VANCOUVER—A number of class-action lawsuits filed in several provinces claim electronics’ giants including Samsung, Panasonic, Hitachi, TDK and Sanyo have acted as a cartel to “wring” $480 million in illegal profits from Canadian consumers for almost a decade.
The lawsuits filed recently in Ontario, British Columbia, Saskatchewan and Quebec name 40 companies that allegedly colluded to fix prices for the electronic capacitors that are a basic building block for everything from cellphones to refrigerators.
“The defendants agreed to operate as a cartel to foreclose competition and protect each of its members from price competition,” said a statement of claim filed in Ontario Superior Court.
They did this “to wring as much profitability out” as possible before their products became obsolete, said the lawsuit.
“Everybody in Canada likely over the age of about 9 is an indirect victim of what we believe is price fixing,” said Tony Merchant, the lawyer involved. “Every piece of equipment you have tends to have a capacitor in it.”
Capacitors store electrical charge. They can be made of aluminum, film, tantalum or, increasingly, ceramics. The lawsuit relates only to tantalum, aluminum and film capacitors.
Costs vary between 75 cents and $1.50 per unit but trillions are sold every year, and the global market is worth about $18 billion.
The companies came to an agreement no later than Jan. 1, 2005, according to the statement of claim.
After that, they manipulated the market in two ways—by fixing a price for their products and metering the supply available on the market, “keeping demand high and, at times, unmet,” the claim said.
The allegations in the statement of claim have not been proven in court.
Several companies contacted by The Canadian Press did not respond to requests for comment.
The U.S. Justice Department confirmed in April that it is investigating price-fixing in the capacitor industry.
In July, China’s National Development and Reform Commission confirmed that one company had self-reported cartel activity and there are reports that the Chinese agency conducted raids on the China-based factories of several of the named defendants.
Japan, South Korea and the European Commission are also investigating but, to Merchant’s knowledge, Canada is not.
“Regretfully, the Canadian authorities are not as proactive and aggressive,” he said.
The inflated costs are ultimately passed on to consumers.
“The real buyers might not care because if they bought for a nickel extra, they passed it on and probably got seven cents so they just added to their components and everybody else was doing the same thing,” Merchant said.
“Huge corporations can work together, wink, wink, and prices will be higher.”
Until recently consumers had no means of fighting back because they were not the direct buyers of the fixed-price goods. Manufacturers were.
But in a lawsuit making similar accusations against Microsoft, the country’s highest court ruled last year that a claim from consumers could go ahead.
In February, Merchant will be in court with similar action against DeBeers over the pricing of diamonds and precious stones.
The representative plaintiff in the capacitor case is Prasan Parikh, a resident of Kingston, Ont., who purchased many different electronic devices over the past decade, but potentially every Canadian has been affected, Merchant said.
The lawsuit seeks a declaration from the court that the defendants conspired to fix the price of capacitors and compensation for $480 million in “unjust enrichment” since January 2005.
It also seeks $10 million in punitive damages.
A class-action lawsuit must be certified by a judge before it can proceed. That process could take up to 18 months.