LCD makers face price-fixing inquiry

An investigation has been launched into alleged price-fixing by the world’s leading manufacturers of LCD panels in a fresh blow to an industry struggling to cope with falling prices and over-supply.

Samsung Electronics, LG Philips LCD and AU Optronics – the world’s number one, two and three liquid crystal display panel makers respectively – said on Tuesday they were being investigated by authorities in the US, Japan and South Korea for “possible anti-competitive conduct”.

Sharp, Japan’s largest LCD panel maker, said it too had received summonses from regulators in Japan and the US over the weekend.

Sanyo Epson, another Japanese LCD panel maker, and Chi Mei Optoelectronics, Taiwan’s second-largest flat panel maker, have also been contacted.

Regulators in South Korea and Japan declined to reveal any details of their investigation.

But one industry executive said regulators were examining potential price-fixing in 2003 and 2004, when the industry was in an upturn.

Since the first quarter of 2004 panel prices have fallen sharply with the average cost of LCD panels for electronic goods from televisions to computers more than halving.

According to Lehman Brothers estimates, since early 2004 the average price of a 32-inch LCD panel has fallen from more than $1,100 to about $350, or almost 70 per cent.

All of the companies that on Tuesday admitted to being investigated pledged full co-operation with the ongoing inquiry.

Samsung said it was “strongly committed to fair competition and ethical practices” while LG Philips said it would co-operate fully with regulatory authorities.

In Korea, the LCD makers face fines of up to 10 per cent of the sales generated from price-fixing.

Analysts said the potential penalties could exceed the $300m fine Samsung was forced to pay in the US last year after pleading guilty to price-fixing tied to its computer memory chip business. The fine was one of the largest ever paid by a company in the US.

Analysts said the investigation could hamper LCD makers’ efforts to cut output and ease oversupply. Taiwan’s AU Optronics is already cutting output.

Samsung shares closed down 0.7 per cent on Tuesday while LG Philips shares dropped 4.3 per cent. All of the other LCD makers that reported being investigated did so after the close of their local stock markets.