Sat, Sep 22, 2012 - Page 1 News List

AU Optronics fined US$500m for price fixing

PAYING THE PRICE:The LCD panel maker said it was innocent and would mull an appeal to contest the fine and jail time given to two of its executives

By Lisa Wang  /  Staff reporter

AU Optronics Corp (友達光電), the nation’s second-biggest LCD panel maker, yesterday announced it had been fined US$500 million by a US federal judge for participating in a global LCD price-fixing conspiracy. Company vice chairman Chen Hsuan-bin (陳炫彬) and former vice president Hsiung Hui (熊暉) were sentenced to three years in jail and each ordered to pay a US$200,000 fine.

AU Optronics said it is discussing with lawyers whether to appeal the verdict, as it found the results “unconvincing,” company president Paul Peng (彭雙浪) told a media briefing.

“It is a pity that the innocence of the company was not found under the [US’] legal system,” he said.

“We hope to prove to the appeal court judge that the fine and the prison terms [for the firm’s two executives] are unreasonable,” Peng said.

The fine exceeded the US$285 million mark that AU Optronics considers would have been a reasonable amount.

However, the stock price of AU Optronics rallied 5.05 percent to NT$11.45 yesterday because the fine was only half of the US$1 billion requested by the US Department of Justice last week on Friday. AU Optronics is allowed to pay the fine in installments spread over 3 years.

The Hsinchu-based panel maker had already reserved US$277 million for the anti-trust case, company chief executive officer Andy Yang (楊本豫) said, but would now need to book US$223 million in damage provisions for the anti-trust case, which would be reflected in its financial statement this quarter.

“The fine is larger than our estimate of US$300 million. We have warned our clients to caution against a bigger damage request,” said an analyst with a Japan-based brokerage surnamed Lin (林), who requested not to be named.

Because of the extra damage provision, AU Optronics would see its losses widen to NT$11.3 billion (US$384 million) in the current quarter, compared with NT$4.62 billion originally estimated by the analyst, distancing the company from returning to profitability.

Bigger rival Chimei Innolux Corp (奇美電子) said on Tuesday that it aimed to swing into monthly profits sometime this quarter.

Last quarter, AU Optronics booked US$208 million in extra provisions to settle price-fixing lawsuits with private groups in the US.

“The verdict has temporarily dissolved uncertainty about the anti-trust case and will bring the management team’s attention back to improving the company’s fundamentals,” Peng said.

The fine is tied with one given to Swiss pharmaceutical company F. Hoffmann-La Roche Ltd for the dubious honor of being the highest paid by a company in a Justice Department anti-trust case, Bloomberg reported yesterday, citing agency data.

The drug company pleaded guilty to leading a worldwide conspiracy to fix prices for vitamins and agreed to pay US$500 million to the Justice Department in 1999.

The average prison sentence in these types of anti-trust cases since 2010 is 24 months, according to the report.

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