LG, Sharp, Chunghwa admit to LCD price fixing

Updated at 12:40 p.m. PST with Dell's comments and historical perspective on Apple iMac shortages due to lack of LCD flat panel displays.

LG Display, Sharp, and Chunghwa Picture Tubes agreed to plead guilty to criminal charges for participating in a liquid crystal display price-fixing conspiracy and pay $585 million in fines, the U.S. Department of Justice announced Wednesday.

The three companies worked in concert to set prices on thin-film transistor LCDs, which are used in computer monitors, notebooks, televisions, mobile phones, and various electronics, according to the antitrust unit of the Justice Department.

Apple, Dell, and Motorola were among the companies affected by the price fixing, antitrust regulators said.

"The price-fixing conspiracies affected millions of American consumers who use computers, cell phones, and numerous other household electronics every day," Thomas Barnett, assistant attorney general for the Justice Department's antitrust division, said in a statement.

The three companies, which were charged with violating the Sherman Antitrust Act, allegedly held "crystal" meetings and engaged in communications about setting prices on the TFT-LCD displays. They agreed to charge predetermined prices for the displays, issued price quotes based on those agreements, and exchanged sales information on the display panels, in order to monitor and enforce the agreement, the Justice Department said.

LG Display agreed to pay a $400 million fine, marking the second-highest antitrust fine ever imposed. The company pleaded guilty to setting prices with other unnamed suppliers for the TFT-LCD panels worldwide from September 2001 to June 2006, when the company operated under the name L.G. Philips LCD, a joint venture between LG Electronics and Philips Electronics. LG Display America was known as L.G. Philips LCD America.

Sharp, meanwhile, agreed to pay a $120 million fine and participated in the conspiracy between April 2001 and December 2006 with other unnamed suppliers. The conspiracy involved setting prices in three separate agreements for TFT-LCD panels sold to Dell, which used them in computer monitors and laptops.

And during the period ranging from the fall of 2005 to mid-2006, similar price-fixing schemes were employed in sales to Motorola, which used the panels in its popular Razr mobile phones.

Sharp's conspiracy also touched Apple from September 2005 to December 2006, in which Apple used the displays for its popular iPod music players.

Chunghwa agreed to pay a $65 million fine, for its participation in the price-fixing scheme from September 2001 through December 2006.

The Justice Department began its investigation in 2006 and notes its investigation is still on-going.

"Dell is aware of the announcement and will review its impact, but we have no comment at this time and probably will not in the near term as it's an ongoing investigation," a Dell representative said Wednesday, in an e-mail response.

Sony, a major LCD panel producer, also declined to comment.

For the LCD industry, problems began in the late 1990s when a surge in demand for notebooks and handheld devices drove up the need for LCD glass. As a result, the TFT-LCD makers built glass plants in Korea and Taiwan during 1998 through 1999.

But as those factories came online and began to pump out LCD glass, a glut took hold. And by the fall of 2000, prices on 15-inch flat panels plummeted to a point that in some cases manufacturers were having to sell their panels at $5 to $10 below cost.

Between October 2000 through August 2001, LCD makers were feeling the pain of an over supply of panels. But after August 2001, prices began to rise.

And apparently, it was no coincidence. Five months prior, Sharp had begun fixing prices on TFT-LCD panels sold to PC giant Dell and in September 2001, LG and Chunghwa also began to engage in price fixing, as well.

Analysts, at the time, predicted LCD shortages, especially in the 15-inch panel, would continue through 2002.

IDC analyst Bob O'Donnell noted at the time that while PCs tend to only go down in price over time, flat panel prices have occasionally risen. Said O'Donnell at the time:

LCD is one of the few (markets) where things have actually gone up in price.

Although Sharp admits to engaging in price fixing with Apple's iPod screens in the 2005 to 2006 period, it remains unclear whether other vendors may have engaged in a similar behavior with Apple back in 2002.

That's when Apple was hit with a component shortage of 15-inch LCD panels for its newly introduced all-in-one flat panel iMacs. As a result, Apple suffered a shortage of iMacs after introducing and touting its sleek iMac.

CNET News' Erica Ogg contributed to this report.

[Pete Bardo]

Ok, how do I get my share of the settlement?

[FogleBR]

I too would like to know where I get my share of the fines. I smell a class action lawsuit in the works.

[tom_highland]

I bought a Dell FP2005 in 2006 and it would be nice to get a piece of that action.

[movie_demon]

I agree!

I've wondered for a long time why the price of LCD technology has remained so ridiculously high, even though it's been available for years and requires probably less than a fourth of the raw materials required to make a standard cathode ray tube.

A 22 inch LCD monitor still costs more than my 27 inch (CRT) television. It makes no sense!
Well, until now. I'd like to think this will finally make prices come down, but sadly, it will probably have the opposite effect, as these companies pass on the cost of the fines to their customers.

[ArtB1]

I'm siting here using an LG monitor purchased during the "price-fixing" period.

My opinion: DON'T start a class action suit. Attorneys are the only ones who score BIG in such suits. I was pleased with the value received, in spite of this announcement. LG, et al will suffer enough. Let the attorney's "suffer" a little in this economy, like every one else!

[Grumpypaul]

Class action lawsuits are great. You get a coupon worth some predetermined amount of money when you buy the next new item. Great if you're in the market but kind of sucky if you aren't.

I've been involved in several over the years. The only one that "paid off" was some suit against American Express investments that actually netted me a check. The rest were useless rebates or discounts.

[gsmiller88]

Well this is all fine and dandy but how is every consumer who was ripped off supposed to get their part of that money?!

[Vegaman_Dan]

Fines aren't meant for consumers, they are meant for the government that issues them. You don't have any right to the money. It is nice to think you do, but that's simply not the reality of the situation.

[kieranmullen]

Where does the money go for such fines? General fund?

KieranMullen
http://360oregon.com

[wlau]

Stupid government!!! CE industry is virtually profit-less. Even with these so call "price fixing", CE have some of the lowest prices compared to other industries. This kind of government action will force price to drop even more for these companies to survive, to a point there is no money to be made and everyone will exit the market.