format unknown (tho h264 in a mkv container seems likely) that will act much like a personal tv channel.

Re:"New and improved" posting technology.

[sourcerror]

What you don't recognize is, that these companies make both the old and new technology. Companies doesn't have to compete with themselves.

Uh!

[voodoo cheesecake]

If they've made enough profit so far, then they have the resources to retool a factory and keep rolling. I seriously doubt they wait until they meet at trade organization forums to discuss price fixing.

Turn to big-scale recycling

[adosch]

Instead of the price fixing to get the most diluted depreciation value out of the plant and an unrealistic ROI based on trying to salvage existing old technology so it takes long to flood the market with new technology, maybe big corporation needs to look at other avenues like recycling their own product. Let's be honest, these big corps already provide us with the end product we want, they should take advantage of recouping some of their manufacturing costs by providing a place we can send in their own product so we can buy their new product. It'll make them cash and keep a customer base.

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. I was happy because I made my wife happy getting rid of stuff sitting around and the recyclers was happy they made some cash. Only makes sense instead of stifling the market.

Re:Turn to big-scale recycling

[flyingfsck]

Nowadays every half decent city has an electronics recycling centre or two. In Calgary, you can take your old schtuff to Staples and Future Shop (Best Buy in the US). The recyclers pick it up there.

Re:Turn to big-scale recycling

[Kjella]

The thing is that if it's got value then they'd be competing against eBay, craigslist, flea markets and whatever else second hand markets there are. There's no particular value to buying it from the manufacturer's second hand shop. The whole business model and process is completely different, there's no reason to think they'd be any good at it.

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.

Re:Turn to big-scale recycling

[zippthorne]

There's no particular value to buying it from the manufacturer's second hand shop.

Tell that to $company certified used car lots.

Re:Turn to big-scale recycling

[blackraven14250]

Instead of recycling, maybe we should go with another R, like reuse, and ship the old computers to people who might be able to use them, say, in the third world countries. It's likely cheaper than recycling everything.

Re:Turn to big-scale recycling

[TheLink]

Don't always have to ship them so far: http://www.freecycle.org/

Re:Turn to big-scale recycling

[azenpunk]

Fry's has an annual "Come dump your old crap here for free" day. Of course it's also an annual "buy replacements while you're here" day.

Re:Turn to big-scale recycling

[zippthorne]

I'm sorry, I didn't mean dealer certifications. I meant manufacturer certifications. Which come with a manufacturer warranty. Frankly, I'm not sure if it matters whether they actually do an inspection or not as long as they back up the car's remaining quality with money.

Re:Turn to big-scale recycling

[bill_mcgonigle]

and ship the old computers to people who might be able to use them, say, in the third world countries.

We're lobbing to impose huge carbon taxes on developing economies and you want to ship them Pentium 4's?

Useless

[oldhack]

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

Re:ZOMG

[oh_bugger]

Does it really matter what the price is?

DRAM situation points the other way

[Anonymous Coward]

http://www.theedgesingapore.com/component/content/1312/1312.html?task=view&start=2

"Swayed by cheap loans and soaring DRAM prices in 2005, Taiwan’s DRAM makers went on an expansion spree, building multi-billion dollar fabrication plants (fabs) and amassing a mountain of debt. ... Prices corrected sharply, with benchmark DRAM spot prices tumbling by over two-thirds in 2007. This year, they have continued to fall, nearly halving in value to reach historical lows. Memory chips are now selling at about 50% below the Taiwan makers’ cash costs, according to Citigroup estimates."

If a disaster like this can happen, it points to competition not being a problem at least in the DRAM industry.

Re:ZOMG

[shawb]

I think the price fixing is on the blu-ray end.

Exactly.

[headkase]

Why is it my problem again that they through short-sighted-ness and not sending their products to appropriate markets (I'm sure CRT's still rule in the third-world) that they aren't making the profit they would like? I'm supporting the flat-panel factory and saying I also have to pay for the CRT factory corrupts the mechanisms of capitalism. It distorts the market and prevents efficiency. I don't want a buggy-whip, stop making them: idiots.

Re:Exactly.

[Anonymous Coward]

Price fixing likely wouldn't work if it wasn't for artificial constraints like corporatist IP which is designed to keep the little and medium guys out of the market. IP is what enables them to do these things.

