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
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
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.
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.
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.
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.
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,
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.
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.”
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.”
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.