International Probe Alleges 10-Company LCD Price Cartel

An unprecedented international investigation jointly announced by American, South Korean, Japanese, and European authorities, has named the world's ten top producers of LCD in a criminal probe alleging they may all have conspired to fix prices in the burgeoning LCD display market during 2003 and 2004.

Earlier today, a spokesperson for the US Justice Dept. confirmed the investigation to the Associated Press, saying only that it is looking into "the possibility of anti-competitive practices in the LCD industry," though without providing any extra detail.

According to the Japanese newspaper Yomiuri Shimbun, it was informed the companies being investigated are as follows: In Japan, Hitachi, IPS Alpha (the joint Hitachi/Toshiba/Matsushita joint venture), NEC, Seiko, Sharp, and Toshiba; and in Taiwan, AU Optronics; and in Korea, LG Philips and market leader Samsung.

There may be one other company outstanding. Sharp officials told the paper its US division had received a subpoena; and world #2 LCD producer LG Philips (the joint venture between Dutch-based Philips and Korea-based LG) had its offices searched last Friday, in both Japan and the US.

The paper says these firms are being investigated for "conspiring to prevent a drop in prices for popular products relating to television and personal computer screens." One question investigators might want to ask was whether such a conspiracy, if it indeed existed, actually succeeded.

This morning, a Hyundai Securities analyst told the Korean news service Yonhap News that, based on his experience with such matters, he predicts this investigation could last up to four years before actual evidence to turn up, and for a prosecution phase to then begin. But having seen what damage the recent DRAM price fixing investigation did to Korean firms, he believes that each company convicted of these allegations could pay fines of between $522 million and $1.03 billion.

Following up on the investigation news, a civil suit was filed in Florida, likely to become a class-action suit, against LG Philips. "As a direct result of defendants' anticompetitive conduct, plaintiffs have paid supra-competitive prices for TFT LCD display units or in preassembled computers bought from retailers," MarketWatch quotes the suit as saying.

Trading in shares of Philips Electronics -- the parent company's US division -- plunged on the news before recovering in late trading to score a modest gain of 0.66%.