Antitrust Alert: U.S. and EU Antitrust Authorities Impose Extraordinary Fines in Two New Enforcement Actions

This week, in separate new matters, the United States and the European Union announced the detection and prosecution of price fixing agreements among competitors. The U.S. Department of Justice reported guilty pleas and fine agreements by three Asian manufacturers of liquid crystal display (LCD) panels. The European Commission revealed its investigation and fines imposed on four suppliers of automobile glass. Each authority obtained a record or near-record fine, reflecting its continued commitment and success in prosecuting cartels.

In the U.S. matter, on November 12 the Justice Department filed charges against LG Display (South Korea), Sharp Corporation (Japan), and Chungwha (Taiwan), all of which have agreed to plea guilty and pay fines for conspiring to fix prices of LCD panels, which are used in computer monitors and other electronic devices. The government charged that the defendants met and agreed on LCD prices, bid to customers in accordance with those agreed prices, and exchanged information to confirm each was complying with the agreement. LG agreed to pay a $400 million fine, Sharp $120 million, and Chungwha $65 million, and the Justice Department stated that the fines would have been larger if the companies’ boards of directors had not quickly accepted responsibility and cooperated. LG’s fine is the second largest paid by any U.S. criminal antitrust defendant. It is likely this investigation was initiated by information obtained from a co-conspirator under the Justice Department’s leniency program. The government’s press statements reported that the investigation was aided by coordination of enforcement officials in Asia and Europe. The government also stated that some of the LCD panels were sold to Apple Computer, Dell Computer, and Motorola Inc. It should be expected that information on additional plea agreements and possible indictment of executives will be released soon. Private class action lawsuits already have been filed on behalf of customers and ultimate consumers of products with LCD panels. It has been reported that the EU and Japan also are investigating this conduct.

DOJ Press Release

In the EU action, also on November 12, the Commission announced it was imposing fines on Saint-Gobain (France), Pilkington (UK), Asahi/AGC (Japan), and Soliver (Belgium), which together represent 90% of the new car and replacement glass purchased in Europe. The EC claims these companies met over the last five years to allocate customers and stabilize market shares. Saint-Gobain was fined €896 million; this fine was increased by 60% over the guidelines fine because Saint-Gobain was a repeat offender, having participated in two prior glass cartels in the 1980s. Asahi was fined €113.5 million, which reflects a 50% reduction because it cooperated with the EC investigation. Pilkington was fined €370 million and Soliver €4.4 million. The Saint-Gobain fine is the largest ever cartel fine for a single defendant. The combined fine is the largest for a single cartel in the history of cartel enforcement – worldwide. The EC initiated this investigation based on an anonymous tip.

EU Press Release

The fines imposed on cartel participants by the U.S. and EU authorities reflect their severe view of cartel conduct like price fixing and market allocation. The EC’s extraordinary fines may be seen as part of its effort to deter cartel conduct in Europe by increasing fines to levels beyond those imposed by any other jurisdictions. Unlike the U.S. authorities, the EC cannot impose jail time for antitrust violations. The U.S. Justice Department considers prison time for executives to be the best deterrent, and each year the U.S. imposes longer jail sentences on more U.S. and non-U.S. defendants.

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