A Houston federal jury has hit a Taiwanese CD-ROM manufacturer with a $176 million verdict after determining the company and its U.S. affiliate knowingly and intentionally violated U.S. antitrust laws.
The unanimous verdict, which the jury reached Tuesday after a weeklong trial and less than five hours of deliberation, favors IT giant HP Inc., which alleged Quanta Storage and Quanta Storage America participated in a massive conspiracy to fix and maintain artificially inflated prices for optical disk drives.
Optical disk drives, or ODDs, are a key component for reading and writing data on CDs, DVDs, and Blu-ray Discs used in computers, video game consoles and other devices.
Because the jury found that Quanta knowingly and intentionally violated U.S. antitrust laws, HP’s lawyers will ask U.S. District Judge David Hittner of the Southern District of Texas to triple the verdict amount. Federal law allows courts to do so when intent is proven in antitrust trials.
“HP believes its suppliers must play by the rules including the antitrust laws of the U.S., when doing business here, a belief HP showed by its willingness to take this case to trial,” said Houston lawyer Alex Roberts of Beck Redden, one of HP’s attorneys at trial. “The verdict stresses the seriousness with which HP takes issues related to price fixing and suppliers’ attempts to manipulate prices. The verdict is a directive to all foreign suppliers to avoid price manipulating behavior.”
The Beck Redden trial team was led by partner Alistair Dawson and also included associate Garrett Brawley.
“The case demonstrates the ability and willingness of U.S.-based companies to fight back against corruption by foreign suppliers,” Roberts said.
Quantum’s lead attorneys, Los Angeles-based David Carman and Zachary Levine, did not immediately return a message seeking comment.
HP sued Quanta and several tech giants in 2013, alleging the group carried out their price fixing conspiracy, which lasted between 2004 and 2010, by rigging bids for ODDs during procurement events that HP conducted. As a result, HP alleged, it paid higher prices for ODDs than it would have paid in a competitive market.
HP also alleged the group carried out the price fixing scheme by sharing their confidential information among each other — including pricing, sales, production and bidding strategies — in order to set agreements and coordinate prices.
The other companies in the defendant group, which included Toshiba, Samsung, Sony, NEC Corp., Panasonic and TEAC Corp, were dropped from the lawsuit before trial began.
In court documents, HP said the defendant group controlled more than 90 percent of the ODD market.
The Justice Department began investigating price fixing in the ODD market a decade ago. According to HP’s lawsuit, Hitachi-LG Data Storage, Inc. entered a plea agreement with the DOJ in which it admitted it had engaged in felonious price-fixing conduct with the defendants in HP’s case in violation of the Sherman Act.
Before Tuesday’s jury verdict, according to other media reports, the Fair Trade Commission and the DOJ had found that Quanta Storage did not breach any rules and did not hamper market competition.
Although HP’s global headquarters are in Palo Alto, Calif., the bulk of its supply chain procurement operations are anchored in Houston.