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Crime Businesses Displays Government Politics

Samsung, Toshiba, Others Accused of LCD Price-Fixing 269

Posted by kdawson
from the just-happened-to-be-in-the-same-hotel dept.
GovTechGuy writes "Toshiba, Samsung, Sharp, LG and other major technology companies allegedly colluded to fix the prices of LCD screens used in televisions and computers, according to an antitrust suit filed Friday by New York Attorney General Andrew Cuomo. The complaint alleges that top-level executives at those firms attended secret meetings on a monthly or quarterly basis where they agreed upon minimum prices, price targets, increases and rates to be charged to specific computer manufacturers. The suit also accuses the companies of exchanging product information, agreeing to output levels and keeping prices artificially high by avoiding competition. Cuomo is seeking hundreds of millions of dollars in damages and punitive charges for the alleged overcharging of state institutions."
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Samsung, Toshiba, Others Accused of LCD Price-Fixing

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  • We will see... (Score:5, Interesting)

    by Pharmboy (216950) on Friday August 06, 2010 @04:28PM (#33168674) Journal

    We will see what comes out in court, although I'm holding back judgement until I see the evidence. If they are doing what the complaint alleges, then yes, fine them enough to discourage them (and others) in the future, ie: heavily. Personally I'm glad to see a bit of consumer protection going on for a change. The FTC has become pretty much useless over the last few decades.

  • by jpolonsk (739332) on Friday August 06, 2010 @04:28PM (#33168686)
    In areas where prices are dropping rapidly its interesting that they are able to find price fixing. It used to be memory now I guess it's moved on to screens.
  • by Fry-kun (619632) on Friday August 06, 2010 @04:40PM (#33168840)

    Whose ass do you have to sue to get some highres monitors around here?

  • by TravisHein (981987) on Friday August 06, 2010 @04:40PM (#33168842)
    such as any telco company, VOIP termination provider, or even gasoline?
  • sounds familiar (Score:3, Interesting)

    by gandhi_2 (1108023) on Friday August 06, 2010 @04:42PM (#33168868) Homepage

    agreeing to output levels and keeping prices artificially high

    Sounds familiar. [wikipedia.org]

  • now we can get to... (Score:5, Interesting)

    by sevenfactorial (996184) on Friday August 06, 2010 @05:02PM (#33169112)

    This is great. Hopefully in the near future we can address price fixing in everything else, like text-messages, internet service, cell phone service .... etc etc etc.

    What happened to trust busting?

  • Re:Not enough (Score:5, Interesting)

    by commodore64_love (1445365) on Friday August 06, 2010 @05:03PM (#33169120) Journal

    >>>Punish price-fixing by price-fixing, at least for a period.

    (1) That's unconstitutional. The New York Constitution does not grant such a power as "price fixing".

    (2) There's no need for such extremes. When the record companies were caught price-fixing CDs (thereby forming an illegal cartel), they were ordered by the courts to refund ~$25 to all their customers, so that erased any illicit profits they had earned.

    (3) And then the free market was left to its own devices, and the cost of CDs plummeted from $13 to $9 within a year, since the cartel was no longer allowed to operate. The same will happen to LCDs too, after the price-fixing cartel is broken-up.

  • by mc6809e (214243) on Friday August 06, 2010 @05:03PM (#33169136)

    Under fixed prices, they could worry less about lowering prices and instead concentrate on quality and eliminating dead pixels.

    But what we see instead is cut-throat competition on price that lowers quality. The same thing happened to the airlines after deregulation. Under regulation, prices were fixed. They now compete on price only and quality has suffered.

    Sometimes competition on price can be destructive. Jobs are lost, quality suffers, and ultimately monopolies emerge after competitors have been driven out of business.

  • by Grishnakh (216268) on Friday August 06, 2010 @06:01PM (#33169734)

    To me it's obvious that LCD companies got sued because no large US company holds substancial interests in glass substrates design and manufacturing.

    Very few US companies hold substantial interests in manufacturing anything these days, except maybe military hardware.

  • by runner_one (455793) on Friday August 06, 2010 @06:21PM (#33169936)

    I have never understood this. Every few months we hear about a new round of companies in trouble for price fixing for one product or another.
    Yet OPEC gets together and does it right out in the open, heck their meetings are on the network news, and we just bend over and take it up the pooper.
      I just don't get it.

  • Re:We will see... (Score:2, Interesting)

    by Beer Drunk (1059846) on Friday August 06, 2010 @06:47PM (#33170170)
    One of these days the foreign manufacturers will realize that America is broke and they don't need us anymore as customers since all we do is buy things with money we borrow from their countries and probably can't pay back. We will then revert to a stone age civilization since all our manufacturing has been exported to other places and the lawyers can sue each other for hides and buffalo dung etc.
  • by Jaime2 (824950) on Friday August 06, 2010 @06:56PM (#33170226)
    I'm posting this from a 1920x1200 24" monitor that I bought three years ago for about $200.00. Almost nobody makes an affordable display with more than 1080 rows any more. You can blame HDTV for it, monitor manufacturers would much rather sell computer users the HDTV screens they are already making than create computer-specific resolutions. Before HDTV, monitors were on a steady march to higher resolution, after 1080p became popular, monitors backtracked and have been stuck ever since.
  • Re:We will see... (Score:3, Interesting)

    by eiMichael (1526385) on Friday August 06, 2010 @06:56PM (#33170232)

    Exactly. They conspired against the free market. You know what we used to do to the people that did that? Look back at McCarthy. Your ass would be blacklisted and you could no longer play with others that followed the rules. They would also spare no expense at throwing the legal system at you (regardless of the legality of their arguments).

