Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Retailers file additional price fixing lawsuit against CRT manufacturers, (May 20, 2014)

By Linda O’Brien, J.D., LL.M.

A group of cathode ray tube manufacturers have engaged in an international conspiracy for over twelve years to fix the prices of CRTs, according to a complaint filed in the federal district court of San Francisco (Crago, d/b/a Dash Computers, Inc. v. Mitsubishi Electric Corporation, filed May 5, 2014, unsealed May 13, 2014). The complaint concerns the same conspiracy and many of the same transactions and events pending in multidistrict litigation before the same court (In re Cathode Ray Tube Antitrust Litigation, MDL No. 1917).

Mitsubishi, Technicolor USA, and Videocon are manufacturers of cathode ray tubes (CRTs) that are used in various electronic products. Crago, Meijer, Nathan Muchnick, Inc., Princeton Display Technologies, Studio Spectrum, and Wettstein and Sons are retailers of televisions, computers, video, and other electronic products that use CRTs.

The complaint alleges that, in 1995, CRT manufacturers faced significant economic pressures as customer preferences for other emerging technologies reduced profits and threatened the sustainability of the industry. To decrease the erosion in pricing, the manufacturers allegedly engaged in an international conspiracy to fix prices on CRT’s included in products purchased by the plaintiffs.

According to the complaint, the manufacturers agreed to (1) fix target prices and price guidelines; (2) exchange pertinent information; (3) coordinate public statements regarding available capacity and supply; (4) resolve issues created by asymmetrical vertical integration among co-conspirators; (5) keep collusive meeting secret; (6) discuss reconciliation of accounts; (7) allocate market share of overall sales; (8) coordinate pricing with producers in other geographic areas; (9) limit competition for certain key customers; (10)allocate customers; and (11) allocate shares of certain key customers’ sales; and (12) restrict output.

The CRT industry has several characteristics that facilitated a conspiracy, including market concentration, ease of information sharing, consolidation of manufacturers, multiple interrelated business relationships, significant barriers to entry, heightened price sensitivity to supply and demand forces, and homogeneity of products.

The complaint states that the conspiracy was effectuated through a combination of group and bilateral meetings. The conspirators participated in meetings in various locations that included representatives from the highest levels of the companies. Participants would often exchange competitively sensitive information, including information on inventories, production, sales, and exports. Since the meeting attendees had authority and reliable information, the meetings resulted in agreements.

The conspiracy is being investigated by the U.S. Department of Justice (DOJ) and numerous foreign competition authorities. Several companies and company executives have been indicted and pleaded guilty to charges in connection with the CRT price-fixing conspiracy. Technicolor admitted to its participation in the conspiracy to fix the prices of CRTs in its 2011 annual report to shareholders and was fined by the European Commission for that participation, the complaint alleged.

The defendants conspired to suppress and restrain price competition in the sale of CRTs; limit production of CRTs by ceasing productions and closing or consolidating manufacturing facilities; and maintain the prices for CRTs in light of downward price pressures. The plaintiffs were injured in their business and property in that they paid more for CRT products that they would have otherwise in the absence of the defendants’ unlawful conduct.

The plaintiffs assert claims for fraudulent concealment 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-02058-SC.

Attorneys: Guido Saveri, R. Alexander Saveri, Geoffrey C. Rushing, Cadio Zirpoli, and Travis L. Manfredi (Saveri & Saveri, Inc.) for the direct purchaser plaintiffs

Companies: Mitsubishi Electric Corporation; Technicolor USA, Inc.; Videocon Industries, Ltd.

News: Antitrust CaliforniaNews