United States Department of Justice goes after optical drive companies
Japanese technology giants Hitachi Ltd. and Toshiba Corp. said Tuesday that, like Sony Corp., their optical disk drive operations in the U.S. received subpoenas from the U.S. Department of Justice in a widening investigation into potential antitrust violations.
According to a person familiar with the inquiry, the Justice Department started a criminal antitrust probe into the market for optical disk drives in recent months, investigating disk-drive makers for possible price-fixing, bid-rigging and allocation of markets. Optical disk drives are used in everyday consumer products like DVD and Blu-ray disk players, as well as in personal computers.
The investigation comes on the heels of a successful Justice Department investigation into price-fixing in the market for liquid crystal displays used in computers, cell phones and televisions.
That probe snared five companies that paid more than $600 million in combined criminal fines in 2008 and 2009.
That’s $600m+ that customers and investors will get to eat in this indirect taxation. The companies here, even if they were colluding to keep prices up, did nothing wrong. The drives are theirs. They can charge whatever the hell they like for them. If you don’t think it’s a good trade… don’t make it. The only way they are able to keep such a cartel going for an extended period of time is due to government intervention in the first place in the form of intellectual property monopoly privileges and all the perks provided to corporations which limit competition.
And how is a cartel much different from a worker’s union? They join together to increase bargaining power with employers in order to raise the collective compensation for their product… labor. This alleged cartel is made up of multiple businesses joined together to increase their bargaining power with the consumer in order to raise the collective compensation for their product… a optical drive.
In a freer market just about any cartel of size would quickly fall apart due to the overwhelming incentives offered to those who would lower prices. In all the well known supposed anti-trust situations throughout US history the market broke the near monopolies and cartels long before the government got involved. In fact often it was the trusts that supported the regulations ultimately because it reduced competition and created government backed cartels. Railroads, oil, electricity, telephone, banking… all made cartels by the government.
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October 27th, 2009 at 10:29 am
One way it’s different is that cartels depend much more heavily on government intervention; see Gabriel Kolko’s “The Triumph of Conservatism” for explication. No voluntary cartels of corporations were successful; in contradistinction, the history of the labor movement is full of large-scale, coordinated actions among workers without government support. In fact, intervention by the state into labor and corporate business singlehandedly weakened labor and strengthened corporations.
October 27th, 2009 at 10:47 am
I’d argue that the large scale voluntary unions of past were primarily successful due to the fact that those businesses they were unionizing against were often artificially large because of government intervention on the businesses behalf. Therefore solidifying support against them. It was more or less a necessity. However, in a freer market the same competition that causes voluntary cartels to be short lived or relatively small will also limit the size and duration of voluntary labor unions.
My point was merely to point out that both actions are taken to strengthen a group’s bargaining position and in a free market there is nothing wrong with doing so. Yet government busy bodies and many layman will praise labor unions and trash business cartels. They are fundamentally the same thing. As a consumer of either/both I dislike both because they can create increases in prices.
November 10th, 2009 at 10:52 am
Seriously?
November 10th, 2009 at 11:22 am
@Mike Why would that be any more wrong then union members colluding to force up wages? The businesses own those drives and components. Why can’t they make agreements with others on how to go about selling them? You may not like it but it’s their property… it’s their business. Don’t give them your money… advocate others don’t either and they’ll have to lower prices.