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: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:ZOMG

[shawb]

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

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/.