Judge Orders Record Penalties Against AU Optronics In Criminal Antitrust Case

Keywords: record penalties, criminal antitrust case, price-fixing

On September 20, 2012, a federal judge imposed a $500 million fine on AU Optronics (AU), a Taiwanese manufacturer of thin-film transistor liquid crystal display (TFT-LCD) panels, for its role in a price-fixing conspiracy. The amount of the fine equals that of the largest criminal antitrust fine in history and is roughly equal to the entire amount of fines collected by the Antitrust Division of the US Department of Justice (DOJ) in FY 2011. Two senior executives of AU, former AU president Hsuan Bin Chen and former vice president Hui Hsiung, were sentenced to three years in prison for their role in the conspiracy, the second-longest terms ever ordered in an antitrust case. The Antitrust Division had sought a fine of $1 billion and ten-year prison terms for each executive, all of which would have set records.

The sentencing hearing was the latest step in a long-running and closely watched antitrust investigation that culminated in an eight-week jury trial in the Northern District of California at which AU and the two executives were found guilty of price-fixing. Two other executives were found not guilty, and the jury was unable to reach a verdict with respect to a fifth executive. AU has vowed to appeal its conviction and sentence.

The investigation focused on allegations that several of the world's largest manufacturers of TFT-LCD panels, which are used in products such as flat screen televisions and computer monitors, were part of a cartel that conspired over a period of at least five years to fix the prices of their products, which then were sold into the United States. The investigation appears to have been triggered by a leniency application by another manufacturer, Samsung Electronics. In exchange for providing information about the conspiracy, Samsung was accepted into the DOJ's leniency program. As a result, Samsung and its employees have avoided criminal prosecution for participating in the cartel.

Other cartel participants opted to plead guilty in advance of trial. Seven other TFT-LCD manufacturers agreed to pay a total of more than $890 million in fines. In addition, ten executives have pleaded guilty and have been sentenced to serve prison terms ranging from six to fourteen months. If the sentence stands, AU will pay $100 million more than any of its co-conspirators, and the convicted executives will each serve prison sentences more than twice as long as the...