Dell Accuses Hitachi in Suit of Price-Fixing Conspiracy

Story Appeared on Bloomberg News

Dell Inc. (DELL), the world’s third-largest personal computer maker, accused at least six makers of optical disk drives including Hitachi Ltd. (6501) of conspiring to fix prices of their products from 2004 to 2010.

Disk-drive makers rigged bids, shared confidential information about pricing, sales and production and agreed to set prices for their products sold in the U.S., Dell said in a complaint filed in federal court in Austin, Texas.

Dell paid inflated prices for optical disk drives as a result and seeks triple damages for the overcharges under antitrust laws, according to the complaint. Dell accuses the companies in the complaint of breach of contract and violations of U.S. antitrust law.

Optical drives go into Blu-ray and DVD players, used with computers and televisions. Hitachi-LG Data Storage Inc. agreed to plead guilty and pay a $21.1 million fine for bid-rigging and price-fixing optical disk drives, the Justice Department said in 2011.

Hitachi-LG conspired with other companies from June 2004 through September 2009 to rig bids and fix prices for optical drives to be sold to Dell, Hewlett-Packard Co. (HPQ) and Microsoft Corp. (MSFT), according to the Justice Department. The U.S. began investigating optical disk drive makers in 2009, and the Hitachi-LG charges were the first in the probe. Hitachi-LG is a joint venture of Tokyo-based Hitachi Ltd. and Seoul-based LG Electronics Inc. (066570)
Guilty Pleas

Dell said in its complaint that four Hitachi-LG executives, including two who were in charge of the Dell account, pleaded guilty to participating in the optical disk drive price-fixing conspiracy.

Other defendants in Dell’s lawsuit include Amsterdam-based Koninklijke Philips Electronics NV (PHIA), Taipei-based BenQ Corp., Suwon, South Korea-based Samsung Electronics (005930) Co., Tokyo-based Sony Corp. (6758) and Toshiba Corp. (6502), also based in Tokyo.

Billionaire Carl Icahn and his partner Southeastern Asset Management Inc. have offered $12 a share in cash or additional Dell stock to investors to take over the company, based in Round Rock, Texas.

Icahn’s deal would maintain Dell as a publicly traded company. The payout would dilute existing Dell shares, which Icahn said would have a value of at least $1.65 apiece. That compares with $13.65 a share in cash offered by Dell founder and Chief Executive Officer Michael Dell and Silver Lake Management LLC.

“We have not yet received any information about the case,” Qisda Corp., the Taiwanese owner of BenQ, said in an e-mailed response to Bloomberg News today. “BenQ/Qisda did not discuss and agree on prices with other optical drive makers.”

Atsushi Ido, a spokesman for Toshiba, declined to comment on the complaint. Sari Kamiya, a Sony spokeswoman, also declined to comment, saying the company hasn’t seen the complaint.

Representatives of Hitachi-LG, Samsung and Hitachi didn’t immediately respond to phone calls seeking comment on the lawsuit.

The case is Dell Inc. v. Hitachi-LG Data Storage Inc., 13-00393, U.S. District Court, Western District of Texas (Austin).