    Weather or not I agree with what happened back then it is plain to see just how different the American public feels about protecting their Free Market these days.

  • by A Friendly Troll (1017492) on Friday August 06, 2010 @07:03PM (#33170280)

    Whose ass do you have to sue to get some highres monitors around here?

    Forget it.

    The only way that's going to happen is if the pixel count gets magically quadrupled, so you can immediately jump from 1900x1200 on a 24" monitor to 3800x2400.

    Any intermediate solutions simply wouldn't work due to issues with scaling existing content. Read: it would look like blurred shit. If you don't want to scale things up in size and keep everything 1:1, then tough luck, because it would require perfect vision and strain the eyes, which would make it inaccessible for the vast majority of people out there (and even then, there are limits). I have a 22" running the bog-standard 1680x1050, and to be honest, sometimes I wouldn't mind having a 24" with the same resolution for extra comfort, after a long day of work...

    Scale up: looks like shit
    Don't scale up: include a magnifying glass with the monitor

    Now, if the pixel count gets quadrupled, then you can keep everything displayed completely the same as now, have the OS lie about resolution and scale everything internally, but also add some new API functions to allow apps to draw certain things (such as font glyphs) at the true native resolution. About seven to ten years later (!), you could consider the transitions successful because all monitors sold would be high-res, all maintained software would have been written to make use of the new API, and all toolbar icons would have been quadrupled in resolution as well.

    Unfortunately, you'd still have the issue of graphics on the web, so you'd also need a new image format that would hold a low res and a high res version, and if you said something was "300px" wide, it would technically be a lie, but never mind that.

    In conclusion, it's not going to happen, and you can forget it :)

  • by Ungrounded Lightning (62228) on Friday August 06, 2010 @07:10PM (#33170328) Journal

    The thing is, market forces work so that companies naturally merge to only 3 or 4 main competitors when an industry is mature. ... At this time, these larger companies are able to take advantage of economies of scale that smaller competitors cannot, and as the industry and technology is mature, new small competitors can't bring any new innovation to the table that outweighs their lack of brand recognition and economies of scale.

    So far so good...

    The catch is, you need a decent government in place which oversees them and makes sure that they don't form a cartel or collude in any way to screw over the customers.

    And there's where you disconnect from both your own argument's internal consistency and what the "Rand-worshiping free-market fans" claim.

    The catch, for the cartel-seekers, is that in order to screw over the customers they have to raise prices. And THAT over-compensates for the economies of scale and lack of opportunity for competition on innovation in a mature market. Once the upstarts start up they have to drive the prices back down to keep from being hamstrung.

    Meanwhile the upstarts have second-mover advantage: They don't have to make all the design and market-choice mistakes and incur all the related costs that the established players did. Meanwhile a market never REALLY matures - science and technology march on even when the current market players aren't incorporating the incremental and breakthrough improvements. When building new plant it's about as easy to design for the latest-and-greatest as to replicate a former decade's technology - and it may actually be cheaper. Once the new guys are playing the old ones are stuck with aging plant that needs replacement or an expensive retrofit.

    So, in the absence of some anticompetitive externality the lifetime of a monopoly or cartel that engages in gouging is limited. It recreates the conditions that lead to the rise of new competitors.

    The fly in this ointment (as a previous poster has pointed out) is the government. By a number of mechanisms it can (and tends to) favor the existing players and raise the barriers to the entry of new competitors - or even prescribe a monopoly. THAT's what allows cartels and monopolies to gouge for long periods.

    A monopoly or cartel that doesn't mistreat its customers can continue to exist for a long time. Example: Alcoa. It had an effective monopoly on aluminum production for decades - mainly BECAUSE it priced its products low, treated its customers well, and focussed on improving its processes rather than playing zero-sum games to transfer its customers' wealth to itself. Thus competition was both unnecessary to achieve the benefits of a competitive market - and (until post-WWII demobilization enabled Reynolds and Kaiser) market forces drove investment to other areas where more value-added was available.

    The problem isn't monopoly per se - it's COERCIVE monopoly. And the main source of coercion (especially coercion that limits entry to markets) is government action.

  • by Rockoon (1252108) on Friday August 06, 2010 @07:10PM (#33170330)

    Yes, economies of scale are a valid argument, despite whatever you're smoking. Bigger companies can buy in bigger quantities, and get better discounts.

    Companies can enter the market as a big player. This can be a new startup with a lot of investors, or an existing company entering a new market. If you dont address that point then you are just repeating the refuted argument.

