Toshiba Conspired With Rivals to Fix LCD Prices, Lawyer Says

Toshiba Corp. (6502) conspired with rivals to fix the price of display screens, forcing businesses and consumers to pay more for televisions and laptop computers, a U.S. jury was told at the start of an antitrust trial.

Attorneys for U.S. makers of digital signs, home theater equipment and office networks that bought panels told the 10 jurors in federal court in San Francisco today that Tokyo-based Toshiba met with competitors and agreed to set prices for thin- film-transistor liquid crystal display, or LCD, panels from 1999 to 2006.

“This is an antitrust case that involves a conspiracy that started on a golf course in 1998,” Bruce Simon, an attorney for the plaintiffs, said during opening statements in the five-year- old lawsuit. “Toshiba was there.”

Toshiba, builder of nuclear power plants and notebook computers, is the lone defendant on trial after at least seven Japanese, Taiwanese and South Korean panel makers settled civil claims filed on behalf of buyers. Sharp Corp. (6753) and Samsung Electronics Co. (005930) were among those who agreed to pay $927 million in settlements reached in December.

AU Optronics Corp. (2409), Taiwan’s second-largest LCD maker, has reached a settlement, lawyers for the company and plaintiffs said at a hearing last month without disclosing an amount. LG Display Co. (034220) reached a settlement May 1 to resolve, for an undisclosed amount, claims by consumers and eight U.S. states.

Justice Department Probe

Overcharges linked to price fixing may total $867 million, lawyers for the plaintiffs said in court filings made before this month’s settlements. Under antitrust law, defendants can be assessed damages of three times the overcharge.

A U.S. Justice Department criminal investigation of LCD price fixing led to guilty pleas by LG Display, Chunghwa Picture Tubes (2475) and Sharp. The companies agreed in 2008 and 2009 to pay $585 million in criminal fines for participating in so-called crystal meetings in Asia where they agreed on what prices to offer customers, the U.S. said.

Toshiba wasn’t indicted in the federal probe. The current lawsuit was filed on behalf of direct purchasers of flat panels.

Toshiba denies participating in a conspiracy or fixing prices. Executives met with competitors occasionally for legitimate reasons, such as to discuss joint ventures, exchange market information and verify prices quoted by customers, Christopher Curran, Toshiba’s lawyer, said in court filings.

‘Never Participated’

The conspiracy was between Korean and Taiwanese competitors, and Japanese makers of LCD panels including Toshiba didn’t participate, he told jurors today in opening arguments.

“There was a conspiracy but Toshiba wasn’t in it,” Curran said. “Toshiba never participated, never even attended the crystal meetings.”

The company didn’t need to because it wasn’t making the type of products that were the subject of the talks, Curran said. There’s no evidence showing that Toshiba harmed any of the companies that sued it, he said.

AU Optronics was unsuccessful when it similarly argued before a jury at a criminal trial this year that its officials met with competitors for legitimate business reasons. The company, its vice chairman and a senior vice president were convicted in March of colluding with rivals to fix LCD prices. The trial took place in the same courtroom as today’s proceedings.

Fine of $1 Billion

The jury acquitted two other officials of the Hsinchu-based company and couldn’t reach a unanimous decision on a fifth. AU Optronics faces a fine of as much as $1 billion, the Justice Department said.

Simon, the lawyer for the plaintiffs in the Toshiba case, said in court filings that he will prove at trial that the company received information from the crystal meetings and had bilateral meetings in Asia and the U.S. Such conduct comprised the conspiracy to fix prices, he argued.

When Japanese companies first entered the conspiracy, bilateral discussions were the primary method of communication, according to the civil complaint. The talks created a model for how the conspiracy would be carried out after the South Korean and Taiwanese defendants joined, the plaintiffs allege.

Simon cited an August 2004 e-mail from Toshiba executive Makoto Chiba to an associate that said in part, “Stop circulating things such as proceeding with violations of antitrust laws via e-mails that include other involved parties.”

H.B. Suh, former head of LCD sales at Samsung who was the first witness to testify for panel buyers, said Toshiba was among the competitors with which he had contacts.

“The LCD industry has a tendency to be very price sensitive, so the company was subject to losses, that’s why I tried to prevent that,” said Suh, who left Samsung in March. “That is why I had those meetings.”

Toshiba was the sixth-biggest maker of flat-panel TVs last year, with a 5.1 percent share in the global market, down from 5.7 percent in 2010, according to DisplaySearch, a Santa Clara, California-based market research company.

The case is In re TFT-LCD (Plat Panel) Antitrust Litigation, 07-1827, U.S. District Court, Northern District of California (San Francisco).

To contact the reporters on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net; Pamela MacLean at pmaclean@pacbell.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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