Hot Docs: Target, other retailers sue TV makers over CRT price-fixing

November 24, 2011

Price warsTomorrow is Black Friday, which means retailers are going to war over prices.

There’s at least one battle that retailers are fighting together, though.

That battle is a new lawsuit, which finds retailers such as Target, Sears, Kmart, and RadioShack aligned together as plaintiffs.

Who are the defendants?

A large group of television manufacturers, such as Samsung, Panasonic, LG, Toshiba, and Philips, who the retailers claim engaged in price-fixing on cathode ray tubes (CRTs) from March 1995 through November 2007.

What are CRTs and why are their prices important?

A CRT is the “tube” in a tube TV, and their prices are important because they directly and significantly affect the price of TVs and monitors.

At least, they did before new technologies (namely, plasma and LCD displays) rendered CRT technology generally obsolete.

But during the time period in question, especially at the earlier end, CRT TVs and computer monitors were essentially the only game in town.

And the 32-page-long complaint isn’t short on the details on how this price-fixing affected consumer prices on TVs.

Hot Doc: Target Corp. v. Chunghwa Picture Tubes Ltd.

Source: Thomson Reuters News & Insight – National Litigation

One example in the complaint tells of several industry analysts commenting in the mid- to late-90s that the average price of a 14” consumer TV should be around $50.

Instead, as those of us who bought a 14” TV around that time remember, it was about twice that much (which the complaint points out as well).

So if CRT TVs are obsolete technology, why are these retailers bothering to sue now?

Aside from the fact that the 12-year-long scheme probably cost the retailers millions of dollars (that they can now claim as damages in the suit), many of the defendants don’t seem to limit their price-fixing activities to the CRT market.

In the past 18 months, actually, there has been a flurry of criminal investigations worldwide for price-fixing on products such as optical disk drives, DRAM chips, and LCD panels.

Just as the criminal investigation on the CRT price-fixing prompted this lawsuit, other criminal price-fixing investigations may very well lead to similar ones.

In pursuing such suits, retailers no doubt hope to not only recoup lost potential earnings, but also warn manufacturers against engaging in such activities in the future.

The latter rationale may very well have played a large part in the motivation for this lawsuit, too.

With the recent crackdown on tech price-fixing by criminal investigatory bodies around the world, however, that warning may be pointless, and this and similar lawsuits may be motivated purely by a desire for a damages award.

Either way, the criminal investigations, many of which have ended in guilty pleas, may all but doom the defendants’ chances of beating this lawsuit, and consequently, they would be far better off settling this one instead of wasting money on legal fees.

Will this breakup of price-fixing regimes translate to lower consumer prices?

Theoretically, yes, assuming that other players in the products’ stream of commerce (i.e. retailers) aren’t themselves engaged in any similar such practices.

Considering the current aggressive level of competitiveness in the retail industry, that seems unlikely to be the case.

Hopefully, then, these price-fixing breakups, which this lawsuit is a part of, will lead to lower consumer electronic prices that, apparently, consumers deserved 16 years ago.