Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Electronic manufacturers allegedly engaged in electrolytic capacitors price-fixing conspiracy, (Jul 21, 2014)

By Linda O’Brien, J.D., LL.M.

Electronics manufacturers Panasonic Corporation, Sanyo Electric Group, Ltd., and Samsung Electro-Mechanics engaged in a conspiracy with other manufacturers to unlawfully fix the prices in the United States for aluminum and tantalum electrolytic capacitors, according to a complaint filed in the federal district court of San Francisco (Chip-Tech, Ltd. v. Panasonic Corporation, July 18, 2014).

Panasonic Corporation, Sanyo Electric Group, Ltd., and Samsung Electro-Mechanics are manufacturers of electrolytic capacitors—components integrated into electrical circuits primarily to store the power supply and regulate the flow of current in electronic devices . Chip-Tech, Ltd. is an electronics designer and distributor that purchased aluminum and tantalum electrolytic capacitors.

The complaint alleges that, when the demand for aluminum and tantalum electrolytic capacitors declined in 2000, the defendant manufacturers formed a global cartel to control market prices of aluminum and tantalum electrolytic capacitors sold in the United States and to restrain their respective product output. To facilitate the conspiracy, the defendants held secret discussions and exchanged nonpublic and commercially sensitive information concerning pricing, production capacity, costs, and distribution.

The market for capacitors is susceptible to anticompetitive manipulation. There are substantial barriers to the entry into the mature capacitors manufacturing industry and to achieving a large volume of sales required to reach economies of scale and profitability. The demand for capacitors is highly inelastic since there are no close substitutes for those components due to the fundamental nature capacitors to the function of electric circuits. Additionally, purchasers of capacitors are always committed inflexible production or delivery deadlines to their customers and therefore would incur any price increases to avoid the cost of production delays or customer dissatisfaction.

The complaint states that the plaintiff’s claims are not barred by the statute of limitations because it had no actual or constructive knowledge and could not have discovered through reasonable diligence the defendants’ conspiracy until investigations by the Department of Justice, regulatory authorities in China, Japan, Taiwan, South Korea, and the European Commission were made public in 2014. The defendants conducted the conspiracy in secret and gave pre-textual justifications for the pricing changes.

As a result of the defendants’ anticompetitive and unlawful conduct, Chip-Tech allegedly paid artificially inflated prices for the capacitors it purchased from the defendants, which exceeded the amount that it would have paid if the pricing had been determined by a competitive market.

The plaintiff asserts claims for restraint of trade and violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, damages, pre- and post-judgment interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 3:14-cv-03264.

Attorneys: Joseph R. Saveri (Joseph Saveri Law Firm, Inc.), Solomon B. Cera (Gold Bennett Cera & Sidener LLP), Eric L. Cramer (Berger & Montague, P.C.), Vincent J. Esades (Heins Mills & Olson, P.L.C.), and Steven J. Greenfogel (Lite DePalma Greenberg, LLC) for Chip-Tech, Ltd.

Companies: Panasonic Corporation; Sanyo Electric Group, Ltd.; Taiyo Yuden Co., Ltd.; Nec Tokin Corporation; Kemet Corporation; Nippon Chim-Con Corporation; Hitachi Chemical Co., Ltd.; Nichicon Corporation; Rubycon Corporation; Elna Co., Ltd.; Matsuo Electric Co.; Toshin Kogyo Co., Ltd.; Vishay Intertechnology, Inc.; Samsung Electro-Mechanics; Rohm Semiconductor U.S.A., LLC.

News: Antitrust CaliforniaNews