Re:Exactly.

[timeOday]

I'm sure CRT's still rule in the third-world

I wonder? Obviously they will predominate the installed base for a long time, since poor people don't waste working stuff like we do. But looking across the room with a 10 year old 27" Trinitron CRT at one and and a 46" Bravia LCD at the other, it's not at all obvious that the older one would be cheaper to produce. I'm sure the CRT factories are all paid off, but look at raw materials and shipping costs. The CRT has this huge vacuum tube made of glass with a high lead content. Last holiday season I got a 21" 1080p computer monitor for under $100; I don't remember ever paying so little for a CRT that size even when they were decades-old technology.

I can see why manufacturers are terrified when the new thing is not only better, but also cheaper than the old. But ultimately that's the basis of most economic growth.

Re:Exactly.

[jvin248]

Ford sold a lot of Model-T's when the other option was a horse. Cheaper and more convenient. Now people can't give CRTs away for free on Craigslist even.

Really?

[Bluesman]

If it costs too much, don't buy it. It's not like they're colluding to corner the market on food staples or water.

This is a money-grab by lawyers, nothing else.

Re:Really?

[Superdarion]

The problem is that big corporations have the resources and the hired great minds. They completely control the market and are the ones shaping the future and all they seem to want is for us to keep buying their old black and green CRTs so that they don't have spend money to build new plants.

They want to keep us in 1990's technology for their own benefit! They're hampering technological advance just to buy a new pair of shoes.

Re:REALLY?

[Superdarion]

Why? Do you drink water out of that lake?

Re:Really?

[misexistentialist]

It would be a pretty dismal life if all you could afford was food staples and water. The covert/indirect price-fixing that already happens is bad enough without encouraging capitalist raiders to do it openly.

Re:ZOMG

[multisync]

You can get a decent DVD burner for 20,- nowadays, and that price is still inflated?

I didn't read the article either, but I would guess from the summary they are complaining about the prices of Blu-Ray drives and other new technology. They're all tooled to produce CD and DVD drives, and they don't want the new tech to supplant their existing revenue source.

But, as I said, I didn't read the article so I could be wrong.

Price fixing should be allowed, IMO

[mc6809e]

Competition for the lowest price often leads to lower quality. If firms were allowed to agree to prices, then they could focus on competing on quality instead of on price.

The airline industry in the US is a great example. Under regulation, the federal government essentially fixed prices. The airlines then did all they could to provide a higher quality experience to get customers.

The other benefit of price fixing is stability. Firms have a better idea what the future holds in terms of revenue and competition. Without price fixing, firms battle with one another until come firms are forced into bankruptcy or are swallowed up by other firms. Jobs are lost. Again, the same thing happened in the airline industry.

Of course the downside is higher prices. But suppose higher prices make an industry much more profitable than it might otherwise be. Wouldn't that draw in more competitors? Price fixing only works if prices stay low enough that investors don't see opportunity. Considering the huge amount of investment in electronics and the rock bottom prices for all sorts of devices, it looks to me like price fixing hasn't stifled competition or investment.

Re:Price fixing should be allowed, IMO

[Superdarion]

So you expect a big company to develop brand new technology, which would imply a lot of research money, building new plants (or completely revamping the current ones), expending loads and loads of money to finally release a product that they would be forced to sell for the same price as the old one? They would much rather put bows and whistles to the old stuff until they ran out of adhesive tape.

Of course, there's a vast difference between the Computer industry and more basic things like food and transportation, which is where your example fits.

Re:Price fixing should be allowed, IMO

[mc6809e]

And deprive the middle class of services? You've got to be kidding me. It sounds like you don't want poor people to be able to fly. If you really want that "first class" experience, stop being a Scrooge and buy a first class ticket!

Price fixing doesn't necessarily mean that all charge the same price. It might also allow the market to segment itself into high, medium, and low-end carriers that agree to prices for each segment.

Re:Price fixing should be allowed, IMO

[mc6809e]

So you expect a big company to develop brand new technology, which would imply a lot of research money, building new plants (or completely revamping the current ones), expending loads and loads of money to finally release a product that they would be forced to sell for the same price as the old one? They would much rather put bows and whistles to the old stuff until they ran out of adhesive tape.