    As far as Standard Oil, it was broken up and rightly so. But you are forgetting that Standard Oil's main leverage was railroad discrimination, and the existing railroads had a government protected monopoly. The government created Standard Oil's advantage.

  • Re:Not enough (Score:3, Interesting)

    by causality (777677) on Friday August 06, 2010 @07:43PM (#33170552)

    I think this is a good approach, personally. A much more significant and lasting punishment for the crime.

    Question is, how long to punish? I think it would only be fair to force them to sell at a lowered price for the same duration they sold at jacked up prices. If they go out of business, tough shit. Should have thought about the consequences of the actions.

    And yes, everyone who bought an LCD during those dates should either receive a reimbursement equal in % to what they were overcharged, or receive a coupon for that % off a purchase of any new LCD from that company that they buy.

    No more light slaps on the back of the hands, corporations need a solid punch in the gut for pulling stunts like this.

    There's one thing that needs to take place if you want a truly effective deterrent.

    All top-level executives who supported this collusion need to be personally conviced of fraud in a criminal court. I'm guessing that fraud on the scale of multiple millions of dollars would land them some hard time in a maximum-security prison. Fraud is fraud even if the criminal who perpetrated the fraud did not directly receive the money out of which the victims were defrauded (i.e. it went directly to his/her corporation).

    What needs to end NOW, and in fact is long overdue, is to remove the "untouchable" status of the people behind the scenes. If we did that, I personally wouldn't care if the corporation itself is fined or not because we'd be taking the punitive measures directly to the source of the problem. By contrast, a heavy fine proportional to the crime that is levied against the corporate entity might end up harming customers and/or rank-and-file employees who had no decision-making input regarding whether or not massive fraud was going to be committed.

    The "limited liability" nature of a corporation should be for failed business ventures and unintentional negligence only (i.e. honest mistakes). It absolutely should never apply to intentional, willful criminal activity.

  • by Antisyzygy (1495469) on Friday August 06, 2010 @07:50PM (#33170596)
    Well, they are subject to our borders. Unfortunately we cannot continue existing without their oil. Its completely the fault of our senators and presidents for the last 25 years for allowing such a dependence to occur. It is a blatant security threat. We should be beating their old asses up for it.
  • Sigh (Score:4, Interesting)

    by ADRA (37398) on Friday August 06, 2010 @09:06PM (#33171054)

    If only OPEC could be held to the standards of everyone else...

  • Re:Not enough (Score:5, Interesting)

    by P0ltergeist333 (1473899) on Friday August 06, 2010 @09:22PM (#33171112)

    >>>(2) There's no need for such extremes. When the record companies were caught price-fixing CDs (thereby forming an illegal cartel), they were ordered by the courts to refund ~$25 to all their customers, so that erased any illicit profits they had earned.

    If you really believe they came anywhere NEAR paying out what they gained by even just the five years of price fixing that they got caught for, you're delusional. The industry shipped over one billion units in the year 2000. Their settlement of 64 million cash to consumers and 75 million in CD's (at a likely actual cost of a few percent of the 75 million) distributed to non-profit organizations was nowhere near the billions they profited.

    And just because when they came up with a lower price fix eventually thereafter is hardly evidence of the 'free market left to it's own devices' adjusting correctly. You'd have to be a total tool to believe these things.

    The bottom line is that at least two of these companies (Samsung and Toshiba) were directly involved and found guilty of memory price fixing at least once in recent times by multiple courts, and neither the governmental remedies nor the supposed hand of the free market impacted them enough to stop them from doing it again with LCDs. Nothing will stop them and millions of other companies from continuing to screw the consumer in the future. Your premise fails in both theory and application.

  • Re:Not enough (Score:4, Interesting)

    by P0ltergeist333 (1473899) on Friday August 06, 2010 @09:43PM (#33171192)

    For what it's worth, yes, they gave out checks. I got one as well. But then I was young, single, and working on my CD collection. I literally spent thousands of dollars in those years on music CDs. I know of many others who spent as much or more, and did not find out about the settlement until it was too late to file. By your own admission, they overcharged 10$ per CD. The RIAA's own figures say they shipped 1 Billion units in the last year covered by the suit, 1999-2000. And the cash settlement was 64 million. So that's 64 million out of ten billion. You make my argument for me.

  • by Anonymous Coward on Saturday August 07, 2010 @08:55AM (#33173140)

    In a healthy market with a mature industry, 3 or 4 main competitors is the most efficient. The catch is, you need a decent government in place which oversees them and makes sure that they don't form a cartel or collude in any way to screw over the customers. Without any government regulation, you'll either end up with a cartel/oligopoly, or a monopoly, and then you don't have a free market at all, since there's no real competition and no choice for the consumers.

    Actually, our current form of regulation is one of the biggest problems.
    When companies get large enough, they can lobby for complex and expensive regulations - this prevents smaller entrants to the market which don't have huge legal departments to navigate the regulatory maze.

    Another issue with our current system are the tax breaks we give to big companies for "creating jobs".
    Those companies then ship those jobs overseas, or import indentured labor (via H1-B).
    It would be far harder for large companies to overcome the inefficiencies of their size without these government gifts (and other tax shelters).

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