Inductors Price-Fixing and Antitrust Collusion Class Action

The US Department of Justice obtained guilty pleas in a recent antitrust case relating to makers of capacitors. Now comes a similar price-fixing case relating to makers of inductors, another type of electronic component, again alleging violations of the Sherman Act.

The class for this action is all persons or entities in the US and its territories who bought inductors (including through controlled subsidiaries, agents, affiliates, or joint ventures) directly  from defendants, their subsidiaries, agents, affiliates, or joint ventures, from January 1, 2003 through December 31, 2016.

Inductors are passive electronic components that store energy as a magnetic field. They are used in smartphones, consumer electronics, advanced driver assistance systems, induction motors for industrial purposes, and military, naval, and air force equipment such as missile systems, radar, and sonar.

The defendants in this case control about 75% of a $3.86 billion global market, while the US market is estimated to be worth about $965 million. The complaint alleges that the defendants conspired to fix the prices of inductors in order to raise prices and keep them high.

A chart from Federal Reserve Economic Data, reproduced in the complaint, tracks the price of inductors and related equipment since 1994. After twenty-nine nations agreed to an Information Technology Agreement (ITA) eliminating tariffs on various kinds of IT products, the price begins to fall drastically, reaching a low point six months after China joined the agreement in 2003. After that, prices begin to climb again.

According to the complaint the prices of raw materials do not explain the price rise, as raw materials have been fairly stable for awhile and have recently declined. Nor do increases in demand, the complaint says, since prices spiked even as demand declined. Similarly, the complaint says, manufacturing costs have declined as well. The only possible explanation, the complaint alleges, is that prices were maintained by collusion between the companies.

The complaint believes that the conspiracy, like those for capacitors and resistors, was carried out partly “under the auspices” of the Japan Electronics and Information Technology Association (JEITA), formed in 2000. The defendants were all members, and the complaint alleges that they used the occasions of JEITA and other trade association meetings to exchange “competitively sensitive information” and reach antitrust agreements.

According to the complaint, the inductor market has several characteristics that make it susceptible to collusion:

  • Inductors are largely interchangeable, with few differences between makers.
  • The market is highly concentrated.
  • There are high barriers to entry.
  • Demand is not elastic.

According to the complaint, on January 4, 2018 mLex reported that some Japanese companies have received investigative subpoenas relating to price-fixing in the inductors market.

The following companies are defendants in this case:

  • Murata Manufacturing Co. Ltd.
  • Murata Electronics North America, Inc.
  • Panasonic Corporation
  • Panasonic Corporation of North America
  • Panasonic Electronic Devices Co. Ltd.
  • Panasonic Electronic Devices Corporation of America
  • Sumida Corporation
  • Sumida Electric Co., Ltd.
  • Sumida America Components, Inc.
  • Taiyo Yuden Co., Ltd.
  • Taiyo Yuden (USA), Inc.
  • TDK Corporation
  • TDK-EPC Corporation
  • TDK Corporation of America
  • TDK USA Corporation
Article Type: Lawsuit
Topic: Antitrust

Most Recent Case Event

Inductors Price-Fixing and Antitrust Collusion Complaint

January 16, 2018

The US Department of Justice obtained guilty pleas in a recent antitrust case relating to makers of capacitors. Now comes a similar price-fixing case relating to makers of inductors, another type of electronic component, alleging violations of the Sherman Act. The complaint alleges that the defendants, who control 75% of the global market, colluded to raise inductor prices and keep them high.

inductor_antitrust_complaint.pdf

Case Event History

Inductors Price-Fixing and Antitrust Collusion Complaint

January 16, 2018

The US Department of Justice obtained guilty pleas in a recent antitrust case relating to makers of capacitors. Now comes a similar price-fixing case relating to makers of inductors, another type of electronic component, alleging violations of the Sherman Act. The complaint alleges that the defendants, who control 75% of the global market, colluded to raise inductor prices and keep them high.

inductor_antitrust_complaint.pdf
Tags: Antitrust, Collusion & Price Fixing