In just the last week, two class action lawsuits were filed in California against Panasonic, Samsung Electro-Mechanics America Inc., and a number of other defendants alleging that the companies colluded to fix prices for aluminum and tantalum electrolytic capacitors. Capacitors are like tiny, electrical-charge storage devices imbedded within a circuit board. Their main purpose is to regulate and govern the flow of electrical currents through a device and insure there is adequate charge available to the device to perform the tasks we require.
Although capacitors are critical to the functionality of electrical devices, they are miniscule in size. For example, a typical smart-phone contains 300-500 capacitors while a typical computer has between 100 and 700. Their cost on an individual basis reflects that size, but because of the sheer number necessary for modern devices, the cost adds up quickly. The average price per unit in the last five years has been $0.01178, or just $11.78 per thousand units, but when combined, capacitors were a $16 billion industry in 2013.
Capacitors are not interchangeable. Each one has a specific size/shape and capacitance (the potential amount of charge a capacitor can store). While technology advances, even the technology of capacitors, manufacturers that use those components do not keep pace; they simply cannot. It is extremely expensive to constantly update designs and manufacturing processes to change to an updated component that only costs $11 for a thousand units.
Instead, device manufacturers are at the mercy of those that produce the capacitors they need. Unable to simply purchase a different and cheaper capacitor, device manufacturers “have no choice but to weather the availability and cost issues” entailed in continuing to use their chosen capacitors and avoid the costs of upgrading, the complaint alleges.
For these reasons, manufacturers of electronics purchase in massive quantities. Device manufacturers wait until the price of the capacitors they need drops, even just a little, and buy enough supply to last for months or longer. For capacitor manufacturers, these practices create fluctuations in supply, demand and, consequently, revenue.
Over time, device manufacturers have slowly moved away from using aluminum and tantalum capacitors in favor of smaller, cheaper, more readily available, and more efficient products.
The complaints allege that the defendants mutually agreed to fix prices and add a lead time to bulk orders of their capacitors in an effort to milk the remaining time in the market for aluminum and tantalum capacitors. Their agreements had the purpose and effect of fixing the prices for capacitors at artificially inflated prices, actions that violate § 1 of the Sherman Act.
Considering the far-reaching effects and uses of capacitors, the actions of the defendants have likely caused price increases and damages (although indirectly) to nearly every consumer. The class action lawsuits name about 20 companies and their affiliates as Defendants.
Beasley Allen is working with other national law firms on this litigation in hopes of, once again, correcting market misconduct involving price fixing, which hurts us all. For more information about this subject, contact W. Daniel “Dee” Miles,, III, head of the firm’s Consumer Fraud Section, at firstname.lastname@example.org, or Beasley Allen attorney Rebecca Gilliland at email@example.com
Source: Law 360