[opendtv] News: 3 Flat-Screen Makers Plead Guilty to Trying to Keep Prices High
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Thu, 13 Nov 2008 08:34:18 -0500
http://www.nytimes.com/2008/11/13/technology/13panel.html?th&emc=th
3 Flat-Screen Makers Plead Guilty to Trying to Keep Prices High
By STEVE LOHR
Published: November 12, 2008
Prices for the flat screens in televisions, personal computers and
cellphones have plummeted in recent years - but the decline would
have been even faster if it hadn't been for an international
price-fixing cartel, the Justice Department said on Wednesday.
Three leading flat-screen producers - LG Display of South Korea,
Sharp of Japan and Chunghwa Picture Tubes of Taiwan - pleaded guilty
and agreed to pay a total of $585 million in criminal fines for their
role in fixing the price of liquid-crystal display panels.
LG is paying the most: a $400 million fine, the second-highest
criminal fine ever imposed by the Justice Department's antitrust
division. The largest was the $500 million paid in 1999 by F.
Hoffmann-La Roche, a Swiss pharmaceutical giant, for leading a
price-fixing cartel in vitamin supplements.
The settlement, legal experts say, is unlikely to be the end of the
flat-panel case. Under the settlement, the three companies have
agreed to cooperate with the Justice Department's continuing
investigation. Thomas O. Barnett, assistant attorney general in
charge of the department's antitrust division, pointed out at a news
conference on Wednesday that the American investigation involved the
coordinated efforts of enforcement officials in Europe and Asia, as
well as the United States.
Government investigations, legal specialists said, are under way in
Europe, Japan and South Korea. In the United States, private
class-action suits have already been filed seeking damages for
companies that purchased flat-panel screens, and for consumers who
bought flat-panel-equipped products. Some of the private suits, if
successful, could provide a way for consumers to benefit, though the
compensation for any individual would probably be slight.
The Justice Department, in a statement, noted that the price-fixing
conspiracy affected screens sold to American companies, and cited
three by name: Dell, Apple and Motorola. Those companies, and others,
could have the basis for private suits.
The LCD business is a $100-billion-a-year market and growing, but
prices are falling relentlessly. Recently, panel prices have often
been cut in half each year, a downward trajectory even steeper than
in other technology markets known for steady price pressure, like
those for computer chips and hard drives.
In the last six months alone, the price of a 15.4-inch panel for a
notebook PC has dropped to $63, from $97, and a 32-inch LCD for a
television has gone to $223, from $321, according to iSuppli, a
market research firm.
The price-fixing conspiracy, industry analysts said, was an effort to
slow the speed of price declines. "These companies were trying to get
a toehold to protect profits in a very difficult market," said
Richard Doherty, director of research at Envisioneering, a technology
consulting firm.
Without the price-fixing scheme, liquid-crystal panels would have
been even cheaper, and they are important parts in a wide range of
products. For example, the screen represents 10 to 20 percent of the
total cost of a notebook PC, said Rob Enderle, an independent analyst
in San Jose, Calif.
The effect was somewhat higher prices. "These price-fixing
conspiracies affected millions of American consumers who use
computers, cellphones and numerous other household electronics every
day," Mr. Barnett said in a statement.
The settlement, legal specialists say, does not precisely indicate
the extent of the consumer harm. Under antitrust law, a company can
be fined up to twice the gain it derived from its misconduct.
But in a settlement, the fine amounts could represent negotiated
levels, or less than the total harm to consumers, said C. Scott
Hemphill, an antitrust expert at the Columbia University law school.
"And this settlement only deals with the harm in the United States,"
he said. "The global totals may be many times larger."
During the Bush administration, antitrust enforcement has been
selective and often guided by a hands-off, pro-business philosophy,
legal experts say. But price-fixing cartels are an area of antitrust
in which there is no debate about enforcement. In a 2004 Supreme
Court decision, which was unanimous, cartels were called "the supreme
evil of antitrust."
"Cartels are regarded as the most dangerous form of anticompetitive
conduct," said Andrew I. Gavil, a law professor at Howard University.
"The reason is that the potential impact on consumers is so great,
and there is no plausible justification for it."
With the settlement, Mr. Barnett, who will leave the Justice
Department next week, has provided "an answer to critics who doubted
he would take on big cases of this kind," Mr. Gavil said.
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