Guilty pleas may not be the end for TFT-LCD makers in collusion case

Wednesday's announcement by the Justice Dept. that three international LCD panel manufacturers will plead guilty in a price fixing scandal, could result in the resumption of civil proceedings against them.

LG (which had been doing business jointly with Philips), Sharp, and Chunghwa -- three of the world's major producers of LCD displays -- will plead guilty to specific charges of conspiracy to artificially prop up the wholesale prices of their products, from the spring of 2001 to the winter of 2006. This despite the fact that those prices were on historic declines throughout that period.

The guilty pleas may represent the harvesting period, rather than the outright end, of an international investigation begun in December 2006, which also involved NEC, Sharp, Seiko, Toshiba, and Hitachi. The DOJ, in cooperation with its counterparts in South Korea, Japan, and Europe, launched an investigation two years ago into whether essentially the entire world's producers of LCD displays made agreements with one another not to compete on price.

In one example cited by the DOJ, Sharp (soon to become part of Panasonic, which was part of a joint venture that was also part of the investigation) will apparently allocate to having conducted discussions with its competitors about how much it should charge clients including Dell, Apple, and Motorola.

The wholesale price any company charges its major corporate clients has direct bearing on the prices it charges its smaller clients; and in US District Court in San Francisco Wednesday, some of those clients -- the total number of which could extend into the dozens -- filed motions that would enable their civil cases against their suppliers to proceed. Many of those cases were filed in the spring of 2007, when the international investigation started to bear fruit, but were suspended on judges' orders pending the outcome of the DOJ investigation.

Although the complete investigation is presumably nowhere near complete, the fact that three major targets will admit to being conspirators, may serve as evidence that a global LCD-TFT cartel did indeed exist.

LG has agreed to pay a fine of $400 million, the second highest ever to be attained by the DOJ's Antitrust division. Sharp will pay $120 million, and Chunghwa has agreed to pay $65 million.