Buyers should not tolerate price fixing by suppliers –
Written by James Carbone in Strategic Purchasing
Passive components buyers may want to rethink their supplier choices for capacitors in light of the Department of Justice (DOJ) investigation into price fixing, bid rigging, and other un-competitive practices in the capacitor industry.
Two capacitor manufacturers so far have agreed to plead guilty to a felony charge that they conspired to fix prices of capacitors. The DOJ announced in April that Hitachi Chemical Co. Ltd. would plead guilty to conspiring with other capacitor manufacturers to fix prices for electrolytic capacitors sold to customers in the United States and other countries between 2002 and 2010.
In January, NEC TOKIN Corp. pleaded guilty to participating in the same conspiracy from 2002 to 2013 and was fined $13.8 million. In addition, in March a grand jury indicted a former global sales manager for one of the capacitor manufacturers for his participation in the conspiracy.
The DOJ will not say if more capacitor manufacturers will be charged with price fixing. However, the investigation continues and the department wants to hear from anyone who has knowledge of price fixing or suspects that capacitor manufacturers have been colluding to fix capacitor tags.
Price fixing is not new in the electronics industry. Semiconductor buyers may remember that a number of brand-name DRAM manufacturers were charged with fixing the price of DRAMs about 10 years ago. Memory IC companies were fined and some executives were jailed for their involvement in the price-fixing conspiracy.
Several liquid crystal display (LCD) manufacturers also pleaded guilty or were convicted of charges that they, too, colluded to set prices for LCDs from 1999 to 2006. The companies paid criminal fines of $1.39 billion and about a dozen executives were convicted and imprisoned.
Buyers should not be surprised if the current DOJ investigation involving capacitor manufacturers leads to probes of manufacturers of other types of passive components. Following its DRAM investigation, the DOJ also investigated makers of the SDRAM and NAND flash memory for possible price collusion. However, the probe ended without any companies being charged.
In the ongoing probe of capacitor manufacturers, buyers should meet with their companies’ legal departments to determine if their companies have been victims of price fixing and what legal recourse should be pursued, such as joining a class-action suit.
But, more importantly, passive component buyers need to review their rosters of capacitor suppliers and decide whether they need to make changes, which may be difficult if it turns out other major capacitor manufacturers are involved in the price-fixing scheme.
Click here to read the full article
List of Companies that Manufacture Capacitors