TFT-LCD (Flat Panel) Antitrust Litigation

The TFT-LCD (Flat Panel) Antitrust Litigation[1] was a United States class-action lawsuit regarding the worldwide conspiracy to coordinate the prices of Thin-Film Transistor-Liquid Crystal Display (TFT-LCD) panels, which are used to make laptop computers, computer monitors and televisions, between 1999 and 2006. In March 2010, Judge Susan Illston certified two nationwide classes of persons and entities that directly and indirectly purchased TFT-LCDs – for panel purchasers and purchasers of TFT-LCD integrated products; the litigation was followed by multiple suits.[2][3]

TFT-LCD (Flat Panel) Antitrust Litigation

Background

TFT-LCDs are used in flat-panel televisions, laptop and computer monitors, mobile phones, personal digital assistants, semiconductors and other devices;[4] in 2006, the worldwide TFT-LCD panels market generated approximately $70 billion in revenue, at least $23.5 billion of which in the U.S.[5]

In mid-2006, the U.S. Department of Justice (DOJ) Antitrust Division requested FBI assistance in investigating LCD price-fixing. In December 2006, authorities in Japan, Korea, the European Union and the United States revealed a probe into alleged anti-competitive activity among LCD panel manufacturers.[6]

The companies involved, which later became the Defendants, were Taiwanese companies AU Optronics (AUO), Chi Mei, Chunghwa Picture Tubes (Chunghwa), and HannStar; Korean companies LG Display and Samsung; and Japanese companies Hitachi, Sharp and Toshiba.[7] Reports alleged an international cartel which took place between January 1, 1999, through December 31, 2006, and which was designed to illegally reduce competition and thus inflate prices for LCD panels. The companies exchanged information on future production planning, capacity use, pricing and other commercial conditions.[8] The cartel members held monthly multilateral meetings, called "Crystal Meetings", where executives exchanged production, shipping, supply and demand information. In later stages, lower-level employees replaced top-level employees at the meetings which were moved from hotel rooms to public restaurants. An investigation by the European Commission concluded that the companies were aware they were violating competition rules, and took steps to conceal the venue and results of the meetings; a document by the conspirators requested everybody involved "to take care of security/confidentiality matters and to limit written communication".[9][8]

Litigation

Samsung was granted immunity by the DOJ, in exchange for cooperation and concrete evidence of LCD price-fixing.[10]

This price-fixing scheme manipulated the playing field for businesses that abide by the rules, and left consumers to pay artificially higher costs for televisions, computers and other electronics.

New York Attorney General Eric Schneiderman, 2011[6]

Companies directly affected by the LCD price-fixing conspiracy, as direct victims of the cartel, were some of the largest computer, television and cellular telephone manufacturers in the world. These direct action plaintiffs included AT&T Mobility, Best Buy,[11] Costco Wholesale Corporation, Good Guys, Kmart Corp, Motorola Mobility, Newegg, Sears, and Target Corp.[12] U.S. States and Indirect-Purchaser Plaintiffs (i.e. those who purchased TFT-LCD integrated products, but not the LCDs as separate products) sought an order certifying (a) one 50-state Rule 23(b)(2)2 injunctive relief class under Section 16 of the Clayton Act (15 U.S.C. § 26) to prevent Defendants from violating Section 1 of the Sherman Act (15 U.S.C. § 1), as well as (b) 23 separate state-wide classes based on each state's antitrust/consumer protection class action law.[13]

In November 2008, LG, Chunghwa, Hitachi, Epson, and Chi Mei pleaded guilty to criminal charges of fixing prices of TFT-LCD panels sold in the U.S. and agreed to pay criminal fines (see chart).

The South Korea Fair Trade Commission launched legal proceedings as well. It concluded that the companies involved met more than once a month and more than 200 times from September 2001 to December 2006, and imposed fines on the LCD manufacturers.[14]

Fines and Penalties
Fines imposed by US, EU and Koran authorities
Conspirator Department of Justice Fines European Competition Commission Fines Korean FTC Fines
AUO $500 million[15] €116.8 million[16] ₩ 28.53 billion[17]
LG $400 million[18] €215 million[19] ₩ 65.5 billion[17]
Chi Mei $220 million[20] €300 million[8] ₩1.55 billion[21]
Sharp $120 milllion[18]
Chunghwa $65 million[18] €9.02 million[8] ₩290 million[21]
Hitachi $31 million[22]
Toshiba $30 million
Hannstar $30 million[22] €8.1 million[8] ₩870 million[21]
Epson $26 million[22]
Samsung Granted immunity ₩97.29 billion[21]

