Price-fixing to Undercut Competition

As a member of the Plaintiff Executive Committee in the Polyurethane Foam Antitrust case, Seeger Weiss knows about price-fixing cases and their repercussions. Price-fixing is an agreement between participants on the same side of a market to buy or sell a product or service at a fixed price. The intent of price-fixing may be to push the price of a product as high as possible or to fix, peg, discount, or stabilize prices. See why multidistrict representation gives Seeger Weiss an edge.

The group who’s involved in price-fixing is sometimes referred to as price cartels. The paper, “Economic of Cartels” by Cento Veljanovski says price cartels are more likely in industries where there is:
  • Standard products and services that are subjected to price competition
  • Fewer manufacturers, i.e., the vitamin and food additive industry
  • Active industry groups or trade associations for participants to signal price and their other intentions easily to one another
  • Significant decreased product demand

Famous Price-Fixing Scandals


Normally, companies compete on the merits of a product or service—or based on price. Price-fixing gives one company or a small group of companies a clear advantage that results in higher prices than would occur if competition still existed. Here are some famous price-fixing scandals over the years:

1961 - During the 1950s, executives from General Electric, Westinghouse, Allis-Chalmers and other leading electrical manufacturing firms met secretly to do bid rigging for major government contracts. In this price-fixing scandal, the companies took turns being the low bidder for the government contract, but at a price that was extremely profitable to the winning firm. Seven executives were found guilty.

1995 - Three vitamin manufacturers and three vitamin distributors were fined for conspiring to fix vitamin pricing. The nature of the food additive industry makes it easy to create price cartels because the small number of companies in the industry facilitates price-fixing.

1996 – Archer Daniels Midland was prosecuted for the illegal price-fixing of lysine, a nutritional additive used in livestock feed, and citric acid. The company produced 54 percent of the nation's lysine used in the US and 95 percent globally. The higher prices of animal feed resulted in lost income for hog and poultry farmers, as well as feed companies.

2000 - A price-fixing arrangement between major auction houses, Christie's and Sotheby's, was brought to light. Executives at both houses had agreed to fix commission fees charged to sellers and to work together on other business practices that illegally hurt competition and cost customers tens of millions of dollars. Christie's gained immunity from prosecution in the US, but Sotheby's senior managers were fired after the price-fixing case progressed. Jail sentences and fines were issued in the final verdict.

2002 - A former executive of Elpida Memory, a large Japanese manufacturer of DRAM chips, pleaded guilty for his participation in a global conspiracy to fix prices. Elpida and four other DRAM manufacturers participated in the price-fixing scandal of DRAM sold to certain computer and server manufacturers. The customers affected by the price-fixing conspiracy were Dell, Compaq, HP, Apple Computer, IBM, and Gateway—plus one bid rigging lot sold to Sun Microsystems in March 2002 (per eNotes).

2007 - The Bay Citizen reported that from 1994 to 2007, CFO of Micron Technologies, a maker of computer memory chips, violated federal antitrust laws by driving up the price of memory. Other companies involved included—Samsung, Infineon, Hynix Semiconductor and Elpida Memory. Civil and criminal penalties were given as well as jail time.

"This was a big deal case," said Robert Lande, a law professor at Baltimore University who has written extensively on the case. "It was price-fixing on a crucial component that everybody uses, and they got together and conducted price-fixing in what was a blatant violation of antitrust laws.”

You can count on Seeger Weiss to stay up on the latest antitrust laws and price-fixing laws and regulations. If you need counsel, contact us.

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