AU Optronic price-fixing trial to have wide repercussions

The China Post news staff

Taiwan’s LCD panel industry has been dealt a fresh blow after a U.S. court found one of its major makers, AU Optronics Corp. (AUO), guilty of price fixing. But the company is determined to fight on despite the annoying implications of a legal battle. The U.S. court found AUO, as well as two of its top executives, guilty of participating in a price-fixing conspiracy with many of its major peers — including South Korea’s LG Display and Japan’s Sharp — in the worldwide LCD industry between 2001 and 2006. AUO may find some comfort and encouragement in the fact that two other executives were acquitted while a mistrial was declared for the part played by another manager. And that may be the reason why it believes it will be eventually exonerated. The company, which has been maintaining its innocence all along, has vowed to appeal the verdict. But it is a very difficult fight where most of its peers charged in the same case have already pleaded guilty. The one exception remains Samsung Electronics, which has become a cooperating witness for the prosecution. AUO has been fighting alone — not just against the U.S. Department of Justice, but also, in a sense, its peers who have chosen to “betray” or “desert” it. We are not assuming the guilt or innocence of AUO, but it will be difficult to convince a jury that one is innocent while all others who have been involved — in this case, in meetings where price-fixing talks were held — have admitted to their crimes. But AUO has been fighting the charges from a technical standpoint. It questions whether the U.S. court has jurisdiction over what happened in meetings that took place in Taiwan. According to AUO, the U.S. court ignored the argument and deferred it to the appellate trial. But if this argument prevails in the appellate trial, it means that all convictions for the other companies would have to be voided. There is one annoying implication to this argument. Does it mean that a country that imports products from price-fixing companies can do nothing about it simply because the unfair practice takes place in another country? This seems to rest the responsibility on Taiwan. So far Taiwan has done nothing to investigate those meetings which took place within its territory. Is the Taiwan government condoning anti-trust activities, or is the lack of action a show of complete trust in all those local LCD panel companies that have been charged or convicted in the United States? The Taiwan government apparently trusts these companies, and has promised to help AUO within all possible means. Of course, the help actually would not be any more than expressing its concerns in the form of “friend of the court” briefs to the United States. Judging from the independence of the U.S. justice system and Taiwan’s diplomatic isolation, it is unthinkable that Taipei could take any more radical actions. But if AUO’s arguments stand and subsequently lead to the appellate court throwing out the case, does it mean that the U.S. government would simply give up? Would it press Taiwan to launch its own investigation? Taiwan has seldom been able to defend itself from U.S. pressure. The recent controversy over ractopamine-containing U.S. beef imports is a good example of Taiwan’s vulnerability. The U.S. pressure could also take the form of punitive tariffs on Taiwan’s LCD products. It could further cripple the competitiveness of Taiwan’s LCD products in the face of strong competition from South Korea, which is already the biggest LCD TV panel-making country in the world.

So what’s the meaning of AUO’s fight? There are times when you are innocent, but find yourselves thrown into a Kafkaesque world where there is no way out. AUO’s peers may have had such a feeling when pleading guilty to the price-fixing charges. They paid their hefty fines, had some of their executives go to prison in the U.S. and then returned to business as usual. But AUO obviously likes the role of Don Quixote more.