Why should they be forced to charge the same price? If anything, the stability of a market with price fixing might actually make it easier to develop new technologies. The uncertainty that comes with wild price swings and price wars makes it much more difficult to plan for the future. Present day survival tends to trump such planning.

I also want to point out that I used the word "allowed". If companies what to battle it out on price, then that's up to them. Nothing says they have to cooperate and mostly they don't.

Re:Price fixing should be allowed, IMO

[fermion]

Take the airline example. Quality may have declined, but prices have allowed many more people to fly. This expanded market has allowed airlines to expand. Under regulation such things were not possible.

When we talk 'what the future holds' we are talking about management. The issues we have seen is that managers have not been doing their jobs, but have still gotten paid sometimes huge sums and often get hired again.

In the late 90's this bad management took the form of mark to market. This was used to overvalue future income and sometimes resulted in huge upfront payments for product of little or no value to the vendor or customer. Companies failed due to huge expenses and no income. Price fixing would have done nothing except created inflated prices for customers.

In the current example, managers and entrepreneurs see a hot product and want to enter the market. Capital manager also want to get into the hot market and loan money without proper due diligence. As time goes on, the market becomes overstated. One way to fix this is to lower prices so that demand can be increased. Such a thing would not possible with price fixing. Another way to fix this would be to let the businesses fail, a long with the irresponsible financial agents. As log as this firms are small, this is not an issue. It will not cause widespread problems. What we are seeing is large integrated businesses, sometimes supported by the government, sometimes created by corrupt government regularion.

In any case, when we cannot let a firm fail, or when we must fix prices and force customers to buy the product, we know we are in deep shit.

Re:Price fixing should be allowed, IMO

[Anonymous Coward]

"The other benefit of price fixing is stability. Firms have a better idea what the future holds in terms of revenue and competition. Without price fixing, firms battle with one another until come firms are forced into bankruptcy or are swallowed up by other firms. Jobs are lost. Again, the same thing happened in the airline industry."

Price fixing creates overstated and lazy markets; when the price is fixed on a product, there is little incentive for innovation toward lower manufacturing costs or increased quality. Inefficient designs _should_ fail, but they don't because price fixing stagnates the very mechanism that would otherwise cause them to die out. Markets for old, outdated technologies should collapse as new technology comes to the forefront. Do you think that we should still make mechanical calculators or use reels of tape for data storage?

Economic pricing lets the market forces decide what is important, be it quality, features, or price. New products and designs _are_ the investor opportunity. They are protected by patents which are for the express purpose of encouraging innovation. People create new businesses because they think they can do it better and cheaper than the competition, not because they want to do more of the same shit. This is called competition and it is what drives the global economy. Why do you think PCs are so much cheaper than Apple computers?

Re:Price fixing should be allowed, IMO

[DaveGod]

Gentlemanly competition is where suppliers compete on things other than pricing. It's close to price-fixing, with the important difference being that none of them have expressed it to one another, it's at most tacit. This happens a lot to some extent, and consumers can win in the long term, provided the extra money is going on service and R&D.

Basically it gives a little room to shift the emphasis of competition from very short-term pricing. Of course, there's lots of different places for that emphasis to go.

When companies are actually agreeing to fix prices, there is no reason to believe the money is going anywhere that benefits consumers. The idea that the high prices would draw a new competitor does not really hold because price fixing only happens where there are substantial barriers to the entry of new firms into the market. For example, massive investment into machinery and patents together with the knowledge that your competitors are colluding against the consumer and will do the same to you.

Re:Price fixing should be allowed, IMO

[Anonymous Coward]

You toy about with prices like you're god, but really what fixed prices mean is poor people can't afford airline flights. You act like it's up to some disembodied person (you, me?) to make a decision to set prices on moral grounds. But you would get your precious quality airlines, and the poor folks would not be able to afford to fly. These damn poor people keep wanting airlines to compete on price! Give me my on flight movie and meal. Dammit.

Re:Price fixing should be allowed, IMO

[unitron]

let's say for LCD displays...

