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January 04, 2013

LCD Price Fixing Cartel Fined

By Joe Rizzo, TMCnet Contributing Writer

In what appears to be a cloak and dagger scene, China’s National Development and Reform Commission (NDRC) has accused six firms of conspiring to fix prices. The price fixing ring was discovered and investigated as a result of a United States Justice Department investigation. This lead to other governments and trade bodies to punish six firms for fixing the price of liquid crystal display (LCD) panels.

The two largest firms that were found guilty were Samsung (News - Alert) and LG, both leading LCD panel makers in the Republic of Korea. Both companies also supply the LCD panels for Apple products such as the iPad. Some of the other four companies involved are all Taiwanese firms. They are Chunghwa Picture Tubes Ltd., HannStar Display Corporation, AU Optronics (News - Alert) and Chimel Innolux.

Image via Shutterstock

These six firms are accused of holding 53 secretive meetings in Taiwan and South Korea to agree on prices for LCD panels. These were monthly meetings that occurred between 2001 and 2006. During this time, the six companies sold about 5.15 million panels in China. Most of these panels, 1.93 million, came from LG. Samsung sold 826,500 panels. The profit from selling these panels came out to 208 million yuan, which comes out to $33 million USD. An official for the NDRC said, “Those involved turned out to have negotiated prices or manipulated prices [of the screens], hampering legitimate rights and interests of other parties and consumers.”

The six companies were ordered to pay a total of $56 million in fines. They have also been ordered to pay back the revenue to China’s television manufacturing industry. According to the NRDC, the six companies are also being fined an additional $21.6 million. An official for the NDRC said, “The enterprises involved in the price monopoly acts have harmed the legitimate rights and interests of the domestic color TV enterprises and consumers."

The European Commission has also investigated the six LCD panel companies and in December 2010, fined them for a total of $850 million. Samsung received immunity from this fine because it was responsible for informing the commission about the scheme and providing details.

Despite the fact that these six companies are making the payments, they are also denying responsibility for the claims made against them.

The commission said Samsung, LG and the four Taiwanese companies have committed to strictly abide by the Chinese laws, engage in a fair competition and extend the unpaid warranty service period for China's domestic TV makers to 36 months from the previous 18 months.

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Edited by Brooke Neuman
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