Settlement in Price-Fixing Case : Panasonic to Repay $16 Million to Customers

Panasonic Co., one of the largest suppliers of home electronics to the American public, said Wednesday that it has agreed to repay $16 million to consumers who state prosecutors say were cheated in an illegal pricing scheme between it and hundreds of retailers.

The scheme, believed to be the largest case of unlawful price collusion between a manufacturer and retailers in U.S. history, forced buyers to pay 5% to 10% more than they should have for videocassette recorders, camcorders, answering machines and many other popular home electronics products sold under the Panasonic and Technics brand names, the prosecutors said.

Under the terms of the settlement, jointly negotiated by the New York and Maryland attorney generals’ offices, 665,000 people nationwide who bought Panasonic products between March 1 and August 31, 1988, will be eligible for refunds ranging from $17 to $45.

The settlement, agreed to after Panasonic discovered it was being investigated by state prosecutors, reflects the growing level of antitrust enforcement at the state level and increased scrutiny of possible price collusion in the hotly competitive consumer electronics market.

Prosecutors said Panasonic, a huge consumer-electronics maker with 40% of the VCR market, coerced thousands of retailers into agreeing to charge minimum prices by threatening to stop supplying stores that charged less, a violation of pricing laws. Although manufacturers and retailers are permitted to set prices for goods individually, agreements between the two outlining how much consumers should be charged are illegal.

Service Merchandise Co., a Nashville, Tenn., catalogue showroom retailer, blew the whistle on the alleged scheme to New York antitrust officials in June after refusing to go along with it. The company is the largest U.S. buyer of Panasonic products, accounting for $150 million of products a year.

“We weren’t trying to be heroes or anything, but they were threatening to cut us off. Setting our own prices is part of our business philosophy,” said spokesman Charles Bain.

New York Atty. Gen. Robert Abrams said the retailers who went along with the scheme in whole or in part included Circuit City, K mart, Best Products, Montgomery Ward, Dayton Hudson, Target and Venture stores.

Ann Collier, a spokeswoman at Circuit City, one of the nation’s largest electronics retailers, said the Richmond, Va.-based company “participated in the investigation,” but she refused to elaborate. Orren Knauer, K mart spokesman, declined to comment, as did Richmond-based Best Products.

Panasonic, a division of Matsushita Electric Industrial Co. of Osaka, Japan, said it did nothing wrong but agreed to the settlement to avoid costly litigation and disruption to its business.

As part of the settlement, the Panasonic division in Secaucus, N.J., said it will not engage in anti-competitive behavior and agreed to notify its dealers of their right to set their prices.