From October 2008 through January 2009, three leading flat-screen manufacturers pleaded guilty to participating in the conspiracy and were fined:[23]

  • LG ("LG Philips" at that time) was sentenced to pay a $400 million criminal fine – the second largest fine in U.S. Antitrust Division history,[24]
  • Sharp Corp. pleaded guilty to three separate conspiracies to fix the prices of TFT-LCD panels sold to Dell Inc., Apple Computer Inc. and Motorola Inc., and was sentenced to pay a $120 million criminal fine,[24]
  • Chunghwa pleaded guilty and was sentenced to pay a $65 million criminal fine for participating with LG and other unnamed co-conspirators during the five-year cartel period.[5]

In South Korea, regulators imposed the largest fine the country had ever imposed in an international cartel case, and fined Samsung Electronics and LG Display ₩92.29 billion and ₩65.52 billion, respectively. AU Optronics was fined ₩28.53 billion, Chimmei Innolux ₩1.55 billion, Chungwa ₩290 million and HannStar ₩870 million.[14]

Seven executives from Japanese and South Korean LCD companies were indicted in the U.S. Four were charged with participating as co-conspirators in the conspiracy and sentenced to prison terms – including LG's Vice President of Monitor Sales, Chunghwa's chairman, its chief executive officer, and its Vice President of LCD Sales – for "participating in meetings, conversations and communications in Taiwan, South Korea and the United States to discuss the prices of TFT-LCD panels; agreeing during these meetings, conversations and communications to charge prices of TFT-LCD panels at certain predetermined levels; issuing price quotations in accordance with the agreements reached; exchanging information on sales of TFT-LCD panels for the purpose of monitoring and enforcing adherence to the agreed-upon prices; and authorizing, ordering and consenting to the participation of subordinate employees in the conspiracy."[25][26][27]

On December 8, 2010, the European Commission announced it had fined six of the LCD companies involved in a total of €648 million (Samsung Electronics received full immunity under the Commission's 2002 Leniency Notice) – LG Display, AU Optronics, Chimei, Chunghwa Picture and HannStar Display Corporation.[8]

On July 2012, AU Optronics was fined $500 million, and two of AUO's executives were sentenced to prison time and a $200,000 criminal fine.[28]

On July 3, 2012, a U.S. federal jury ruled that the remaining defendant, Toshiba Corporation, which denied any wrongdoing, participated in the conspiracy to fix prices of TFT-LCDs and returned a verdict in favor of the plaintiff class. Following the trial, Toshiba agreed to resolve the case by paying the class $30 million.[29]

Civil Class Litigation Outcome

On March 29, 2013, Judge Susan Illston issued final approval of the settlements agreements totaling $1.1 billion for the indirect purchaser’ class. The settling companies also agreed to establish antitrust compliance programs and to help prosecute other defendants, and cooperate with the Justice Department's continuing investigation.[6] Some of the money from the settlement was to be made available to consumers in 24 states. In the U.S. and other countries, private class action suits were filed seeking damages for companies that purchased flat-panel screens (direct purchasers/victims), and for consumers who bought TFT-LCD integrated products (indirect purchasers/victims).

See also

• List of class-action lawsuits

References
  1. "07-1827 – TFT-LCD Antitrust Litigation – party names". govinfo. Retrieved November 14, 2020.
  2. "In re Tft-Lcd (flat Panel) Antitrust Litigation – COURT ORDER GRANTING – Filed March 28 2010". DocketBird. Retrieved November 14, 2020.
  3. "Order Denying Defendants' Joint Motion For Summary Judgment Against Indirect Purchaser Plaintiffs In 14 States – In re TFT-LCD (Flat Panel) Antitrust Litig". Casetext. December 7, 2011. Retrieved November 14, 2020.
  4. Joseph A. Castellano (2005). Liquid Gold: The Story of Liquid Crystal Displays and the Creation of an Industry. World Scientific. ISBN 978-981-256-584-6.
  5. Frieden, Terry (November 12, 2008). "LCD makers Sharp, LG and Chunghwa plead guilty: Price fixing – Nov. 12, 2008". money.cnn.com. Retrieved November 14, 2020.
  6. Freifeld, Karen (December 27, 2011). "LCD makers settle price-fixing case for $553 million". U.S. Retrieved November 14, 2020.
  7. "In IN RE TFT-LCD (FLAT PANEL) ANTITRUST LITIGATION – Memorandum Of Points And Authorities In Support Of Indirect-purchaser Plaintiffs' Motion For Class Certification" (PDF). Applied Antitrust Law. Retrieved November 14, 2020.
  8. "Antitrust: Commission fines six LCD panel producers €648 million for price fixing cartel". European Commission. Retrieved November 14, 2020.
  9. AFP (December 8, 2010). "EU slaps 649 million euro fine on Asian flat-screen cartel". The Independent. Retrieved November 14, 2020.
  10. Savage, Lynn (January 1, 2011). "Taiwanese and South Korean LCD Cartel Pressed Hard by Fines". Photonics Spectra. Retrieved November 14, 2020.
  11. 13-17408 Best Buy Co., Inc. v. Hannstar Display Corporation, United States Court of Appeals for the Ninth Circuit, on YouTube, December 11, 2015
  12. "Expert Report of B. Douglas Bernheim, PhD concerning Target Corp., et al". DocketBird. December 15, 2011. Retrieved November 14, 2020.
  13. "TFT-LCD Global Price Fixing Antitrust Class Action Lawsuit". Lieff Cabraser Heimann & Bernstein, LLP. August 12, 2015. Retrieved November 14, 2020.
  14. Lee, Jung-Ah (October 30, 2011). "Seoul Fines Six LCD Manufacturers in Price-Fixing Case". WSJ. Retrieved November 14, 2020.
  15. "AU Optronics Fined $500 Million in U.S. Price-Fixing Case". The New York Times. September 20, 2012. Retrieved November 14, 2020.
  16. chcom (June 24, 2013). "AU Optronics". Companies History – The biggest companies in the world. Retrieved November 14, 2020.
  17. Kirk, Jeremy (October 31, 2011). "South Korea Fines Flat-panel LCD Display Makers". PCWorld. Retrieved November 14, 2020.
  18. "LG, Sharp, Chunghwa Agree to Plead Guilty, Pay Total of $585 Million in Fines for Participating in LCD Price-Fixing Conspiracies". U.S. Department of Justice. March 31, 2008. Retrieved November 14, 2020.
  19. Reisinger, Don (December 8, 2010). "EU fines LCD makers for 'price fixing cartel'". CNET. Retrieved November 14, 2020.
  20. Happich, Julien. Taiwan LCD producer pleads guilty for role in price-fixing conspiracy, EE Times, December 10, 2009
  21. "Expert Report Of Mohan Rao, Ph.d. In re Tft-Lcd (flat Panel) Antitrust Litigation". DocketBird. November 2012. Retrieved November 14, 2020.
  22. Superior Court Of California  – Flrst Amended Complaint For Damages And Injunctive Relief  – Demand For Jury Trial, March 2011. www.ca.gov
  23. "LG Display, Sharp and Chunghwa plead guilty to price-fixing". The New York Times. October 13, 2008. Retrieved November 14, 2020.
  24. "Four Executives Agree to Plead Guilty in Global Lcd Price-Fixing Conspiracy". FBI. June 29, 2011. Retrieved November 14, 2020.
  25. "Four Executives Agree to Plead Guilty in Global LCD Price-Fixing Conspiracy (2009-01-15)". U.S. Department of Justice. January 15, 2009. Retrieved November 14, 2020.
  26. "Supreme Court Of The United States – Petition For A Writ Of Certiorari" (PDF). Applied Antitrust Law. March 16, 2015. Retrieved November 14, 2020.
  27. "Largest Taiwanese LCD Producer, Houston-Based Subsidiary and Six Executives Indicted for Participating in LCD Price-Fixing Conspiracy". Department of Justice. June 10, 2010. Retrieved November 14, 2020.
  28. AU Optronics Fined $500M, Execs Jailed For LCD Price-Fixing, Law360. September 20, 2012
  29. Gullo, Karen (July 11, 2012). "AUO, LG Display, Toshiba Will Settle LCD Case, Lawyer Say". Bloomberg. Retrieved November 14, 2020.
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