China fines flat-screen manufacturers for price-fixing

China Flat Screen ManufacturingOne of Beijing’s economic planning agencies, the National Development and Reform Commission (NDRC), said Friday that the aforementioned South Korean firms plus Taiwanese companies Chimei, Chunghwa Picture Tubes, AU Optronics and HannStar were being fined for their actions between 2001 and 2006.China joined an international crackdown on price-fixing in the flat-screen electronics industry by fining Samsung, LG and four other Taiwanese firms $57 million US for anti-competitive behaviour.

It’s believed that at the time, the companies were meeting on a quarterly basis to set prices for components. Supply of components for screens far outpaced demand at the time, but the companies were able to maintain high prices by working together at the time, and that kept prices higher for consumers down the line.

The fines pale in comparison to the $3 billion in fines that North American and European regulators have already slapped the industry with for similar behaviour. As much as $74 billion worth of electronics had their ultimate price affected by the practice, U.S. prosecutors say. U.S. courts have already sentenced 12 executives to prison time for their role in the matter.

Virtually all flat screens on any device in the world are at least partially manufactured in China, so Beijing getting involved even on a modest scale is significant. The NDRC says China’s fines are comparatively smaller because they fall under the pricing law. U.S. and European bodies have pursued the issue on anti-trust grounds, which allow for much larger fines.

But China’s only equivalent law wasn’t enacted until 2008 and as such can’t be applied retroactively.

Companies react to price-fixing fines

Screen suppliers “manipulated market prices and damaged the lawful interests of other companies and consumers,” said an NDRC statement.

After the EU fined companies in 2010, a major Chi Mei shareholder, Terry Gou, said the price-fixing was led by Samsung and LG, the biggest and second-biggest display panel manufacturers, respectively. Gou is chairman of Hon Hai Precision Industry Co., which assembles electronics for Apple Inc. and other companies, but does not make display screens.

In a statement, Samsung said it doesn’t dispute the Chinese government’s move. The company will “strengthen training” so employees do not engage in price-fixing in the future, the official said.

LG Display said in a written statement that it “remains committed to operating with full transparency in providing the best-quality products and services to its global customers.”

Source: CBC News “China fines flat-screen manufacturers for price-fixing”

Categories: Manufacturing & Industry

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