Hitachi-LG venture admits price fixing

Hitachi-LG Data Storage has admitted bid-rigging and price fixing over optical disk drives used in Dell, HP and Microsoft computers.

The company – a joint venture between Hitachi and LG Electronics – pled guilty to 14 counts of bid-rigging and one of fraud, and agreed to pay a $21.1 million criminal fine.

“The bid-rigging and price-fixing conspiracies involving optical disk drives undermined competition and innovation in the high tech industry,” says Sharis A Pozen, acting assistant attorney general in charge of the Department of Justice’s Antitrust Division. 

“The Antitrust Division is committed to prosecuting those who harm competition in the optical disk drive industry.”

According to court documents, Dell hosted optical disk drive procurement events at which bidders would be awarded varying amounts of optical disk drive supply, depending on where their pricing ranked. 

And, says the DoJ, from summer 2004 to fall 2009, Hitachi and others conspired over bidding strategies and prices. It did the same when dealing with Microsoft between June 2007 and March 2008, and when bidding to HP between November 2005 and March 2009.

The company’s also charged with one count of wire fraud for a scheme to subvert HP’s competitive bidding process for an April 2009 procurement event. 

According to the DoJ, one of its employees sent emails to co-conspirators in San Jose, California and the Republic of Korea containing first round bidding results and non-public, competitively sensitive information.

Under the plea agreement, which still needs court approval, Hitachi-LG Data Storage will help the department continue its investigation into  the optical disk drive industry.