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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.'"
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.
"'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!"
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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.
"All great wisdom is contained in .signature files"
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.
Why don't they go after telecom and cable? I know of nobody complaining about dvd players.
Fuck systemd. Fuck Redhat. Fuck Soylent, too. Wait, scratch the last one.
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.
I think the price fixing is on the blu-ray end.
I'll never make that mistake again, reading the experts' opinions. - Feynman
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.
If moderation could change anything, it would be illegal.
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.
I don't care why you're posting AC
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/.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
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.
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.
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.
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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.
Over-the-top Response Guy! Giving "Over-the-Top Responses" since 1970.
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.
>>"ad space available -- low rates!!!"
When you're selling hundreds of millions of units the R&D is soon recovered.
No sig today...
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.
comment first, facts later. http://chem.tufts.edu/AnswersInScience/RelativityofWrong.htm
There haven't been 100 million Bu-Ray players sold yet because they aren't a few dollars more than DVD players.
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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.