On February 17, 2010, Cohen Milstein Sellers & Toll PLLC filed a class action complaint on behalf of Patrick Keyes and a proposed class of direct purchasers of optical disk drives in the U.S. District Court for the Northern District of California.
In Keyes v. Sony Corporation, the Plaintiffs allege that the major manufacturers of optical disc drives, including Hitachi-LG Data Storage Inc., Hitachi, Ltd. ("Hitachi"), LG Corporation, Samsung Electronics Co., Ltd., Sony Corporation ("Sony"), Sony Optiarc Inc., Sony Optiarc America Inc., Toshiba Corporation ("Toshiba") and Toshiba Samsung Storage Technology Corporation ("TSST"), conspired to fix the prices of those drives at supra-competitive prices from 2005 to the present. These defendants dominate the highly concentrated optical disk drive market. They have formed numerous joint ventures together and belong to the same trade associations, business and standards-setting organizations. They benefit from high barriers to entry in the industry.
Optical disk drives play CDs, DVDs or Blu-Ray discs and are used in computers, video game consoles and other types of electronic equipment. The domestic market for these drives has grown tremendously in the last decade. Between 2001 and 2005, it increased 23% from $7.5 billion in 2001 to approximately $9 billion in 2005. The IDC estimates to total worldwide revenue from Optical Disc Drive Shipments exceeded $45 billion between 2004 and 2008. Demand has manifested itself in hundreds of millions of sales—in 2005 over 303 million Optical Disc Drives were sold. Likewise, Digitimes reports that total worldwide shipments have increased approximately 10% annually since 2002. According to Digitimes, 200 million Optical Disc Drives were shipped worldwide in 2002 and that number grew to more than 300 million by 2007. In 2009, Digitimes predicted that the demand for Optical Disc Drives would continue to rise.
In October 2009, the United States Department of Justice (“DOJ”) acknowledged that it had commenced an investigation into anticompetitive conduct in the Optical Disc Drive industry and that, in connection with that investigation, it had served subpoenas on Defendants Sony Optiarc America, Hitachi-LG and TSST. Since then, Defendants Sony, Hitachi and Toshiba have acknowledged receipt of such subpoenas. On October 27, 2009, a DOJ spokeswoman, Gina Talamona, confirmed that: “[t]he antitrust division is investigating the possibility of anticompetitive practices in the Optical Disc Drive industry.”