LG, Sharp, and Chunghwa nailed for LCD price-fixing

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Such shameful conduct! It looks like from 2001 to 2006, LG, Sharp, and Chinese OEM Chunghwa were conspiring to keep the prices of LCD screens high and agreed on pricing floors to guarantee cash flow for everybody involved.

Over five years of first- and second-party sales (Dell and Apple were among the buyers), they must have run up quite a tab, although no one’s done the math yet. The companies have, however, been served with fines totalling $585 million between them ($400m from LG alone) — which amount, large as it appears, they can most certainly afford. Their reputation and business relationships may have been damaged severely by the legal proceedings, and perhaps in the coming OLED revolution, big retailers of LCDs may snub the companies, even though it’s likely every other supplier has similar predatory policies.

It seems, also, that the fine may be subject to change if it is discovered that the companies’ gains or the other companies’ losses exceed the original fine. Why, that would be terrible!

The full press release:

LG, Sharp, Chunghwa Agree to Plead Guilty, Pay Total of $585 Million in Fines for Participating in LCD Price-Fixing Conspiracies

LG to Pay $400 Million Fine, Second Highest Antitrust Division Criminal
Fine Ever Imposed

WASHINGTON, Nov. 12 /PRNewswire-USNewswire/ — Three leading
electronics manufacturers – LG Display Co. Ltd., Sharp Corp. and Chunghwa
Picture Tubes Ltd. – have agreed to plead guilty and pay a total of $585
million in criminal fines for their roles in conspiracies to fix prices in
the sale of liquid crystal display (LCD) panels, the Department of Justice
announced. Of the $585 million in fines, LG will pay $400 million, the
second highest criminal fine ever imposed by the Department’s Antitrust
Division.

Today’s charges were filed in U.S. District Court in San Francisco. The
companies have agreed to cooperate with the Department’s ongoing antitrust
investigation.

Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels are used
in computer monitors and notebooks, televisions, mobile phones, and other
electronic devices. In 2006, the worldwide market for TFT-LCD panels was
approximately $70 billion. Companies directly affected by the LCD
price-fixing conspiracies are some of the largest computer, television and
cellular telephone manufacturers in the world, including Apple, Dell and
Motorola.

“Today’s charges and criminal fines emphasize the commitment of the
Department of Justice to crack down on international cartels,” said
Attorney General Michael B. Mukasey.

LG Display Co. Ltd, a South Korean corporation, and its wholly-owned
subsidiary, LG Display America Inc., a California company (LG), agreed to
plead guilty to participating in a conspiracy from September 2001 to June
2006 to fix the price of TFT-LCD panels sold worldwide. During the
conspiracy, LG Display Co. Ltd. was known as LG.Philips LCD Co. Ltd. (a
joint venture between LG Electronics and Philips Electronics) and LG
Display America Inc. was known as LG.Philips LCD America Inc.

Sharp Corp., a Japanese consumer electronics manufacturer, has agreed
to pay a $120 million fine for its participation in separate conspiracies
to fix the price of TFT-LCD panels sold to Dell Inc. from April 2001 to
December 2006 for use in computer monitors and laptops; to Motorola Inc.
from fall 2005 to the middle of 2006 for use in Razr mobile phones; and to
Apple Computer Inc. from September 2005 to December 2006 for use in iPod
portable music players.

Chunghwa, a Taiwanese TFT-LCD panel manufacturer, has agreed to pay a
$65 million fine for its participation with LG and other unnamed
co-conspirators in a conspiracy from September 2001 to December 2006 to fix
the price of TFT-LCD panels sold worldwide.

“These price-fixing conspiracies affected millions of American
consumers who use computers, cell phones and numerous other household
electronics every day,” said Thomas O. Barnett, Assistant Attorney General
in charge of the Department’s Antitrust Division. “These convictions, and
the significant fines they carry, should send a clear message that the
Antitrust Division will vigorously investigate and prosecute illegal
cartels, regardless of where they are located.”

LG and Chunghwa are charged with carrying out the conspiracy by:

— Participating in meetings, conversations, and communications in
Taiwan, Korea and the United States to discuss the prices of TFT-LCD
panels;

— Agreeing during those meetings, conversations and communications to
charge prices of TFT-LCD panels at certain pre-determined;

— Issuing price quotations in accordance with the agreements reached;
and

— Exchanging information on sales of TFT-LCD panels, for the purpose
of monitoring and enforcing adherence to the agreed-upon prices.

Sharp is charged with participating in three separate conspiracies, to
fix the price of TFT-LCD panels sold to Dell, Motorola and Apple by:

— Participating in bilateral meetings, conversations, and
communications in Japan and the United States to discuss the prices of
TFT-LCD panels to be sold to Dell, Apple and Motorola;

— Agreeing during those bilateral meetings, conversations and
communications to charge prices of TFT-LCD panels at certain pre-determined
levels to Dell, Apple and Motorola;

— Issuing price quotations in accordance with the agreements reached;
and

— Exchanging information on sales of TFT-LCD panels to be sold to
Dell, Apple and Motorola, for the purpose of monitoring and enforcing
adherence to the agreed-upon prices.

LG, Sharp and Chunghwa are each charged with price fixing in violation
of the Sherman Act. Each violation carries a maximum fine of $100 million
for corporations. The maximum fine may be increased to twice the gain
derived from the crime or twice the loss suffered by the victims of the
crime, if either of those amounts is greater than the statutory maximum
fine.

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