AU Optronics, a Taiwanese company was fined $500 million Thursday and its former
president and executive vice president were each sentenced to three
years in prison for their leading roles in a global LCD screen
The sentences handed down Thursday are among the harshest penalties ever given in an antitrust criminal case.
the U.S. Department of Justice complained the punishments were not
enough. Federal prosecutors demanded a $1 billion fine and a 10-year
prison sentence for the executives.
U.S. District Judge Susan
Illston said she rejected the demand because A.U. Optronics has already
paid out millions to settle a class-action lawsuit and still faced other
lawsuits in the United States and around the world.
She also said
the two executives - Hsuan Bin Chen and Hui Hsiung - didn't deserve the
lengthy prison sentences demanded by prosecutors because they acted not
for personal gain like someone operating a Ponzi scheme but out of
their sincere belief that they were aiding a troubled industry plagued
by over-production and plummeting prices. Both men declined to address
"There were a lot of business pressures they responded to," the judge said. "There was relatively little personal motivation."
Nonetheless, the judge said the evidence of their guilt was "overwhelming" and that "they did know it was illegal."
company and seven other competitors who have previously pleaded guilty
were convicted of sending executives to quarterly meetings between 2001
and 2006 to hash out production levels and prices they would charge the
world's largest technology companies for their liquid display screens.
The tech giants include companies such as Apple Inc., Dell Computers and
a long-list of television and computer makers. Many of the meetings'
agendas and conclusions were documented and presented to the jury as
evidence. The jury convicted the company and men in March.
said the conspiracy artificially inflated the cost of those products
for consumers around the world. One-third of the $74 billion in LCD
screen sales implicated in the scheme were made by U.S. companies.
defendants played a pivotal role in a global conspiracy that had an
unprecedented impact on the pocket books of American consumers," federal
prosecutor Heather Tewksbury unsuccessfully argued for harsher
sentences. "They have done nothing to accept any responsibility for what
The judge is allowing the company to pays its fine in
four installments over the next year after its attorney Dennis Riordan
pleaded for a payment plan. He said the company had only $80 million in
cash on hand and order to pay the fine immediately would cause lenders
to demand repayment of $6.5 billion worth of loans. Such a scenario
would have "killed" the company, Riordan said.
The judge also
ordered the company to publish in three "trade journals" that it has
been convicted of price fixing and what measures its taking to avoid
breaking the law in the future.
DOJ is wrapping up a yearslong
investigation of the global price-fixing scheme that artificially
increased the price of LCD screens used in televisions, computers and
other electronic products made by Apple Inc., Dell Computers and many of
the largest high-tech companies in the United States.
conspiracy affected every family, school, business, charity, and
government agency that paid more to purchase notebook computers,
computer monitors, and LCD televisions during the conspiracy,"
prosecutors concluded in arguing for the criminal penalties.
Optronics and the other co-conspirators are also the targets of class
action lawsuits filed by customers, retailers and consumers.
July, the company, along with Toshiba and LG, agreed to pay a combined
$571 million to settle one of the lawsuits. Other manufactures,
including Hitachi, Sharp and Samsung, agreed in December to pay $538
million to settle.
Seven other Asian manufacturers and 22 of their
executives have previously pleaded guilty and agreed to pay a combined
$890 million in fines. The 10 executives who have been sentenced so far
received prison terms ranging from six months to a little more than year
The $1.39 billion in criminal fines won in court make
the LCD screen price fixing case the largest criminal antitrust case
ever prosecuted by the DOJ, surpassing the breakup of a vitamin cartel
in the late 1990's that netted $875 million in criminal fines.
date, F. Hoffmann-La Roche Ltd.'s $500 million fine for participating in
the vitamin price-fixing scheme remains the largest antitrust fine. The
DOJ's annual collection of antitrust criminal fines only topped $1
billion once in the past 10 years, according to a report compiled by the
law firm Gibson Dunn.
A jury found AU Optronics, Chen, its former
president, and former executive vice president Hsiung guilty and
acquitted two others. The jury couldn't agree on a verdict for a fifth
executive, and prosecutors dropped charges. Chen remains a vice chairman
of the company's Board of Directors. Both men were allowed to go free
and ordered to report to prison on Dec. 20
AU Optronics refused to plea bargain with the DOJ, becoming the only company to go to trial.