Site icon 2 Minute Finance

Smartphones Are More Expensive Because of…Collusion?

You-May-Have-Overpaid-Smartph

Man, this is a total bummer. A lawsuit filed last Friday alleged that the cost of new smartphones kept increasing the past few years because Samsung, Hynix, and Micro colluded to drive up prices on their memory chips.

Collusion, as alleged in this case, would have been an agreement between the parties to limit the supply of their DRAM chips in order to increase prices. Since these three companies represented a large portion of the DRAM chip manufacturing market, that meant when they together decided to choke off supply and raised their prices, the prices of all the devices that their chips go into had increased as well to make up for the cost increase. Specifically, brand new smartphones.

The practice is completely illegal under US Antitrust laws because it gives these companies an unfair market advantage, suppresses competitive opportunities, and essentially defrauds the consumer.

While we don’t know how much their alleged collusion cost us as consumers directly, we do know some rough numbers on overall impact.

“…the firm claims that the price of a 4GB DRAM stick jumped by 130 percent in less than two years. In 2017, the only full year covered by the lawsuit, DRAM revenue expanded by 76 percent, while sales of smartphones and PCs remained nearly constant…anyone who purchased a smartphone or computer between July 1, 2016 and Feb. 1, 2018 may have overpaid and could be due restitution.”

Lawsuit blames rising smartphone prices on Samsung price-fixing crucial components“, BGR, April 30, 2018.

Bottom line: If you bought a cell phone in the last few years, you’re likely in line to receive some sort of compensation if the lawyers win their case. Watch your mailbox for a densely worded class-action lawsuit claim form.

(Featured photo credit: “Samsung Galaxy S5” by Kārlis Dambrāns is licensed under CC BY 2.0.)

Exit mobile version