Introduction
In September 2012, the US Department of Justice (DOJ) announced that AU Optronics Corporation, a Taiwanese electronics manufacturer, had been sentenced to pay $500 million in criminal fines for its participation in price-fixing LCD panels used in various electronic devices. In this article, we will explore the background of the case, the charges and their impact on the electronics industry.
Background of the Case
AU Optronics Corporation is a Taiwan-based company that specializes in the production of flat-panel displays for televisions, computer monitors, and laptops. In 2010, the company, along with other major suppliers, including Samsung and LG, was accused of participating in a scheme to fix prices of LCD panels.
The investigation began in 2006 when the US Department of Justice (DOJ) launched an investigation into price-fixing in the LCD panel industry. DOJ officials discovered that AU Optronics and other major LCD panel manufacturers had colluded to fix prices of LCD panels between 2001 and 2006.
The Charges and Sentencing
In September 2012, AU Optronics was found guilty by a federal jury in California for conspiring to fix prices, rig bids and allocate markets for LCD panels. The company was sentenced to pay $500 million in criminal fines, which is one of the largest fines ever imposed for antitrust violations in the United States.
The DOJ stated that AU Optronics and its co-conspirators met in secret locations to discuss setting prices and allocating sales of LCD panels, which resulted in artificially inflated prices that consumers paid across a range of electronic devices such as TVs, laptops, and mobile phones.
Impact on the Electronics Industry
The impact of this case on the electronics industry was significant. The LCD panel is an essential component in many electronic devices, and the price-fixing scheme meant that consumers were paying higher prices for their electronic devices than they should have been. This case highlights the importance of competition in the marketplace and the dangers of conspiring to fix prices.
The case also sends a clear message to other companies engaging in similar illegal activities. The DOJ has shown that it will not hesitate to prosecute companies that engage in price-fixing and antitrust violations that harm consumers.
Conclusion
The AU Optronics Corporation case shows the importance of antitrust laws and their enforcement in promoting competition and protecting consumer welfare. The $500 million fine imposed on the company for price-fixing is a clear indication of the severity of the violation. It also signals that the DOJ will not hesitate to take similar actions against companies found to be engaging in similar illegal activities. The case serves as a reminder to companies to comply with antitrust laws and avoid engaging in activities that harm competition and consumers.
The Department of Justice announced on Thursday, September 20th, that the Taiwan-based LCD manufacturer, AU Optronics Corporation, was sentenced by San Francisco District Court to pay $500 million for its involvement in price fixing.
AU Optronics Corporation is a leading producer of the “thin-film” transistor LCD in the world market. The criminal fine matches the biggest fine ever placed on a company for violation of U.S. antitrust laws.
The American subsidiary and two of the top executives were sentenced on Thursday as well. The former president, Hsuan Bin Chen, received three years in prison and a $200,000 fine. The former executive vice president, Hui Hsiung, received the same sentencing.
The judge also requires AU Optronics Corporation to print the convictions and penalties in three major publications in both the United States and Taiwan. The company must list steps it will take after the conviction as well.
Scott D. Hammond, the Deputy Assistant Attorney General for the criminal enforcement program under the Antitrust Division, stated: “This long-running price-fixing conspiracy resulted in every family, school, business, charity and government agency who bought notebook computers, computer monitors and LCD televisions during the conspiracy to pay more for these products.” Hammond also reported antitrust cases have increased in the last 5 years, thus have efforts to thwart the cases increased by the FBI.
The world market for the LCD panels was estimated at $70 billion annually. Computer manufacturers like Hewlett Packard, Dell and Apple all use the LCD panels.
The FBI has convicted eight companies in its growing investigation into antitrust. The sentencing has led to $1.39 billion in criminal fines, and 22 executives total have been charged by the FBI so far. Collectively, the executives have a combined sentencing of 4,871 days in prison.
Source: Department of Justice