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AU Optronics group conspiracy cost billions: prosecutor
SAN FRANCISCO |
SAN FRANCISCO (Reuters) - Executives met over 60 times at luxury hotels to fix prices of liquid crystal display panels, a conspiracy which illegally cost the U.S. economy billions of dollars, a U.S. prosecutor said in court on Tuesday.
The government embarked on a rare criminal trial against a publicly traded company, AU Optronics Corp, as lawyers delivered opening statements in a San Francisco federal court.
"Instead of competing, these executives and these corporations were conspiring," Peter Huston, an attorney with the U.S. Department of Justice, told jurors.
But Christopher Nedeau, an attorney for AU Optronics, countered that AU Optronics "competed fiercely." The exchange of information between companies is not illegal, Nedeau said, and is necessary to survive in the industry.
AU Optronics, one of Taiwan's largest companies, was indicted in 2010 in Northern California for allegedly fixing prices of LCD panels.
Several other companies, including LG Electronics, have already pleaded guilty in the LCD probe, while Samsung Electronics cut an early deal to avoid prosecution.
However, AU Optronics and five of its current and former executives -- including Lai-Juh Chen, the former chief executive who is still a top executive at the company -- pleaded not guilty. If convicted, the executives could face prison, while the company could be subject to hundreds of millions of dollars in fines.
AU's market capitalization is roughly $3.8 billion.
Executives kept notes of their secret meetings, Huston said, and AU personnel attended almost all of those sessions. In addition to picking prices, executives also set production targets at those meetings, he said, in order to manage global supply.
"Ladies and gentlemen, the documents don't lie," Huston said.
AU's profits were 300 percent higher when the executives were meeting, he said, compared with when they weren't.
Yet Nedeau maintained that customers like Hewlett-Packard Co, Dell Inc and Apple Inc, actually drove pricing, not competitors. Nedeau showed jurors an email exchange between AU and HP employees, in which HP demanded a $5 price cut on 15-inch display panels. The AU employee agreed. Additionally, Nedeau argued that the U.S. Department of Justice is relying on witnesses who are cooperating to avoid severe punishment.
"Every deal has its price," Nedeau said. "These deals were conditioned on giving testimony favorable to the government's version of the case."
The U.S. government's LCD probe has netted fines totaling more than $890 million so far, DOJ has said.
Attorneys for the individual executives are expected to deliver their opening statements later on Tuesday.
The case in U.S. District Court, Northern District of California is United States v. Hsuan Bin Chen et al, 09-cr-00110.
(Reporting by Dan Levine; Editing by Tim Dobbyn and Gerald E. McCormick)
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