Nokia LCD Suit Could Lower Handset Costs
Nokia has filed a lawsuit against eight LCD manufacturers accused of collusion and price-fixing. Nokia is hoping to win damages to recover money it overpaid to the various companies for LCD displays for its mobile handsets.
The lawsuit includes Seiko Epson, Hitachi, LG Display, Philips, Samsung, Sharp, Toshiba, and Chunghwa Picture Tubes as defendants. Nokia has not specified the amount of the damages it is seeking, but the alleged collusion covers a ten-year period spanning 1996 to 2006, during which time Nokia claims to have paid inflated prices for the LCD displays.
Nokia said in a statement "Nokia has filed suits to recover overcharges it paid as a result of cartel activities which are currently under government investigation." The statement further explains "When certain companies and management employees have already admitted participating in, or are indicted for, global price-fixing cartels involving components Nokia has purchased, it is reasonable for Nokia to seek redress."
Fair enough. LG, Sharp, and Chunghwa Tubes have already admitted participating in the price-fixing cartel and have been fined $585 million by the U.S. Department of Justice, and AT&T has filed a similar lawsuit seeking damages related to the collusion.
The news of the price-fixing is nothing new, though, and the alleged collusion ended three years ago, so consumers are unlikely to see any benefit from the fines or lawsuits. Ostensibly, devices--particularly smartphones--could be less expensive if the price handset makers pay for the LCD displays isn't artificially inflated.
The cost consumers pay for mobile devices is already subsidized by the wireless service providers. Even if the full price of a high-end smartphone dropped from $600 to $500, the carriers would most likely absorb the savings as additional profit rather than reflecting the savings by dropping the subsidized pricing even lower.
One potential benefit, though, would be that users may be more likely to pay the full price if the no-contract, non-subsidized cost was lower. Perhaps rather than waiting every two years for contracts to expire and upgrading with a new subsidized device, users would be able to simply purchase new devices at will as compelling new technology comes out.
Nokia's legal team has been busy lately. Nokia also recently filed a suit against Apple, alleging that the iPhone infringes on a number of patents held by Nokia. Apple pales in comparison to Nokia in terms of handset sales volume, yet generates significantly more profit per device. Nokia wants a piece of that revenue pie.
Nokia has had a rough time lately with stagnant sales, declining revenue, and a stale portfolio of handsets. Hopefully Nokia isn't hoping these lawsuits will help it rebound, though. It should learn a lesson from watching AT&T's recent legal circus and realize that you can't litigate your way to success.