RadioShack might have begun 2015 with a bankruptcy filing, but that doesn’t mean what’s left of the company can’t end the year with a bombshell. The liquidation trustee for the former retail giant is accusing five of the world’s largest consumer electronics companies of illegally conspiring to create an intricate price-fixing scheme that artificially inflated the cost of optical disk drives, a common component present in many devices, computers and appliances.
In a federal antitrust lawsuit filed Wednesday in Northern California, attorneys for Peter Kravitz, trustee for the RSH Liquidating Trust, said Sony Corporation, Toshiba Corporation, Samsung, Philips Electronics and Light-On IT Corp. all participated in the alleged collusion. They said RadioShack lost millions of dollars as a result of the “six-year price-fixing conspiracy,” which allegedly took place from January 2004 until at least January 2010 and kept prices for the commonly used disk drives higher than they should have been.
The lawsuit also says a number of other electronics companies acted as “co-conspirators,” including Pioneer, Sharp, Quanta, TEAC, Panasonic, Hitachi and LG, which are not named as defendants in the case, but which Kravitz asserts were party to agreements that facilitated the scheme.
The 64-page legal complaint describes a complex web of covert meetings, discussions and communications in which manufacturers agreed on bidding strategies and prices of optical disk drives, including prices and bids to RadioShack. As a result, the complaint states, optical disk drive prices were fixed, stabilized and maintained, forcing RadioShack to pay artificially inflated prices.
“The mutually beneficial nature of the business relations between and among certain Defendants and their co-conspirators provided the opportunity for their parent entities to conspire and created a financial incentive to do so,” the lawsuit states.
A representative for Toshiba declined to comment on the lawsuit. Representatives for Sony, Samsung, Philips and Light-On did not respond to requests for comment.
Optical disk drives, or ODDs, transmit data to and from CDs, DVDs and Blu-ray discs. The devices are commonly included in desktop and laptop computers, but are also used in videogame consoles, DVD players, CD players and other appliances. According to the lawsuit, the defendants and their “co-conspirators” controlled more than 90 percent of the ODD market during the six-year period when the collusion allegedly took place. RadioShack, the complaint states, purchased more than a $1 billion worth of ODDs during the period.
Kravitz asserts that the companies’ behavior amounted to a restraint of trade in violation of the Sherman Act. He is seeking damages, penalties and attorneys’ fees where applicable law permits.
After years of hemorrhaging market share to big-box retailers like Best Buy, and later online retailers like Amazon.com, the 94-year-old RadioShack Corp. filed for Chapter 11 bankruptcy protection in February, facing debts of $1.4 billion. In June, the company filed a liquidation plan to pay back some creditors, the Wall Street Journal reported.
Kravitz was appointed trustee for the RSH Liquidating Trust and has been seeking to recover funds from former RadioShack vendors, according to media reports. In October, Law 360 reported that Kravitz filed more than 140 lawsuits in New York bankruptcy court, naming such venders as Amazon, Apple and Verizon.
Read the full legal complaint below: