March 14, 2012

Foreign LCD Maker Appeals Guilty Verdict In Price-Fixing Scheme

Taiwanese LCD maker AU Optronics Corp has announced that it will appeal the guilty verdict handed down by a U.S. court in a multi-billion dollar price-fixing suit over liquid crystal display panels.

AU is the world´s fourth-largest manufacturer of TFT- LCD maker, supplying panels for multinational electronics makers like Acer, Apple, Dell, LG and Samsung.

The company was just one of a number of defendants in a trial that saw charges brought against several Asian LCD designers for colluding to create a cartel between 1999 and 2006 that allowed them to artificially raise the price of the liquid-crystal screens.

Fellow accused corporation LG Electronics was made to pay a $400 million-dollar fine in 2008. Also implicated in the scandal was Samsung Electronics, but the Seoul-based firm reached a settlement for an undisclosed sum early on in the proceedings. “¨“¨AU was the only corporation to plead ℠not guilty´ to the charges.

The company´s decision to appeal the court´s ruling is a risky gambit, and it comes just weeks after AU posted lower-than-expected earnings for the fourth quarter of 2011. And with an increasingly saturated market, falling prices and stiff competition, AU´s prospects for the 2012 fiscal year are anything but certain.

Yet with a prolonged and potentially costly legal battle ahead of it, AU assured its investors in a press conference that it had the solvency to meet the challenge.

“Up to the end of last year we have made enough provisions, according to our accountants´ advice,” AU Chief Financial Officer Andy Yang stated, though he did not disclose an exact figure.

Prosecutors with the U.S. Justice Department claimed that the defendants had leached billions of dollars of dollars out of the American economy by colluding to fix prices at an unnaturally high level. Adding an element of the conspiratorial to their case, federal attorneys told the court that executives of the accused firms had met more than 60 times in resort hotels to discuss the details of their perfidious plans.

Officials from the U.S. Justice Department have stated that they would seek restitution from AU Optronics with a fine of up to $1 billion. AU´s chief legal advisor, however, says that the final sum will depend on how much revenue AU collected from the U.S. market between 2001 and 2006.

Not all of the executives implicated in the charges were found guilty. Of the four accused executives, two were acquitted, including former AU chief executive L.J. Chen.

While an AU spokesman expressed relief over the acquittal of the two men, he added that the company was sure that the others would also eventually be cleared of any wrongdoing.

“(AU) remains confident that the corporation and the individuals will ultimately be vindicated during further proceedings in this matter,” he told reporters last Wednesday.

Throughout the trial, AU attorneys maintained that the company had “competed fiercely” on the LCD market. He also reminded the jury that that simply sharing information with competitors is not an illegal act.

In a press statement following the verdict, company attorneys said they were disappointed and believed that they had “presented undisputed evidence that (AU) consistently priced below the so-called crystal prices from 2001 to 2006, which the company believes to be solid evidence that it did not participate in any price fixing agreement.”

One AU lawyer, Dennis Riordan, says that the more fundamental issue at stake is one of jurisdiction — that is, whether U.S. prosecutors should even be allowed to bring price-fixing charges when the alleged crimes didn´t even occur on the U.S. turf.

This is likely to be the focus of AU´s appeal and, according to Riordan, may be most important aspect of the whole debacle once the dust has settled.

“This is a huge case,” he said. “It's really the appeal that´s going to determine what this means.”


On the Net: