Prices for flat-screen televisions, personal computers and cell phones are likely to fall after manufacturers of liquid crystal displays on Wednesday admitted they conspired to drive up the prices of such panels, according to Justice Department attorneys.
Major Asian electronics manufacturers LG Display Co., Sharp Corp. and Chunghwa Picture Tubes Ltd. agreed to pay $585 million in fines to settle the department’s charges of price fixing. The manufacturers sell liquid crystal displays (LCDs) to American corporations such as Apple Inc., Dell Inc. and Motorola Inc.
As a result of agreements among executives of the Asian manufacturers to set prices for their products, “consumers were forced to pay more for these products,” Thomas O. Barnett, assistant attorney general in charge of the department’s Antitrust Division, said at a news conference Wednesday in Washington.
Businesses that agree to set prices for their industry, rather than letting marketplace competition determine costs to consumers, violate antitrust provisions of the federal Sherman Act.
A government “criminal information” listing violations of the act was filed Wednesday against the Asian manufacturers in federal court in San Francisco.
LCD panels are used in computer monitors, televisions, mobile phones and many other electronic devices. The worldwide LCD market reached $70 billion in 2006.
Unnamed representatives of the Asian manufacturers held what they called “crystal meetings” during which they agreed on prices they would charge customers, the Justice Department reported.
Breaking up the scheme is likely “to lead to lower prices,” Mr. Barnett said. He would not give an estimate on how low the prices would fall.
The bulk of the fines, or $400 million, is being paid by LG Display, a South Korean corporation, which pleaded guilty to participating in a conspiracy from September 2001 to June 2006. It was the second-largest antitrust fine in U.S. history, surpassed only by the $500 million fine against Swiss pharmaceutical company F. Hoffman-LaRoche in 1999 for price fixing vitamins.
LG Display reported $15.3 billion in revenue in 2007.
Sharp, a Japanese company, agreed to pay a $120 million fine for conspiracies to fix prices of LCDs sold to Dell for its computers, to Motorola for its Razr mobile phones and to Apple for its iPod portable music players.
“Sharp understands the gravity of this situation and will strengthen and thoroughly implement measures to prevent the recurrence of this kind of problem and will earnestly work to regain the public’s confidence,” the company said.
Sharp’s chief executive officer and other directors have agreed to return 10 percent to 30 percent of their compensation from the company for the next three months, the company said.
In a statement, Motorola said it is “aware of the Department of Justice’s announcement today and has no further comment at this time.”
Chunghwa, a Taiwanese manufacturer, agreed to pay $65 million in fines for participating with LG Display Co. to fix prices on display panels sold worldwide.
Sharp reported $34.2 billion in revenue in its past fiscal year, $6.8 billion of it from LCD sales. Chunghwa reported $4.8 billion in revenue in fiscal 2007.
Neither Chunghwa nor LG Display has responded publicly to the Justice Department charges.
So far, no corporate executives have faced criminal charges, only their corporations.
However, “the investigation is continuing,” Mr. Barnett said. Other investigations are pending in Europe and Japan.
The $585 million in settlement agreements against the manufacturers are subject to federal court approval.