Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Electronics manufacturers charged with electrolytic capacitors price-fixing conspiracy, (Aug 22, 2014)

By Linda O’Brien, J.D., LL.M.

A group of Japanese electronics manufacturers and their domestic affiliates engaged in a conspiracy 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 in San Francisco by a group of consumers and businesses that indirectly purchased aluminum and tantalum electrolytic capacitors (Ellis v. Panasonic Corporation, August 21, 2014).

Panasonic, Sanyo, Taiyo, Nec Tokin, Kemet, Nippon, United Chemi-Con, Hitachi, Nichicon, Avx, Rubycon, Elna, Matsuo, Toshin, Vishay, Samsung, and Rohm are manufacturers of electrolytic capacitors, which are fundamental components of electrical circuits and primarily to store the electrical charge. All electronic devices used today employ various electrical circuits. Everett Ellis is one of several consumers who purchased products containing aluminum and tantalum electrolytic capacitors manufactured by one or more of the defendants. Bhrac, LLC, Beverly Hills Leasing LLC, Cetacea Sound, Inc., Computing Solutions, Inc., Gossett Motor Cars, Inc., and Autorama, Inc. are businesses that purchased aluminum and tantalum electrolytic capacitors indirectly from one or more of the defendants.

The complaint alleges that in 2000, as demand for aluminum and tantalum electrolytic capacitors declined, the defendant manufacturers mutually agreed control the market prices for their mutually interchangeable electrolytic capacitors in an effort to protect their profits. The agreement was reached though oral and written communication, electronic and paper correspondence, text messaging, and telephone and video communications. The conspiracy was furthered by a course of conduct among the defendants to fix the prices for aluminum and tantalum electrolytic capacitors and restrain product output through extended product lead times based on false, deceptive, misleading, and pretextual reasons.

The multi-billion dollar market for capacitors is susceptible to anticompetitive manipulation. The market for aluminum and tantalum electrolytic capacitors is highly concentrated and there are significantly high barriers to the entry. The capacitors are interchangeable commodities, and price is the most obvious differentiation among these products for purchasers. Furthermore, capacitors are necessary to the function of electric circuits; other types of passive electrical capacitors cannot service as a substitutes for those components. Original equipment manufacturers and third-party distributors are almost always committed to inflexible production schedules or delivery deadlines to their respective customers and would incur any price increases on the capacitors to avoid a greater cost of production delays or customer dissatisfaction, the complaint charges.

The U.S. the Department of Justice and competition authorities in China, Japan, Taiwan, South Korea, and Europe have launched investigations into the capacitor industry. The plaintiffs did not have actual or constructive knowledge and could not have discovered the existence of the conspiracy through the exercise of reasonable diligence until March 2014, when the regulatory authorities made their investigations of the industry public. The defendants kept the conspiracy secret and gave pretextual justifications for the pricing changes, according to the complaint.

As a result of the defendants’ anticompetitive actions, prices for aluminum and tantalum capacitors sold in the United States increased or their decline was slowed. The plaintiffs allegedly had to pay artificially inflated prices for the capacitors it purchased from the defendants.

The plaintiffs assert claims for restraint of trade, unfair competition, deceptive trade practices, unjust enrichment, and violations of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble 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-03815.

Attorneys: Mark P. Robinson and Daniel S. Robinson (Robinson Calcagnie Robinson Shapiro Davis, Inc.) for the Indirect Purchaser Consumer Plaintiffs. Phillip Duncan (Duncan Firm, P.A.), Kent W. Emison (Langdon & Emison), Richard Lombardo (Shaffer Lombardo Shurin), and William W. Heaton (Heaton & Moore, P.C.) for the Indirect Purchaser Business Plaintiffs.

Companies: Bhrac, LLC; Beverly Hills Leasing LLC; Cetacea Sound, Inc.; Computing Solutions, Inc.; Gossett Motor Cars, Inc.; Autorama, Inc.; Panasonic Corporation; Sanyo Electric Group, Ltd.; Taiyo Yuden Co., Ltd.; Nec Tokin Corporation; Kemet Corporation; Nippon Chemi-Con Corporation; United Chemi-Con Corporation; Hitachi Chemical Co., Ltd.; Nichicon Corporation; Avx Corporation; Rubycon Corporation; Elna Co., Ltd.; Matsuo Electric Co., Ltd.; Toshin Kogyo Co., Ltd.; Vishay Intertechnology, Inc.; Samsung Electro-Mechanics; Rohm Co., Ltd.

News: Antitrust CaliforniaNews