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San Francisco (AFP) Sept 20, 2012
A US judge on Thursday fined Taiwan's AU Optronics $500 million and sentenced two former executives to prison for rigging prices of displays for smartphones, computers and other gadgets.
"This was a documented and far-reaching conspiracy; there is no doubt about that," US District Court Judge Susan Illston said while sentencing Taiwan's largest LCD maker and Hsuan Ben Chen and Hui Hsiung.
She ordered one-time AUO president Chen and former executive vice president Hsiung to each serve three years in federal prison and pay $200,000 in fines.
A jury trial in San Francisco ended in March with a jury convicting AUO and the men of taking part in a scheme to rig prices of thin film transistor liquid crystal (TFT-LCD) display panels from late 2001 to December in 2006.
Prosecutors went on record in court calling it the "most serious price-fixing" case in US history and urged Illston to slam AUO with an unprecedented billion-dollar fine and imprison both men for a decade.
"We believe a $500 million fine is unable to deter the kind of conduct we see here," Department of Justice antitrust division trial attorney Heather Tewksbury argued during the sentencing hearing.
Defense attorneys countered that the prosecution's recommendation was "excessive."
Officials said the $500 million fine matches the largest fine imposed against a company for violating US antitrust laws.
Illston granted a request by prosecutors that AUO place notices in major trade publications in Taiwan and the United States telling the outcome of the case and what steps are being taken to prevent price fixing in the future.
AUO was also ordered to implement an ethics program watched over by an independent monitor.
Illston refused to stay imposition of the sentences pending appeals and ordered AUO to pay the fine in installments over the coming three years.
AUO and a Texas-based subsidiary took part in a five-year conspiracy to fix TFT-LCD prices worldwide, according to prosecutors.
Jurors concluded that "ill-gotten gains" in the United States alone tallied at least a half-billion dollars, according to the DOJ.
"These defendants and AUO's subsidiary, AU Optronics Corporation America were central figures in the most serious price-fixing cartel ever prosecuted by the United States," prosecutors said at the time of the verdict.
The companies and the former executive were convicted on conspiracy charges for taking part in a scheme to rig prices of the thin display panels.
Rival LCD makers met in secret at karaoke bars, tea rooms and hotel conference rooms in Taiwan to set prices rather than letting market forces prevail, according to the DOJ.
The convictions were part of an ongoing investigation that had already resulted in guilty pleas from seven other companies accused of taking part in the conspiracy.
US authorities say victims of the scheme included manufacturers such as Apple, Hewlett-Packard and Dell, as well as families, schools, small businesses and government agencies that paid higher prices as a result.
"This long-running price-fixing conspiracy resulted in every family, school, business, charity and government agency who bought notebook computers, computer monitors and LCD televisions," deputy assistant attorney general Scott Hammond said Thursday.
The DOJ estimated that by the end of the conspiracy the worldwide market for LCD panels was valued at $70 billion annually.
Eight companies and a dozen former or current executives have been convicted of criminal charges stemming from the price-rigging investigation.
Thursday's sentences raised the cumulative amount of fines to $1.39 billion, according to prosecutors.
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