Europe fines LCD companies €649 million for price fixing

by Scott Bicheno on 8 December 2010, 15:05

Tags: Samsung (005935.KS), HANNspree, European Commission, LG Electronics (066570.KS)

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It looks like Samsung learnt an important lesson when it was fined nearly €150 million for its participation in a DRAM cartel, which was found to have kept the price of memory artificially high by the European Commission earlier this year.

Another participant in the cartel - Micron - was spared any fine because it grassed-up the other participants, thus setting the Orwellian precedent of escaping punishment for illegal behaviour by ratting on the other participants.

Today the European Commission announced it was doshing out fines totalling almost €649 million to six LCD panel-makers for operating a price-fixing cartel in Europe between 2001 and 2006. However, there's a sliding scale of reduction on the price of committing a crime depending on the extent to which a company is prepared to betray its former accomplices.

The table below shows all the fines and the extent to which they've been reduced for cooperation with the investigation. As you can see, Samsung gets to keep every extra penny and cent it made by price-fixing for five years, while LG gets to keep half for coming clean in 2005. This ruling may also provide the foundation for individual actions for damages in future

"The companies concerned knew they were breaking competition rules and took steps to conceal their illegal behaviour. The only understanding we will show is for those that come forward to denounce a cartel and help prove its existence," said Commission VP Joaquín Almunia.

Fine (€)*

Includes reduction (%) under the 2002 Leniency Notice

1.

Samsung

0

100%

2.

LG Display

215 000 000

50% and "partial immunity" for 2006

3.

AU Optronics

116 800 000

20%

4.

Chimei InnoLux Corporation

300 000 000

0%

5.

Chunghwa Picture Tubes

9 025 000

5%

6.

HannStar Display Corporation

8 100 000

0%

 

HEXUS Forums :: 5 Comments

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Posted by usxhe190 - Wed 08 Dec 2010 15:16
WTH??

So today's lesson is:

If you want to do something illegal (no matter how bad it is), do it in a group and when things get heated, be the first to tell.

As long as you aren't the last dude telling, you will get a benefit.
Posted by aidanjt - Wed 08 Dec 2010 15:39
It's an intentional ‘race to the bottom’. By giving massive incentive to the first to come forward about cartels, no company can trust another, since their self-interest alters from making more money, to keeping all their money, it makes cartels more difficult to form.

Of course, it's still ridiculous.
Posted by usxhe190 - Wed 08 Dec 2010 16:19
aidanjt
It's an intentional ‘race to the bottom’. By giving massive incentive to the first to come forward about cartels, no company can trust another, since their self-interest alters from making more money, to keeping all their money, it makes cartels more difficult to form.

Of course, it's still ridiculous.

Unless, there is a cartel on the court payments, in which case, the companies still win.
Posted by c.ruel - Wed 08 Dec 2010 21:49
On the flipside from the perspective of the consumer it is better this way. Cartels are more likely to be broken up sooner because inevitably companies will rat each out sooner so the cartel doesn't last as long and therefore prices become competitive for you the consumer sooner.

If there was nothing like this in place it could take decades to come out or simply not come out at all.

Still I take all of you points that it is bad to reward really immoral cowardly behaviour.
Posted by bradyjames - Thu 09 Dec 2010 09:46
But the real losers here were the consumers / corporations that got ripped off for years. However none of the fine will get distributed to them. In the long run the LCD manufacturers will need to recoup the fine and therefore will need to make more margin on current products to pay the fine. So the consumer suffers again. In the end the producers take a minimal hit, the consumer pays again and the European Commission takes all the money.

This would be much fairer if a rebate was given back to each purchaser for each LCD purchased but it would probably cost a fortune to administer.