AU Optronics taken to the cleaners

AU Optronics, its American subsidiary and six of its executives have been indicted in the US for taking part in a cunning scheme to fix prices on LCD display panels.

According to the US Justice Department, the indictments are just the latest move in an continuing antitrust investigation into the LCD market

It looks like the rot went all the way to the top.  Amongst those facing charges are top AU Optronics executives and the outfit’s president, Lai-Juh Chen.

According to papers shown to the court AU Optronics participated in a world-wide LCD price-fixing conspiracy from 2001 to 2006, by which time the market for LCD panels was $70 billion.

Apple, Dell, and HP  were all hit by the price fixing scam, the DoJ said.  It is not clear how much cash they had to pay because of the scam.

Prosecutors alleged that AU Optronics officials would meet up with competing LCD makers at hotels, restaurants and cafes in Taipei.  Over a couple of drinks, perhaps a dancing girl or two, they would fix LCD prices and monitor and enforce them.

Information on LCD production, shipping, supply and demand was shared at those meetings, prosecutors alleged.

Apparently companies involved in the meetings became increasingly worried about being caught by their customers.  They decided it would be a good idea to quit meeting in groups and instead instructed their lower-level employees to conduct the information exchanges.

Employees at the company’s US based subsidiary in Houston were told to discuss and confirm pricing arrangements with other LCD makers in the Land of the Free.

Six other companies have pleaded guilty to fixing prices and have paid criminal fines totalling more than $860 million.These include LG Display, Sharp, Chunghwa Picture Tubes, Seiko Epson, Hitachi and Chi Mei Optoelectronics.

More than 17 executives from LCD companies have been charged in the investigation. The first charges in the case were announced in 2008.

AU Optronics, based in the Hsinchu science park in Taiwan said that it will defend itself against the charges. It issued this statement: ” AUO has cooperated with the DOJ and other authorities in their investigations of the TFT-LCD industry since they began in December of 2006 and is disappointed with the DOJ’s action today.

“When institutions are confronted with allegations of wrongdoing, it is tempting to look for someone to blame, even its own managers or employees. Regardless of what others may do, that is not the way AUO does business and is not the path it chooses now.

“AUO believes the facts of the case do not warrant such charges, as shown, among others, by the intense competition within the industry which has benefited consumers as shown by the steep decline in prices over the years for TFT-LCD panels.”