US seeks $1 bn, prison for Taiwan execs in LCD case

Sep 13, 2012

Prosecutors asked for a $1 billion fine for Taiwan's AU Optronics and prison terms of 10 years for two top executives in the "most serious price-fixing" case in US history, court documents showed Wednesday.

According to a US government sentencing recommendation filed in federal court, "only these sentences could possibly reflect the seriousness of this offense or provide adequate deterrence."

The asked for the massive fine to be levied against Taiwan's largest maker of displays for computers, smartphones and other gadgets, for its conviction in a price-fixing scheme for LCD display panels.

It also called for top H.B. Chen and Hui Hsiung to serve 10 years in prison and pay $1 million fines.

"These defendants and AUO's subsidiary, AU Optronics Corporation America were central figures in the most serious price-fixing cartel ever prosecuted by the United States," the statement said.

"The correctly and conservatively calculated ranges—a corporate fine of $936 million to $1.872 billion and prison terms from 121 to 151 months—suggest that these sentences are lenient ones for the offense in this case."

AU Optronics, along with a Texas-based subsidiary and two former , were convicted on conspiracy charges after a trial in US District Court in San Francisco.

They were charged in a price-fixing conspiracy that brought in more than half a billion dollars in "ill-gotten gains."

The companies, along with one-time president Chen and former executive vice president Hsiung, took part in a scheme to rig prices of liquid crystal (TFT-LCD) display panels from late 2001 to December in 2006, according to officials.

are used in computers, laptops, televisions, smartphones and other gadgets.

Rival LCD makers met in secret at karaoke bars, tea rooms and hotel conference rooms in Taiwan to set prices rather than letting market forces prevail, according to the DOJ.

The jury's finding of $500 million in ill-gotten gains by Optronics was based on US imports of LCD screens.

The convictions were part of an ongoing investigation that had already resulted in guilty pleas from seven other companies accused of taking part in the conspiracy.

US authorities say victims of the scheme included manufacturers such as Apple, Hewlett-Packard and Dell, as well as families, schools, small businesses and government agencies that paid higher prices as a result.

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User comments : 16

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infinite_energy
3 / 5 (2) Sep 13, 2012
"market forces prevail" what are those? Is there a formula to describe them?

"Rival LCD makers met in secret at karaoke bars, tea rooms and hotel conference rooms in Taiwan to set prices rather than letting market forces prevail, according to the DOJ."
Since when meeting with somebody to have a chat is against the law?

Read more at: http://phys.org/n...html#jCp
VendicarD
2.6 / 5 (5) Sep 13, 2012
Doesn't Freedom include the freedom to make deals with other businesses to fix prices?

We don't wan't any regulation limiting what Corporations can charge for their products do we? That would be Communism.

DGBEACH
3 / 5 (4) Sep 13, 2012
Yet another example of the US imposing its bizarre one-sided form of capitalism upon the rest of the world. Of course those manufacturers had a right to meet together to discuss pricing. The reason they think its wrong is because their morals are based upon their wallets...and it goes all the way up to the Supreme Court! Our neighbor to the South has embarrassed us once again :(
Deathclock
3 / 5 (4) Sep 13, 2012
There are a lot of dumb people commenting here...

Price fixing eliminates competition and basically forms an ad-hoc monopoly. Not only that, but it also stifles innovation, crowding out small innovators from the market through either bullying or simply buying them out and trashing their competitive ideas. Conspiracy theorists claim this is happening in the energy industry where Big Oil buys ideas that would improve fuel efficiency of engines and simply sits on them to prevent them from ever materializing. I don't believe THIS is happening, but things like this do happen if you allow collusion between competitors.
Deathclock
3.4 / 5 (5) Sep 13, 2012
"market forces prevail" what are those? Is there a formula to describe them?


