Disk drive error, please restart your computer

Published On 28/12/2013 | By Claire Bridge | Litigation

Hewlett Packard (HP) and Acer have both commenced action against a number of optical disk drive companies alleging that they have conspired to fix prices.  HP kicked things off by commencing proceedings in the Federal Court in Houston, Texas.  A day later, Acer followed suit by commencing proceedings in the California Federal Court.

Optical disk drives are devices that are used to read and record data, music and video content contained on storage formats such as CDs, DVDs and Blu-Ray discs.

The world’s biggest maker of personal computers, HP, claims that seven leading optical disk drive makers and their subsidiaries including Panasonic, Samsung, Sony, Quanta Storage, TEAC, Toshiba and NEC were part of a price fixing scheme between 2004 and 2010.  Amongst other things, the defendants are alleged to have covertly met at trade shows and exhibitions to swap data and perpetuate the price fixing scheme.  During the six-year period, the defendants allegedly controlled 90 per cent of the market for optical disk drives.

HP argues that it was not aware of the conduct until the U.S. Department of Justice (DOJ) launched an investigation into price-fixing and bid-rigging claims for the sale of optical disk drives in 2009.  As a result of the DOJ’s multi-year investigation, Hitachi-LG agreed to pay $2.1 million in criminal penalties for its involvement in a scheme from 2005 to 2009.  Four Hitachi-LG Data Storage Inc executives agreed to plead guilty and serve prison time in the U.S. for their involvement in conspiracies to bid rig and fix prices.

HP is seeking unspecified damages and a court injunction against these companies for the conspiracy in contravention of U.S. antitrust laws.

In Acer’s suit, the Taiwanese computer maker has similarly claimed that it paid inflated prices for optical disc drives as a result of a purported conspiracy between Toshiba, Samsung and other electronic companies over the same six year period.

Acer has alleged that these companies “engaged in a series of integrated and overlapping anticompetitive acts” such as allocating markets and exchanging confidential information.  In doing so, Acer alleges that the companies violated the Sherman Act and Californian antitrust laws.

Watch this space for follow on regulatory or private enforcement action!

Claire Bridge and Nikhi Wagstaff

Photo credit: aussiegall / Foter.com / CC BY

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About The Author

is a solicitor in the Melbourne office at King & Wood Mallesons.

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