Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Electronics manufacturers charged with electrolytic capacitors price-fixing conspiracy, (Sep 12, 2014)

By Linda O’Brien, J.D., LL.M.

Japanese electronics manufacturers and their domestic affiliates engaged in a conspiracy to fix prices for tantalum, aluminum electrolytic, and film capacitors sold in the United States, according to a complaint filed in the federal district court in the Northern District of California (eIQ Energy Inc. v. Avx Corporation, September 11, 2014).

Japanese companies Avx Corporation, Elna Co., Hitachi Chemical Company, Ltd., Kemet Corporation, Matsuo Electric Co., NEC Tokin Corporation, Nichicon Corporation, Nippon Chemi-Con Corporation, United Chemi-Con, Panasonic Corporation, Sanyo Electric Co., Ltd., Rohm Company, Rubycon Corporation, TDK Corporation, Vishay Interchnology, Inc., and their domestic affiliates manufacture, distribute, and sell tantalum, aluminum electrolytic, and film capacitors in the United States. Capacitors are passive electronic components that are used to store electricity and are incorporated into almost every electronic device, including computers, automobiles, and audio, video, and telecommunications equipment. eIQ Energy designs and manufactures power electronics for solar photovoltaic systems and purchases capacitor products directly from the manufacturers.

The complaint alleges that Japanese and U.S. manufactured capacitors have been able to demand a premium after widespread reporting of failures of capacitors sourced from Taiwan and China. The ability of Japanese and U.S. manufactures to enjoy a price premium over their counterparts in Taiwan and China faltered during the economic downturn in 2007. As a result, the manufacturers sought to take advantage of their market position by agreeing among themselves to raise the prices of their capacitors.

According to the complaint, the capacitor market is conducive to collusion. The market is highly concentrated and the defendants collectively account for a significant percentage of the global capacitor market. The capacitor industry is mature and dominated by established companies with diverse product portfolios, multi-national operations, and global reach. Entry to the capacitor market involves high barriers, such as significant start-up costs, the availability of necessary raw materials, and establishing networks of global distribution centers. Additionally, the pricing for capacitors is highly inelastic because there are no adequate substitutes. The defendants were alleged to have ample opportunities to collude, since every defendant is a member of numerous trade associations and regularly attended the annual Applied Power Electronics Conference and Exposition.

Antitrust investigations are currently taking place in the United States, China, Korea, Japan, Taiwan, and Europe regarding price fixing of capacitors by Japanese manufacturers. In addition, the European Union competition authorities are also investigating capacitor price fixing. In May 2014, the U.S. Department of Justice issued a report that confirmed the China’s regulatory authorities had finished its cartel investigation into the electronic capacitor industry.

The plaintiff could not have discovered, through the exercise of reasonable diligence, the existence of the conspiracy, until government investigations were announced publicly in the media in March 2014. The defendants held themselves out as honest competitors and fraudulently concealed their conspiracy by holding secret meetings and having surreptitious communications, the complaint alleged.

The plaintiff asserts claims for violations of Section 1 of the Sherman Act. The action seeks declaratory 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-04123.

Attorneys: Joseph Saveri (Joseph Saveri Law Firm, Inc.), Dennis J. Drasco (Lum, Drasco & Positan, LLC), Howrad J. Sedran (Levin, Fishbein, Sedran & Berman), Roberta D. Kiebenberg (Fine, Kaplan and Black, R.P.C.), and W. Daniel Miles, III (Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.) for eIQ Energy Inc.

Companies: eIQ Energy Inc.; Avx Corporation; Elna Co.; Hitachi Chemical Company, Ltd.; Kemet Corporation; Matsuo Electric Co.; NEC Tokin Corporation; Nichicon Corporation; Nippon Chemi-Con Corporation; United Chemi-Con; Panasonic Corporation; Sanyo Electric Co., Ltd.; Rohm Company; Rubycon Corporation; TDK Corporation; Vishay Interchnology, Inc.

News: Antitrust CaliforniaNews