Yeah, competition rather than collusion. Any competitors, if they are smart and if it were legal, could get together and decide to all sell their competing products at the same price, and then simply raise that price steadily over time. Consumers then have no option but to pay the ever increasing price for the good or to stop consuming it. This isn't a HUGE problem with LCD panels... but imagine this occurring with necessities like milk, produce, gasoline, electricity, water... you get the idea.

Collusion and monopolies are bad, mmmkay? Does anyone study economics anymore?
infinite_energy
1 / 5 (2) Sep 13, 2012
"and then simply raise that price steadily over time."
Since the planet population only increases demand increases too and the prices increase. Prices will never decrease towards zero. Never. They will stabilize at some level only to further increase.
Apart from Taiwanese LCD manufacturers there are Chinese ones, Japanese ones, Korean ones even maybe some American ones. Nobody forces you to buy a "price fixed" Taiwanese LED.
Taiwanese LCD manufacturers are actually accused of milking the American consumer.
If Taiwanese prices are too high let the US market forces spring into action and a US company will seize the opportunity and build your own LCDs for the desired target price.
Why aren't Intel or AMD being accused of price fixing since they sell similar products for almost equal prices?!?!?!
FMA
2.6 / 5 (5) Sep 13, 2012
US government needs money so badly, they tried to fine all the oversea big companies that have business in US which include HSBC, Standard Character Bank, the above two Taiwan companies ...etc.
Deathclock
2.3 / 5 (3) Sep 13, 2012
Since the planet population only increases demand increases too and the prices increase. Prices will never decrease towards zero


What?

First of all, OF COURSE prices will never "decrease toward zero"... what caused you to even type that? Secondly, this statement has nothing at all to do with what we are talking about... you are talking about natural price fluctuation due to supply and demand, collusion/price fixing is the OPPOSITE of this.

Nobody forces you to buy a "price fixed" Taiwanese LED.


When all of the companies agree to set a fixed price there is no competition and there is no alternative, that is the ENTIRE PROBLEM... that is the REASON that this isn't allowed.

Why aren't Intel or AMD being accused of price fixing since they sell similar products for almost equal prices.


1: This isn't even remotely true.
2: You would have to prove that they did so with the INTENT to form a monopoly over the goods/services they provide.
infinite_energy
2.3 / 5 (3) Sep 13, 2012
Being a free market you can set whatever price you want.
From 0 to trillions of dollars.
Next thing is to find customers for what you sell.
Deathclock
2.3 / 5 (3) Sep 13, 2012
Being a free market you can set whatever price you want.
From 0 to trillions of dollars.
Next thing is to find customers for what you sell.


...you clearly don't understand the problem... sit through a few hours of Econ101 at your local community college, okay?
infinite_energy
1 / 5 (3) Sep 13, 2012
"...you clearly don't understand the problem... sit through a few hours of Econ101 at your local community college, okay?
"
There is no problem to begin with.
VendicarD
4 / 5 (4) Sep 13, 2012
Price fixing is the right of every businessman.

Anything else is pure Communism according to my Libertarian friends.

ScooterG
2.3 / 5 (3) Sep 13, 2012
On a website that deals with high-level intelligence matters, it's amazing to me that some posters here support the idea of price fixing. But then again, precious few people (Americans in particular) know anything about business or how a business operates.
Deathclock
2.3 / 5 (3) Sep 14, 2012
On a website that deals with high-level intelligence matters, it's amazing to me that some posters here support the idea of price fixing.


I agree, but in a more general sense I would say that what really surprises me is the number of complete idiots that post comments here, given that it is a website that features such highly intellectual news articles.
VendicarD
2.3 / 5 (3) Sep 15, 2012
I don't see how anyone could be opposed to businesses colluding to fix prices.

Such opposition is as much against the laws of Austrian Economics as laws against child molestation are against Libertarian social philosophy.

jonnyboy
2 / 5 (4) Sep 15, 2012
I don't see how anyone could be opposed to businesses colluding to fix prices.

Such opposition is as much against the laws of Austrian Economics as laws against child molestation are against Libertarian social philosophy.


as usual Scott, you are a morontard