China fines six screen makers

BLOOMBERG NEWS

Samsung Electronics screen manufacturing arm, Samsung Display, together with that of LG Electronics, LG Display, and four Taiwanese display manufacturers, have been fined a combined $56 million by China for fixing LCD screen prices from 2001 to 2006. Photo: Bloomberg.

China fined South Korean and Taiwanese makers of liquid crystal display (LCD) screens a combined $56 million (R482m) on Friday for price-fixing, joining the US and EU in a crackdown on the industry.

US and European regulators have hit suppliers with penalties of more than $3 billion for colluding to push up slumping prices of display screens from 2001 to 2006. US courts have sentenced 12 executives to prison.

In China, the display units of Samsung Electronics and LG Electronics, along with four Taiwanese companies, were ordered to pay 144 million yuan (R154m) in penalties plus repayment to Chinese customers and other charges, according to China’s planning agency, the National Development and Reform Commission (NDRC).

Envoys from the six companies met every quarter from 2001 to 2006 to set prices of screens at a time when supply outstripped demand, pushing down market prices, according to Western and Chinese regulators. Samsung owns 85 percent of Samsung Display, the biggest display manufacturer. LG Display is publicly traded and LG owns 38 percent.

Nearly all the world’s cellphones and personal computers are assembled in China, making it a major market for components imported from South Korea, Taiwan and other Asian countries.

The display manufacturers “manipulated market prices and damaged the lawful interests of other companies and consumers”, the NDRC said.

US prosecutors say $74bn in global sales of LCD screens were affected by the conspiracy. Customers included Apple, Dell and other electronics firms.

The Taiwanese companies were Chi Mei, AU Optronics, Chunghwa Picture Tubes, and HannStar Display. The US Justice Department said it had been awarded $1.4bn in fines by courts while EU officials have imposed a total of e1.3bn (R14.6bn) in penalties.

China’s fines were smaller because it acted under its pricing law, which bases penalties on the improper income from sales, according to the NDRC. It said Western anti-monopoly laws based penalties on the much larger amount of a company’s total revenue but Beijing could not do that because its first anti-monopoly law was only enacted in 2008 and could not be applied retroactively.

After the EU fined companies in 2010, a major Chi Mei shareholder, Terry Gou, said price-fixing was led by Samsung Display and LG Display, the second-biggest panel manufacturer. Gou is the chairman of Hon Hai Precision Industry, which assembles electronics for Apple and other companies but does not make screens.

Samsung Display did not dispute the NDRC’s statement, said a company official contacted by phone on Friday.

The company would “strengthen training” so staff did not engage in price-fixing in the future, he said.

LG Display said it “remains committed to operating with full transparency in providing the best quality products and services to its… customers”.

Chi Mei, which has been renamed Innolux, said it had set aside money to pay the fines, indicating it would not appeal.

Spokespeople for AU Optronics and Chunghwa Picture Tubes said their companies would co-operate with investigators.

Employees who answered the phone at Hannstar said company officials who could comment were not available.

In September last year in the US, a former president and executive vice-president of AU Optronics were sentenced to three years in prison in what was said to be the most severe penalty imposed in an antitrust case. The firm was fined $500m.

In July last year AU Optronics, along with Toshiba and LG, agreed to pay a combined $571m to settle a lawsuit by customers. Other manufacturers, including Hitachi, Sharp and Samsung, agreed in December to pay $538m to settle.

Seven other Asian manufacturers and 22 other executives have pleaded guilty in US courts and agreed to pay a combined $890m in fines. – Joe McDonald from Beijing for Sapa-AP