AUO Executives Go on Trial on LCD Price-Fixing Charges
SAN FRANCISCO -- AU Optronics (AUO) and five executives took part in price-fixing meetings at hotels more than 60 times with counterparts from five other TFT-LCD makers that produced billions of dollars in excess costs to customers including Apple, Dell and Hewlett-Packard, a federal prosecutor told jurors Tuesday at the start of a trial that the lawyers have estimated will last two or three months. The executives on trial are former CEO Hsuan Bin Chen; Hui Hsiung, a former corporate executive vice president and AUO America president; Lai-Juh Chen, who was vice president of the desktop display business; Shiu Lung Leung, who was director of the desktop unit; and Tsannrong Lee, who held senior manager positions in the computer display businesses.
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In his opening statement, Peter Huston, assistant chief of the San Francisco offices of Justice Department’s Antitrust Division, featured excerpts of what he said were meeting reports and emails by participants discussing specifics of 2001-2006 agreements among the makers on minimum prices for specific panels for notebook displays, desktop monitors and TV sets, and why supply-demand imbalances made them necessary. He called a report of the first meeting “a blueprint of this conspiracy” with references to seeking “orderly prices,” “production capacity and demand balance” and ultimately “pricing stability” for “profitability” by raising a “yellow flag” to “maintain order.” The “documents don’t lie,” Huston told the jurors twice. He said the government will ask them to find “at least $500 million in overcharges,” to increase penalties. U.S. District Judge Susan Ilston rejected a mistrial motion based on Huston’s having displayed a reference in a memo to 9/11 that the government had promised not to bring up in its opening statement, but she admonished prosecutors to stick by their commitments.
Defense attorneys replied that AUO executives participated in the meetings not to fix prices but to gain competitive intelligence from the other companies involved: Chi Mei Optoelectronics, Chunghua Picture Tubes and HannStar, all, like AU, from Taiwan, along with South Korea’s LG and Samsung. AUO’s aggressive price-cutting -- sometimes to below the floors that the meeting reports said had been agreed to -- and huge investment in production capacity undercut any possibility that it was sticking to cartel pricing, they said. “It is not illegal to meet with competitors” or even “to discuss prices,” Christopher Nedeau of the Nossaman law firm said on behalf of the parent company. The meeting reports “were based on the perception and self-interest of the author,” who was often from a company other than AUO, said Chen’s attorney, Michael Attanasio of Cooley Godward.
Most of the original defendants in the case from outside AUO have made plea agreements, and Huston said they will supply much of the prosecution testimony aside from expert witnesses. The attorneys for AUO America and Leung reserved their opening statements until later in the case. Each trial defendant is charged with one violation of Section 1 of the Sherman Act. If convicted, AUO and its American arm each could be fined $100 million, or double the company’s gain or the victim’s losses, whichever is more, DOJ said. The maximum penalty for an individual defendant is 10 years in prison and a $1 million fine.