Optical disc drives, commonly known as CD, DVD, and Blu-ray drives, have been the subject of several high-profile class action lawsuits over the past two decades. These lawsuits have alleged that major manufacturers of optical disc drives conspired to fix prices and restrict competition in violation of antitrust laws. Several major settlements have resulted from these lawsuits, providing compensation to consumers and businesses that purchased optical disc drives.
The CD-R/CD-RW Lawsuit Settlement
In the early 2000s, class action lawsuits were filed against several major manufacturers of CD-R and CD-RW drives, including Hitachi-LG, NEC, Panasonic, Phillips, Samsung, Sony, TEAC, and others. The lawsuits alleged that these companies secretly agreed to inflate the prices of CD-R and CD-RW drives sold worldwide between 1995 and 2003. This resulted in consumers, businesses, and other purchasers paying more for CD burners during this time period.
In 2005, the manufacturers agreed to settle the case, establishing a $124 million settlement fund. Consumers and businesses that purchased a new CD-R or CD-RW drive for their own use between 1995 and 2003 were eligible to receive between $20 and $40 per drive purchased. Those who purchased drives for commercial resale were eligible for a 15% refund on qualifying purchases.
CD-R/CD-RW Settlement Terms
- Settlement fund: $124 million
- Settlement class period: January 1, 1995 to December 31, 2003
- Eligible products: New CD-R and CD-RW drives
- Individual payout: $20 to $40 per drive purchased
- Commercial reseller payout: 15% refund on qualifying purchases
The settlement provided important relief to millions of consumers and businesses impacted by the alleged price-fixing conspiracy. The case marked one of the first major successes in antitrust litigation against optical disc drive manufacturers.
The DVD-ROM Lawsuit Settlement
Following the CD-R settlement, class action lawsuits were filed against many of the same manufacturers alleging similar price-fixing of DVD-ROM drives between 1998 and 2001. DVD-ROMs were the dominant optical disc format in the late 1990s and early 2000s for pre-recorded movies, software, and video games.
According to the lawsuits, manufacturers including Hitachi-LG, Matsushita-Panasonic, NEC, Pioneer, Phillips, Sony, and others conspired to artificially inflate the prices of DVD-ROM drives during this three-year period. This resulted in consumers paying higher prices for both stand-alone DVD-ROM drives as well as PCs and game consoles that contained built-in drives.
In 2011, the DVD-ROM case reached a $54 million settlement that was approved by the court. Consumers who purchased stand-alone DVD players or game consoles containing DVD-ROM drives between 1998 and 2001 received between $20 and $40 per drive. People who bought computers with DVD-ROM drives during this time were eligible for refunds between $5 and $12 per drive.
DVD-ROM Settlement Terms
- Settlement fund: $54 million
- Settlement class period: January 1, 1998 to December 31, 2001
- Eligible products: DVD-ROM drives, stand-alone and PC or console internal
- Individual payout:
- $20 to $40 per stand-alone player or game console drive
- $5 to $12 per PC internal drive
Like the previous CD-R settlement, this case helped provide important compensation to millions of DVD consumers impacted by anti-competitive practices in the optical media market.
The ODD Lawsuit Settlement
The largest settlement to date involving optical disc drives targeted price-fixing in the more modern Blu-ray, DVD-RW, and CD-RW markets. Several class action lawsuits filed in the late 2000s alleged that Hitachi, LG, Panasonic, Philips, Pioneer, Samsung, Sony, TEAC, and Toshiba conspired to fix prices of ODD (optical disc drives) products from 2004 to 2010.
The lawsuits claimed these companies colluded to artificially set floor prices for Blu-ray players and drives, DVD burners, DVD-ROM and CD drives, stifling competition and inflating costs paid by consumers. The alleged conspiracy exploited the companies’ dominance of the optical media market during the critical transition period from DVD to Blu-ray formats.
In 2014, the defendants agreed to settle the case for $124 million to resolve antitrust claims in the U.S. and Canada. The settlement provided cash refunds to consumers who purchased computers, game consoles, or stand-alone optical disc drives between 2004 and 2010. Claimants could receive between $10 and $35 per drive, depending on the type of product purchased.
ODD Settlement Terms
- Settlement fund: $124 million
- Settlement class period: January 1, 2004 to January 1, 2010
- Eligible products: CD, DVD, Blu-ray drives, stand-alone or internal
- Individual payout:
- $10 for CD drives
- $12 to $25 for DVD drives
- $25 to $35 for Blu-ray drives
The ODD settlement provided the largest monetary relief to consumers of any optical disc drive price-fixing case. The substantial settlement reflected the extensive harm caused to consumers in the DVD and Blu-ray markets during a significant transition period for optical media technology.
Impact of the Settlements
The series of settlements over two decades provided important relief and compensation to millions of consumers and businesses harmed by price-fixing conspiracies in the optical disc drive market. Cumulatively, the settlements transferred nearly $350 million from manufacturers to purchasers impacted by inflated prices.
Beyond the monetary compensation, the settlements also sent a strong message to deter anti-competitive collusion by manufacturers that control essential technology markets. When companies secretly conspire to manipulate prices and stifle competition, class action litigation provides an important remedy on behalf of consumers. The optical disc drive settlements affirm that large corporate defendants will be held accountable.
While precautions have been put in place to prevent future price-fixing, cases like these settlements demonstrate that consumer class actions continue to play a vital role in policing markets, compensating victims, and protecting the public interest.
Total Settlement Funds
| Settlement | Settlement Fund | Settlement Class Period |
|---|---|---|
| CD-R/CD-RW | $124 million | 1995-2003 |
| DVD-ROM | $54 million | 1998-2001 |
| ODD | $124 million | 2004-2010 |
| Total | $302 million |
Conclusion
The optical disc drive settlements highlight the substantial impact that can result from class action antitrust litigation. Over a fifteen year period, the cumulative settlements transferred hundreds of millions of dollars back to consumers harmed by price-fixing conspiracies. The cases also had an important deterrent effect on the market.
Consumer class actions serve a vital function in policing corporate misbehavior and ensuring justice when economic harm occurs. The outcomes provide confirmation that even giant conglomerate companies will be held accountable and required to compensate victims. As technology continues to rapidly advance with new formats like Blu-ray succeeding DVD, it will remain imperative for consumers to have recourse through class action litigation.