I meant LC Displays

If you meant liquid crystal displays, then you meant LCD. Stands for Liquid Crystal Diode (which are the little thingies that turn on and off to make the picture), not Liquid Crystal Display. Not an Automatic Teller Machine machine or Personal Identification Number number situation.

Re:Price fixing should be allowed, IMO

[Rich0]

Ironically, back when the US government fixed airline prices, they did start competing on quality. That led to the government regulating stuff like what kinds of food could be served, and on what kind of dishes. Heaven forbid that maybe a better company drive a worse one out of business or something!

The airline industry is a perfect example of oversupply - every time a company is on the verge of collapse the government bails them out. That costs taxpayers money and provides little benefit. If they just let one or two go down the rest would be much more stable. You don't let it get to the point where there are only 3 or anything, but right now there are just too many.

And when companies price-fix, don't you think they'll go ahead and quality-fix as well? The whole point is that they DON'T want to compete with each other. They just chop the market up percentage-wise and everybody takes their cut - just like a mob.

Re:Price fixing should be allowed, IMO

[PitaBred]

Yeah. It's just cheaper to cut to the razor's edge on costs and let planes fall out of the sky. Price ain't everything.

Re:Price fixing should be allowed, IMO

[unitron]

Liquid crystal displays are made up of Liquid Crystal Diodes, therefore LCD display is accurate and acceptable.

Re:ZOMG

[Joce640k]

Blu-Ray drives have pretty much the same stuff inside them but they cost much more. All else being equal they should only cost a couple of dollars extra to buy.

Re:ZOMG

[kno3]

That is ridiculous, do you really think that when you buy hardware it should be priced purely on how much it cost to manufacture that unit?
No, you are paying for the research. Optical drive companies have just spent incredibly sums of money researching, designing, and putting into manufacture blu-ray drives, they are not going to sell them at the same price as technology which has paid back all of its investment years ago.
If they have been colluding on prices, then that is a totally different matter, and they should be made to pay dearly for it.

Fines for Beta tapes collusion were not enough

[afflatus_com]

If found guilty, I hope the fines go well beyond damages and are punitive enough to give CEOs pause before repeating.

Sony in particular--it was only 2+ years since their fines part for collusion for price fixing for Beta-type tapes.

http://broadcastengineering.com/news/eu-fines-betacom-1126/

Sony got an extra dose of fines in that one for obstructing justice with employees shredding documents. However, fines still weren't enough there since Oops they did it again. Most large corporations are amoral, they respond only to the shareholders. If guilty this time, need a heavy enough fine to be a real deterrent when the CEO is facing angry shareholders looking at the reason why there was such a loss that year.

Re:ZOMG

[karnal]

But all else isn't equal. I'm sure there are some R&D costs to recover... but those should be close to nil now unless new "features" are being introduced.

digital products

[zogger]

That hasn't worked very well with digital products. When consumers were faced with a two cent to manufacture product with a price tag of ten to hundreds of dollars, they rebelled and set up their own black market "digital fabs" to make more affordable copies of digital products, because they couldn't get a fair price. The digital products price fixing cartel got into action and outright *bought* enough government laws and enforcement to try to keep their outrageous prices up, and to punish the "independent producers". Still on-going today. They *haven't* adjusted the cost down to way more reasonable levels, they adjusted the laws and law enforcement way up in their favor to maintain price fixing and an insane last century business model based on a per-unit pricing structure that was based on a tangible copy, not a cheap to reproduce digital copy.

  Demand for digital products is always really high, and in the modern world you just can't say "don't buy them" because those sorts of products ARE what helps make the modern world, but outrageous cartel price fixing combined with co-opting and corrupting government, across the board, has skewed the natural market that should exist tremendously. You can say "don't buy them", and not do that yourself, but what about when your enforced tax monies go to pay outrageous digital products cost? You are being forced to buy them. How about when you shop for anything else, and you know some of the price you are paying is going to also pay for way over priced digital products that are used in the production, distribution and final sale of some other good or service? You simply can't avoid paying these inflated prices in day to day normal living, whether you want to or not, because it has been carved into lawstone that you *must*.

Most Americans

[gbutler69]

deserve to be hated. Most of "us" are lazy and stupid. Just like most of the rest of the world. The people who hate stupid, lazy Americans are the same people who hate the stupid and lazy of their own country. The world is 80% stupid and lazy people. Deal with it. That's the way the world works.

