LG, Sharp, Chunghwa own up to LCD price-fixing
Published: 13 Nov 2008 13:48 GMT
LG Display, Sharp and Chunghwa Picture Tubes have agreed to plead guilty to criminal charges for participating in a LCD price-fixing conspiracy, and to pay $585m (£392m) in fines, the US Department of Justice announced on Wednesday.
The three companies worked in concert to set prices on thin-film transistor LCDs, which are used in computer monitors, notebooks, televisions, mobile phones and various other electronic devices, according to the antitrust unit of the Department of Justice.
Apple, Dell and Motorola were among the companies affected by the price-fixing, antitrust regulators said.
"The price-fixing conspiracies affected millions of American consumers who use computers, cell phones and numerous other household electronics every day," Thomas Barnett, assistant attorney general for the Department of Justice's antitrust division, said in a statement.
The three companies, which were charged with violating the Sherman Antitrust Act, allegedly held "crystal" meetings and engaged in communications about setting prices on the TFT-LCD displays. They agreed to charge pre-determined prices for the displays, issued price quotes based on those agreements, and exchanged sales information on the display panels, in order to monitor and enforce the agreement, the Department of Justice said.
LG Display agreed to pay a $400m fine, the second-highest antitrust fine ever imposed. The company pleaded guilty to setting prices with other unnamed suppliers for the TFT-LCD panels worldwide from the beginning of September 2001 to June 2006, when the company operated under the name LG Philips LCD, a joint venture between LG Electronics and Philips Electronics. LG Display America was known as LG Philips LCD America.
Sharp agreed to pay a $120m fine and participated in the conspiracy between April 2001 and December 2006 with other unnamed suppliers. The conspiracy involved setting prices in three separate agreements for TFT-LCD panels sold to Dell, which used them in computer monitors and laptops.
During the period between autumn 2005 and the middle of 2006, similar price-fixing schemes were employed in sales to Motorola, which used the panels in its popular Razr mobile phones.
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Sharp's conspiracy also affected Apple from September 2005 to December 2006, with Apple using the displays for its popular iPod music players.
Chunghwa agreed to pay a $65m fine for its participation in the price-fixing scheme from September 2001 to December 2006.
The Department of Justice began its investigation in 2006 and noted that its investigation is still ongoing.
"Dell is aware of the announcement and will review its impact, but we have no comment at this time and probably will not in the near term, as it's an ongoing investigation," a Dell representative said on Wednesday.
Sony, a major LCD-panel producer, also declined to comment.
For the LCD industry, problems began in the late 1990s when a surge in demand for notebooks and handheld devices drove up the need for LCD glass. As a result, the TFT-LCD makers built glass plants in Korea and Taiwan during 1998 and 1999. However, when those factories began to pump out LCD glass, a glut occurred. By the autumn of 2000, prices on 15-inch flat panels plummeted to such an extent that, in some cases, manufacturers had to sell their panels at $5 to $10 below cost.
Between October 2000 and August 2001, LCD makers keenly felt the results of an oversupply of panels. But after August 2001, prices began to rise.
Apparently, it was no coincidence. Five months earlier, Sharp had begun fixing prices on TFT-LCD panels sold to PC giant Dell and, in September 2001, LG and Chunghwa also began to engage in price-fixing, as well.
Analysts, at the time, predicted LCD shortages, especially in the 15-inch panel, would continue until 2002.
IDC analyst Bob O'Donnell noted at the time that, while PCs tend to only go down in price over time, flat-panel prices have occasionally risen: "LCD is one of the few [markets] where things have actually gone up in price."
Although Sharp admitted to engaging in price-fixing with Apple's iPod screens in the 2005 to 2006 period, it remains unclear whether other vendors may have engaged in a similar behaviour with Apple back in 2002, when Apple was hit with a component shortage of 15-inch LCD panels for its newly introduced, all-in-one, flat-panel iMacs.
CNET News.com's Erica Ogg contributed to this article.
Credit: LG, Sharp, Chunghwa admit to LCD price fixing from CNET News
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