Hitachi cops to Dell LCD pricing conspiracy
A Hitachi subsidiary has agreed to a $31m fine for its role in an industry-wide conspiracy to fix the prices of monitors sold to computer and handset manufacturers.
Tuesday's guilty plea by Hitachi Displays came the same day the US Justice Department filed a one-count indictment that claimed the Japanese monitor maker actively sought to drive up the price of thin film transistor liquid crystal display monitors sold to Dell. The company admitted its officials attended "bilateral meetings" to discuss and agree upon prices of LCD monitors sold to Dell.
Hitachi becomes the fourth maker of LCD monitors to cop to price fixing charges. LG Display in December agreed to pay $400m to settle similar charges, while Sharp has coughed up $120m after also pleading guilty. Chunghwa Picture Tubes, meanwhile, has been ordered to pay $65m.
Four individuals working for the companies have also received prison sentences or fines for their roles in the conspiracy, which also forced Apple and Motorola to pay prices above market rates for monitors used in their products. In all, the government's price-fixing investigation has netted more than $585m.
The case is the result of a joint investigation conducted by the San Francisco field offices for the Justice Department's antitrust division and the FBI. ®
One government to rule them all…
I have a Dell widescreen monitor (pretty good it is too). Where do I write to in order to get my partial refund?
Oh, wait, this is just to line governmental pockets and not actually assist the ripped-off consumer? Dammit.
This was a fine, not a damages payment. The government gets the money.
Not as simple as it looks
Price fixing may be evil, but it's not always the fixer who is the root of the problem. The closer you look at this sort of stuff, the less clear it is who is the good guy and who the bad. Dell's distribution unfairly controlling the market price - manufacturers price fixing in order to survive; lawyers making a name for themselves regardless of who gets hurt.
It's all a matter of who has the greater power in negotiations - are LCD's being sold to Dell, or is distribution being sold to the manufacturer. Just as Tesco can say to a supplier - if you want your biscuits on our shelves, you're going to have to give us lower prices than anyone else - so can Dell. It may not be so much little Dell being tricked into overpaying for LCD's as the LCD makers trying not to sell at a loss. If a supplier of the latest LCD's has invested billions in the latest generation of production facility, his hands are tied - he must recover his investment by keeping his lines running while prices are still high. Along comes Dell and says - we'll take your entire production, so you don't need to charge a high price. Then Dell sells for a market leading, but extremely profitable price worldwide which undercuts every other brand. If excess supply turns up, Dell can simply dump it on the market at cost. Meanwhile, other manufacturers are not running at full capacity, and need to charge even higher prices to survive. It's very easy to see how price fixing becomes a matter of survival for manufacturers, and that Dell isn't a manufacturer, but a distributor.
We saw this with the first 24 inch LCD's 3-4 years ago. Dell had the best product and the best price. But from time to time you could buy at almost half that price, direct, on ebay or via numerous online resellers as Dell simply turned 90 days of supplier credit on the excess supply into cash.
The commoditization of everything Dell sells means that Dell's channel has currently lost this power. You can see the results in the share price - one fifth of what it was in Dell's glory days, despite increased sales.
Hurray for the Justice Department!
Yay! White collar criminals stealing from you and me get punished.