Law360, New York (July 21, 2014, 2:52 PM ET) — Panasonic Corp. along with units of Hitachi Ltd. and Samsung Electronics Co. Ltd. were slapped with an antitrust class action in California federal court Friday alleging they participated in a decade-long conspiracy to fix prices on electronic circuit board components.
Plaintiff Chip-Tech Ltd. brought the suit on Friday, which also named Hitachi Chemical Co. Ltd. and Samsung Electro-Mechanics America Inc., alleging that the companies along with nearly two dozen others colluded to restrain trade of aluminum and tantalum electrolytic capacitors, in violation of the Sherman Act.
The suit claims that the manufacturers reached agreements to artificially set prices and maintain demand for the capacitors — which are fundamental in the operation of all electrical circuit boards — from at least Jan. 1, 2005, to the present.
“Defendants’ anti-competitive and unlawful conduct resulted in the increase or slowed the decrease of aluminum and tantalum capacitor prices for products sold in the U.S. during the class period,” the complaint said. “As a result, plaintiff and the class paid artificially inflated prices for the capacitors they directly purchased.”
The anti-competitive conduct included direct and indirect communication as well as secret discussions between the manufacturers to control market prices for capacitors sold on the U.S. market, the suit said.
The manufacturers also allegedly reached agreements among themselves to artificially set prices and to restrain their respective product output by extending product lead times based on pretextual reasons, such as difficulty in obtaining raw materials the suit said.
The manufacturers allegedly formed the cartel after demand for their aluminum and tantalum electrolytic capacitor product lines began to wane in the early 2000s when newer and smaller electronics products required different kinds of capacitors, according to the suit.
Ultimately, Chip-Tech argued that the scheme was effective in moderating and negating normal downward pressures on prices for capacitors caused by price competition, oversupply, reduction of demand and technological changes.
Chip-Tech is seeking to represent a class of direct purchasers of aluminum or tantalum electrolytic capacitors from a defendant in the U.S. since 2005, according to the suit.
Since 2005, the suit says that per unit prices for tantalum capacitorsThe tantalum capacitor distinguishes itself from other capacitors in having high capacitanceThat property of a system of conductors and dielectrics which permits the storage of electricity when potential difference exists between the conductors. Its value is expressed as the ratio of a quantity of electricity to a potential difference. A capacitance value is always positive. per volume and weight. Relative to other electrolytic capacitors, tantalum capacitors have low resistance, low leakage, and can operate in higher temperature environments, but non-electrolytics are even better in these regards. increased by approximately $8.82 per thousand as a result of the scheme, while the price per unit for aluminum capacitors remained stable at around $46 after experiencing a steep decline in the years prior to the alleged conspiracy, according to the suit.
Additionally, the defendants controlled about 70 percent of the market for the products, the suit said.
“By forming this cartel, defendants intended to wring as much profitability out of the aluminum and tantalum electrolytic capacitors market as possible before their product portfolios for these capacitors become technologically obsolete or became consigned to the comparatively unprofitable niche market,” the complaint said.
Chip-Tech noted that after many years of active concealment, the manufacturers ‘ anti-competitive acts recently have drawn the attention of law enforcement and regulatory agencies in the U.S., China, Japan, South Korea, Taiwan and Europe, all of which opened investigations earlier this year.
At least one capacitor manufacturer, believed to be Panasonic, has self-reported its unlawful price fixing and is cooperating with authorities in at least the U.S. and China in exchange for amnesty from prosecution, and has disclosed background details regarding the cartel’s membership and the scope of the conspiracy, according to the suit.
The capacitors at issue are integrated into the electrical circuits of nearly all electronic devices in use today primarily to store an electrical current and govern its flow so that electronic devices perform effectively, according to the suit.
To add context, the suit estimates that a typical smartphone, home computer or automobile contains hundreds of these capacitors. The global revenues for all manufacturers in the capacitor industry in 2013 totaled approximately $16 billion, based on the sales of trillions of capacitors, and the number is only expected to rise in the coming years, according to the suit.
In addition to Panasonic, the suit also named as defendants Panasonic subsidiary Sanyo Electric Group Ltd., Kemet Corp. and Matsuo Electric Co. Ltd., among nearly two dozen others.
Joseph Saveri, an attorney representing Chip-Tech, told Law360 Monday that the “detailed facts alleged [in the complaint] represent the results of an investigation by us going back several months.”
“We anticipate moving the case forward quickly, setting the schedule and preparing the case for trial,” Saveri said.