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.

Re:Is this seriously a problem?

[bill_mcgonigle]

Slap a tariff on the cheap electronics until the US is competitive.

Our problem is that our system of government is too expensive. Increasing revenues to government isn't going to help.

China has lower taxation and lower regulation, so they can compete better. The US has the second-highest corporation tax rates in the world and has to pass that on to all its customers.

Re:Is this seriously a problem?

[ErikZ]

Slap a tariff on the cheap electronics until the US is competitive.

When the US citizens keep on demanding more and more benefits from their government, they will never be competitive.

Re:ZOMG

[Joce640k]

When you're selling hundreds of millions of units the R&D is soon recovered.

Classic case of going after the weak guys

[Anonymous Coward]

Price fixing in the electronics industry is necessary to some extent. The manufacturers barely make any money off of raw hardware. The profitability on these devices is around 5% in most cases. Also to achieve large market share billions of dollars must be invested into expanding current clean room facilities and photolithography machines. The market dynamics for the electronics manufacturing simply require too much capital for production of a device with only a lifetime of 1 year before the next big thing comes out. How much cheaper do you want your gadgets? You have to realize if the stuff that you are designing does not sell for a high price, then your salary will go down accordingly because management will always take their share and the engineer will take the pay cut.

Re:Classic case of going after the weak guys

[haruchai]

Then pay the people who are doing the hard work - let management take the pay cut. It's astonishing to me that we've become so incredibly stupid
that we've allowed the gap between workers and management to widen to such an extent, even after all the financial scandals of the last 2 decades.

Been waiting for a Long Time...

[mpapet]

You bet prices are fixed. It's one of the things a company earns when it enters the top three. It's a sign of respect. The average slashdotter recoils in horror and thinks, "That's illegal!" Well, is it? If you all meet in China to plan pricing for the West, have you committed a crime? You aren't planning to fix prices in China while you are there.

The other important thing to remember is nearly all markets mature into an oligopoly and then the members of the oligopoly don't want to kill the geese laying the golden eggs.

Re:Been waiting for a Long Time...

[JAlexoi]

If you plan on killing a person that is in another country, killing him will still be a crime. Or did you no know, that it's not the actual meetings on price fixing that are illegal, but the act of price fixing itself?

Re:ZOMG

[sourcerror]

Maybe they have similar amounts of research costs to recover?

Re:ZOMG

[dgatwood]

There haven't been 100 million Bu-Ray players sold yet because they aren't a few dollars more than DVD players.

Re:ZOMG

[multisync]

Maybe they do.

Perhaps you should point that out to the plaintiff in the case. They are the one alleging price fixing by Sony etc.

Re:ZOMG

[jvin248]

They price at what the market will bear.

It doesn't cost much more to make a Cadillac than a Chevy, or a Macbook than a Dell - but somehow people demand them and are willing to pay extra.Extra cost for Branding.

Does Blue-ray give that much better of a picture than standard DVD? How much extra will you pay for that improvement? Extra Cost for utility.

One person might think it's worth $1000 more than the standard DVD, while more will think it's only worth $300 and wait a few years (I think it's only worth about $10 and get by with DVD). VHS used to be sold as $1000 machines too.

What's the next 'color' for DVD players? Plaid? I'll bet that will be $1000 for the first adopters.

Re:ZOMG

[kno3]

They price at what the market will bear.

Yes that is very true, however they can also choose the market that they want/can afford to aim at. If they want blu-ray to become universal then they know that they have to price low. But they will not be willing to price at the same price as DVD drives because they need to get the money back on their investment pronto. It would also be a marketing nightmare; consumers want to feel that they are buying something that is better than what they already have. If it costs the same price, then they wont feel that they are investing in something better, and wont be motivated to buy.
As for whether Blu-rays are worth it, I have to say when I took the plunge and bought an HD monitor and blu-ray drive there was not as bigger improvement as I was hoping for. However I definitely think that there is a worthwhile improvement, and I am glad I took the plunge. Plus the extra res for my desktop is really nice.

Re:ZOMG

[kno3]

You are completely underestimating the amount of money they have put into R&D here. I would not be surprised if they are still in the red.