China joins global action over flat screen price-fixing
In this Aug. 5, 2007 file photo, massive scaffolding and an LCD screen are set up on Tiananmen Square ahead of a countdown ceremony to celebrate the coming 2008 Beijing Olympic Games in Beijing. (AP / Andy Wong)
Published Friday, January 4, 2013 9:44AM EST
BEIJING -- China on Friday joined a global crackdown on price-fixing by manufacturers of LCD screens used in computers and TVs, imposing multimillion-dollar fines on South Korea's Samsung and LG and four Taiwanese companies.
Suppliers already have been hit by U.S. and European regulators with penalties totalling more than $3 billion for colluding to push up slumping prices of display screens in 2001-06, which raised costs for electronics manufacturers. U.S. courts have sentenced 12 executives to prison.
In China, LG and Samsung and four Taiwanese companies were ordered to pay 353 million yuan ($56 million), according to the Cabinet's planning agency, the National Development and Reform Commission. It said that includes 144 million yuan ($22.8 million) in fines plus repayment to Chinese companies that were overcharged.
LG, Samsung and Taiwanese suppliers met every quarter in 2001-06 to set prices of screens at a time when supply outstripped demand, pushing down market prices, according to Western and Chinese regulators.
Nearly all the world's mobile phones and personal computers are assembled in China, making its factories major consumers of display screens and other components supplied by South Korea, Taiwan and other Asian economies.
The display screen suppliers "manipulated market prices and damaged the lawful interests of other companies and consumers," said an NDRC statement.
U.S. prosecutors say some $74 billion in global sales of display screens were affected by the conspiracy. Customers included Apple Inc., Dell Inc. and other producers of TVs, notebook computers and other electronics.
The Chinese penalties totalled 100 million yuan ($15.9 million) for Samsung and 118 million yuan ($18.7 million) for LG. The Taiwanese companies and their fines were Chi Mei Corp., 94 million yuan ($14.9 million); AU Optronics Ltd., 21.9 million yuan ($3.5 million); Chunghwa Picture Tubes, Ltd., 16.2 million yuan ($2.6 million); and HannStar Display Corp., 240,000 yuan ($38,000).
The U.S. Department of Justice says it has been awarded $1.4 billion in fines by courts while EU officials have imposed a total of 1.3 billion euros ($1.7 billion) in penalties.
China's fines were smaller because Beijing acted under its pricing law, which bases penalties on the improper income from individual sales, according to an NDRC statement. It said Western regulators used anti-monopoly laws that base penalties on the much larger amount of a company's total revenue but China could not do that because its first anti-monopoly law was not enacted until 2008 and cannot be applied retroactively.
After the EU fined companies in 2010, a major Chi Mei shareholder, Terry Gou, said the price-fixing was led by Samsung and LG, the biggest and second-biggest display panel manufacturers, respectively. Gou is chairman of Hon Hai Precision Industry Co., which assembles electronics for Apple Inc. and other companies but does not make display screens.
Samsung Display, the Samsung unit that makes flat panels, doesn't dispute the Chinese government's statement, said a company official contacted by phone Friday in Seoul. He refused to be identified by name, citing company rules, but said his comments reflected Samsung's official position.
The company will "strengthen training" so employees do not engage in price-fixing in the future, the official said.
In a written statement, LG Display said it "remains committed to operating with full transparency in providing the best quality products and services to its global customers."
Chi Mei, which has been renamed Innolux Corp., said in a written statement it has set aside money to pay the fines, indicating it would not appeal.
A spokeswoman for AU Optronics, Yawen Hsiao, said the company was co-operating with Chinese authorities but declined to comment further.
Employees who answered the phone at Chunghwa and at Hannstar said company officials who could comment were not available.
In the United States, a former president and executive vice-president of AU Optronics Ltd. were sentenced by a federal court in September to three years in prison in what prosecutors said was the most severe penalty imposed in an antitrust case. The company was fined $500 million.
In July, AU Optronics, along with Toshiba and LG, agreed to pay a combined $571 million to settle a lawsuit by customers. Other manufacturers, including Hitachi, Sharp and Samsung, agreed in December to pay $538 million to settle.
Seven other Asian manufacturers and 22 other executives have pleaded guilty in U.S. courts and agreed to pay a combined $890 million in fines.