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Philips and LG Display accused of LCD price fixing

by Parm Mann on 13 July 2009, 14:40

Tags: Philips (AMS:PHIA), LG Display

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Dutch electronics company Philips and South Korea's LG Display have today revealed that they've been sent a "statement of objections" from the European Commission in regards to suspected price fixing on LCD panels.

Philips has refuted the claims, stating that it will "vigorously oppose" any price-fixing accusation.

The European Commission's statement signals the first formal step in an EU investigation, and it allows for the concerned parties to reply to the objections long before a final verdict is reached.

According to the European Commission, the statement of objections has been issued to a number of LCD manufacturers, many of whom remain unnamed. It adds that the product under investigation is "the main component of thin, flat monitors used in mobile phones, televisions, computers, digital watches, pocket calculators, portable music players and digital cameras".

One of the known accused parties, LG Display, was formed in 1999 as a joint venture between Philips and LG. Earlier this year, Philips completed the sale of its share in the company and states that it received its statement of objections as a former shareholder of LG Display.

In a similar case last year, LG Display - along with Japan's Sharp and Taiwan's Chungwa Picture Tubes - pleaded guilty to LCD price-fixing in the US. LG Display was consequently fined $400m.

HEXUS Forums :: 6 Comments

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Posted by Hicks12 - Mon 13 Jul 2009 15:23
How is it that their displays/phones etc are among the cheapest and best and they are somehow price fixing??. Sorry but sony and many other brands are alot more expensive so maybe you should through the accusation to them lot aswell.

Again its the EU commission, looking for useless reasons to fine companies apart from the ones that actually do wrong *Apple*.
Posted by Breezey - Mon 13 Jul 2009 16:41
Surely as a company they can charge whatever the hell they like as it their product they are selling? who cares anyway the vast majority of people will agree that the their premium displays are of superior quality to most others surely that means they can charge more for them?
Posted by handscombmp - Mon 13 Jul 2009 18:03
If they are found to be guilty does this mean consumers can get some money back like the did in the BA/Virgin atlantic fuel fixing.

Please say we can as i brought and LG screen in Xmas.
Posted by Funkstar - Mon 13 Jul 2009 18:19
Hicks12
How is it that their displays/phones etc are among the cheapest and best and they are somehow price fixing
The article does state: “has been issued to a number of LCD manufacturers, many of whom remain unnamed” LG and Philips are just two of the ones named.

This isn't about LG and Philips monitors, it's about the wholesale LCD panel market. Like all the LG panels sold to Dell and Apple for use in their monitors. Or the ones bought by HTC and Nokia for their phones.

There may be hundreds of companies selling monitors, but there are very few people actually making the actual screens. A few more will make the image processing electronics and power supplies found in side them.

Breezey
Surely as a company they can charge whatever the hell they like as it their product they are selling?
But if two or more domenant players in the market decide they are going to artificially inflate the price of those items, then that is price fixing and is illegal. Again, this is not about monitors.
Posted by Saracen - Mon 13 Jul 2009 18:23
Breezey
Surely as a company they can charge whatever the hell they like as it their product they are selling? who cares anyway the vast majority of people will agree that the their premium displays are of superior quality to most others surely that means they can charge more for them?
They can, by and large, charge what the hell they like. What they can't do is agree among themselves what that price will be.

Hicks12
How is it that their displays/phones etc are among the cheapest and best and they are somehow price fixing??. Sorry but sony and many other brands are alot more expensive so maybe you should through the accusation to them lot aswell.

Again its the EU commission, looking for useless reasons to fine companies apart from the ones that actually do wrong *Apple*.
Price fixing is often to maintain artificially high prices, but it can also be to maintain artificially low prices.

Let me give you an example. Suppose the market for some items, say “wotsits” is dominated by three companies, A Ltd, B Ltd and C Ltd. A fourth company (D Ltd) develops a new form of wotsit, significantly better and cheaper, than existing wotsits.

As soon as D Ltd brings their product to market, it's going to put market pressure on A Ltd, B Ltd and C Ltd, because they can't charge what they used to because D's wotsit is cheaper and better. And as it;ll take a couple of years to catch up with D Ltd's technology, and cost a lot of money, they're …. erm …. in trouble. So …. A, B and C all agree that in order to drive D Ltd out of business, they'll all sell at a loss. D Ltd, being a new company, doesn't have the reserves or resources to battle this out and relies on it's technology to give it a competitive advantage, but due to the collusion from the others, D Ltd goes out of business and A, B and C go back to their old pricing.

Result? We all get to lose out on the cheaper and better product from D. We all get to pay more than we need to for an inferior product, and A, B and C Ltd have little incentive to actually spend money on research and development to advance products because they know they can just drive competitors out of business.

Oh, and E, F and G Ltd, all of whom had ideas, also now won't bother to spend the money developing them because they saw the fate of D Ltd when they tried.


Low prices might be a benefit right now, but they aren't necessarily in our interests long term, because they could well mean we all pay more over time, or that progress doesn't …. er …. progress as fast as it should, or perhaps at all.

For that reason, and others, price fixing and similar types of anti-competitive collusion are illegal in the UK, EU, US and some other places, and not only can companies get fairly heavily fined but in some cases, company directors can end up with a vacation at one of Her Majesty's barred window and barb-wired holiday camps.

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