AU Optronics fined $500 million in U.S. for price fixing

Reuters News
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Posted: Sep 20, 2012 2:27 PM
AU Optronics fined $500 million in U.S. for price fixing

By Malathi Nayak and Dan Levine

SAN FRANCISCO (Reuters) - AU Optronics Corp <2409.TW> of Taiwan was fined $500 million by a U.S. judge on Thursday for criminal price fixing in the market for liquid crystal display panels.

U.S. District Judge Susan Illston in San Francisco also handed down prison sentences of three years apiece to two individual defendants.

A jury convicted the company and two AU executives, Hsuan-Bin Chen, 60, and Hui Hsiung, 58, in March. Former AU Chief Executive L.J. Chen, who remains a top executive at the company, was acquitted at the trial.

AU was charged as part of an investigation into an alleged price-fixing cartel between 1999 and 2006. Several other companies, including LG Electronics Inc <066570.KS>, have pleaded guilty in the LCD probe.

U.S. prosecutors had accused company executives of meeting more than 60 times at luxury hotels to fix prices of LCD panels, saying the conspiracy cost the U.S. economy billions of dollars.

Criminal trials against publicly traded companies are rare, and AU has said it would appeal its conviction. At trial, AU's lawyers argued that the company "competed fiercely" and the mere exchange of information between companies was not illegal.

AU, one of Taiwan's largest companies, had argued it should be fined no more than $285 million. U.S. antitrust prosecutors had sought $1 billion.

"This was a documented, far-reaching, clearly illegal conspiracy to fix pricing," Judge Illston said at Thursday's hearing. She said she took into consideration fines imposed on other companies in the investigation, and the fact that AU had already incurred heavy costs in money and time for this trial.

"That's why I find that $500 million is adequate but not excessive," she said.

Rival LG Electronics agreed to pay a $400 million fine in 2008, while Samsung Electronics Co Ltd <005930.KS> cut an early deal to avoid prosecution.

AU was the sole Asian LCD maker to plead not guilty.

"$500 million is not enough to deter cartels like this from forming," Department of Justice antitrust division trial attorney Heather Tewksbury said.

In urging a larger penalty, Tewksbury said LG Electronics had been fined $400 million even after providing substantial assistance to authorities.

"AU Optronics is getting a 50 percent discount and that's an inequitable result," she said.

The judge also ordered three years of probation for the company, including implementation of a compliance and ethics program. The company was ordered to pay the fine over three years.

Both Chen and Hsiung declined to make personal remarks when asked by Judge Illston. They sat motionless as she sentenced them to three years in prison for making "poor choices and bad judgment."

"The Antitrust Division will continue to pursue vigorously international cartels that target American consumers and rob them of their hard earned money," Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division's criminal enforcement program, said in a statement.

The case in U.S. District Court, Northern District of California is United States v. Hsuan Bin Chen et al, 09-cr-00110.

(Reporting By Malathi Nayak and Dan Levine; additional reporting by David Ingram; Editing by Maureen Bavdek, Martha Graybow and Carol Bishopric)