* AU Optronics found guilty but not former chief executive
* Amount of gains from price-fixing judged at least $500 mln
* AU says to appeal verdict and any fine
By Jonathan Standing and Ronnie Cohen
TAIPEI/SAN FRANCISCO, March 14 Taiwan's AU
Optronics Corp will appeal a guilty verdict by a U.S.
court in a price fixing suit over liquid crystal display panels
that could leave it facing a fine of up to $1 billion just as it
looks to recover from a series of losses.
AU, the world's No.4 LCD maker, was charged as part of an
investigation into an alleged price-fixing cartel between 1999
and 2006, but was the sole Asian LCD maker to plead not guilty.
It told a media briefing in Taipei on Wednesday that the appeal
process could last more than a year.
Tuesday's verdict came after rival LG Electronics Inc
agreed to pay a $400 million fine in 2008, while
Samsung Electronics Co Ltd cut an early deal to
"We estimate the final fine could be at least T$15 billion
($508 million)," said Eric Kao, analyst at KGI Securities in
"But with the provisions AU has made so far the shortfall
will be less than T$10 billion, and since the company has about
T$120 billion available, there will be no problem getting the
AU said in a briefing it would continue to book provisions
for the case on a quarter by quarter basis according to the
progress of the case.
"Up to the end of last year we have made enough provisions,
according to our accountants' advice," Chief Financial Officer
Andy Yang told the briefing, but he declined to give a figure
for the provisions.
Its shares extended losses to more than 5 percent after the
briefing and were last trading down 4.73 percent at T$15.15 in a
broader market up 1.1 percent.
U.S. prosecutors accused company executives of meeting more
than 60 times at luxury hotels to fix prices of LCD panels,
saying the conspiracy cost the U.S. economy billions of dollars.
In a statement, the U.S. Justice Department said AU
Optronics faces a maximum fine of $1 billion. AU's legal adviser
said at the Wednesday briefing the court would evaluate the size
of AU's business in the U.S. from 2001 to 2006 before deciding
on the fine.
Two AU executives were also found guilty, but former AU
chief executive L.J. Chen -- who remains a top executive at the
company -- and a fourth executive were found not guilty. Chen's
family members wept with relief when the verdict was read out in
a San Francisco federal courtroom.
"While the company is gratified for the acquittals against
the executives, the company is deeply disappointed by the guilty
verdict," AU said in a statement on Wednesday.
"(The company) remains confident that the corporation and
the individuals will ultimately be vindicated during further
proceedings in this matter."
Any large fine would come at a difficult time for AU, which,
like other panel makers is struggling with falling prices and
demand. Most makers have posted several quarters of losses.
AU itself reported a worse-than-expected loss for the fourth
quarter earlier this month, but forecast a pick-up this year and
stable panel prices.
The company would have to take a bigger provision to cover
any fine and the legal costs of its appeal, but the ruling
should not affect its wider operation since new management was
now in place, said an analyst who declined to be identified.
"Depending on when AU books the provision, the company may
still be able to see a profit in Q3," he said.
On Tuesday, the jury decided that the total amount of gross
gains derived from the conspiracy -- in which several other
producers have been accused -- came to at least half a billion
Dennis Riordan, an attorney for AU Optronics, said after the
verdict that the jury was not asked to answer the most pressing
question -- whether U.S. price-fixing laws apply to acts
committed on foreign soil.
During the trial, one of AU Optronics's lawyers also argued
that the company "competed fiercely" and the mere exchange of
information between companies was not illegal.
The company added in its statement that it "presented
undisputed evidence that it consistently priced below the
so-called crystal prices from 2001 to 2006, which the company
believes to be solid evidence that it did not participate in any
price fixing agreement."
Before the trial, Riordan said, U.S. District Judge Susan
Illston rejected a motion to dismiss the case because the
alleged crimes took place outside the United States.
"This is a huge case," he said. "It's really the appeal
that's going to determine what this means."
One of two convicted AU executives, Hsuan-Bin Chen, is
currently vice chairman of the company's board. The jury also
convicted Hui Hsiung, and it acquitted Tsannrong "Hubert" Lee.
The panel deadlocked 8-4 in favor of convicting Shiu Lung
"Steven" Leung, according to a juror.
Illston will sentence the two men found guilty and impose
fines against the company after she hears motions for a new