Bad raps can kill reputation, but in this recent piece of news, Dell Inc. is going against some pretty big names who have established a long history of quality products and services in the computer industry. Therefore, the question is whether Dell’s charges are enough to make a dent in their reputations. As they say, time will tell. Dell’s main target in its allegations is Japan-based Hitachi, a company known for the manufacture of optical drives. According to Dell, Hitachi conspired with other big-name optical disc drive manufacturers to fix prices for disc drives to be sold to companies in the United States.
Hitachi’s alleged price fixing conspiracy has got Dell filing a lawsuit in a federal court in Austin, Texas. Dell is claiming that conspiratorial pricing that went on between Hitachi and other major disc drive manufacturers goes against the U.S. antitrust law and violates the contract between Dell and Hitachi. The lawsuit covers a span of time from 2004 until 2010, within which Dell claims that Hitachi and other global disc drive manufacturers arranged bids, gave out confidential information on pricing, sales and products, and set prices for products that will eventually enter the U.S. market.
Dell is suing for triple damages for the inflated prices that it was offered for the purchase of optical disc drives it would use for its line of computers and laptops. It argues that had the market been fair and “competitive,” it would have ended up having to pay less for the drives for that allotted period of time. The company maintains that it has the right to sue for damages covering the six years that spanned the price-rigging of Hitachi and its conspirators. To further drive the point that Hitachi is indeed guilty, Dell stated that a close observation of the period from 2004 to 2010 would show that Hitachi and company controlled above 90 percent of the market. To keep Dell’s racket from escalating, Hitachi, alongside with LG in a joint venture that has formed Hitachi-LG Data Storage Inc., attempted to bury the matter in the past as quickly as possible by pleading guilty of the charges brought by Dell and settling out the court battle with a $21.1 million fine. The fine recognizes Hitachi-LG’s bid-rigging and price-fixing practices.
For the curious, Hitachi’s conspirators include LG, Sony, Toshiba, Samsung Electronics, Philips, Lite-On, and BenQ. Hitachi’s co-conspirators have either refused to comment on the lawsuit or delayed their responses.