- October 17, 2019
Testimony began Tuesday afternoon in a trial over Hewlett-Packard Co.'s claims that Quanta Storage Inc. and Quanta Storage America Inc. conspired with other companies to keep prices high, making HP the victim of an industrywide conspiracy to artificially inflate the cost of optical disk drives. HP reached a series of settlements in 2017 with other suppliers, including Samsung and Toshiba, but has taken Quanta to trial.
HP's director of procurement strategy and operations, Russell Hudson, testified Wednesday about emails sent between Quanta employees and employees of other optical disk drive supply companies — including one sent to Philips & Lite-On Digital Solutions Corp. with the subject line "price fixing" — that discuss their alleged strategies for keeping prices high and thwarting what should have been a legitimate online bidding process for the contract.
Hudson said it was also a surprise when some of those former suppliers were caught up in a U.S. Department of Justice investigation into the price-fixing scheme, which ended in some entering plea agreements and copping to the charges. He testified that at the time, he and other HP leaders had "assumed everyone was playing by the rules, and the outcome" of the online bidding process for contracts "was legitimate."
HP has alleged Quanta participated in the scheme to set the price of optical disk drives, a key component for reading and writing data on CDs, DVDs and Blu-ray Discs that are used in computers, video game consoles and other devices. The scheme was allegedly carried out by rigging bids for optical disk drives in procurement events that HP conducted and also through the exchange of confidential information — including pricing, sales, production and bidding strategies — between the companies in order to set agreements and coordinate prices.
HP has said in court filings it brought the action "to recover for injury to its business and property arising from billions of dollars of purchases of optical disk drives at artificially inflated prices over several years," from at least as early as April 2003 through at least January 2010.
Excerpted from Law360. To read the full article, click here.