Price Fixing in the LCD Business Sure Doesn’t Seem to Do Much Good!

by on November 13, 2008 · 19 comments

There’s news today that the Department of Justice (DOJ) is imposing fines on three leading electronics manufacturers — LG Display Co. Ltd., Sharp Corp. and Chunghwa Picture Tubes Ltd. — “for their roles in conspiracies to fix prices in the sale of liquid crystal display (LCD) panels.” According to the DOJ’s press release, of the $585 million in fines, LG will pay $400 million, the second highest criminal fine ever imposed by the DOJ’s Antitrust Division.

Regardless of the merits of the DOJ’s case, I have to ask: Has there ever been a worse attempt at fixing prices in the entire history of price fixing? After all, have you looked at flat-screen prices lately? They do nothing but fall, fall, fall — fast! Here are some numbers from Steve Lohr’s New York Times article about the DOJ case:

The LCD business is a $100-billion-a-year market and growing, but prices are falling relentlessly. Recently, panel prices have often been cut in half each year, a downward trajectory even steeper than in other technology markets known for steady price pressure, like those for computer chips and hard drives. In the last six months alone, the price of a 15.4-inch panel for a notebook PC has dropped to $63, from $97, and a 32-inch LCD for a television has gone to $223, from $321, according to iSuppli, a market research firm. The price-fixing conspiracy, industry analysts said, was an effort to slow the speed of price declines. “These companies were trying to get a toehold to protect profits in a very difficult market,” said Richard Doherty, director of research at Envisioneering, a technology consulting firm.

Yeah, well, that “toehold” didn’t protect squat. And how could it; it’s not like these are the only three companies in the LCD business.  And you’ll forgive those of us who only have plasmas or projectors in our homes for wondering what the big deal is (although I am certainly aware that LCDs are the primary technology for smaller flat screen displays in computer monitors, cell phones, and other handhelds).

But hey, I’m sure the DOJ’s effort was worth it at some level. Some lucky handful of consumers will probably get a check for 65 cents once the class action dust settles on this one. In the meantime, if there is some sort of Antitrust Hall of Fame out there, I hearby nominate LG, Sharp, and Chunghwa for the “Worst Price Fixers in History” award.

  • http://www.techliberation.com Adam Thierer

    The more I think about it, the more asinine I find this. Here's a list of the top plasma suppliers and here's a list of the top TFT-LCD suppliers. As you will see, the big dog in this sector is Samsung, which is #1 in the LCD market and #2 in the plasma market. And yet Samsung wasn't in on the price fixing “cartel” that the DOJ just busted up.

    Hmmm… how does one create an effective price fixing cartel without the top dog from both market segments also being a part of it? I would also think that Panasonic, which #1 in plasmas, would be all too happy to see the LCD makers try to boost display prices so that they can undercut them and steal away flat-panel market share! And you may have heard of a couple of these other companies who weren't part of the “cartel” either: Sony, Hitachi, and Pioneer.

    Really, this has got to be THE worst attempt at creating a price fixing cartel that I have ever heard of.

  • Angus

    did you like at the time from 2001 to 2006. or just the last couple of months? This case covers 2001 to 2006…

  • http://www.techliberation.com Adam Thierer

    I have not looked at the prices from 2001 to 2006, and the 3 operators may indeed have succeeded, on average, in keeping prices fairly level during that period. But it certainly didn't seem to last long. My point here is not that price fixing is a great thing, or that it never works, it's that:

    (1) markets typically evolve to solve these problems because competitors don't sit still;

    (2) technological innovations route around attempts to freeze markets; and,

    (3) the remedies pursued by regulators typically take years to enforce and do very little good for consumers in the long-run.

  • toyotabedzrock

    First off these three decided to cut a deal and plead guilty. I believe that there is still an ongoing investigation on other large LCD manufactures.

    Second i would point your attn to the fact that prices for smaller LCDs has not dropped much if at all for several years now, and that generally wide screen displays in those smaller sizes provide fewer actual pixels.

    Also touch screen technology still remains very expensive, and panels that use 8 bits per color have gone up in price.

  • http://www.hdtv-premium-store.com HDTV Store

    Maybe there was an attempt to hold on the prices but to apply the second highest criminal fine It's to much

  • http://www.tvstelevisionsonline.com TVS TELEVISIONS

    I have been looking for blogs related to my foray into e-commerce with lcd's as the focus for my niche. I enjoyed reading your thoughts on price fixing. Since I targeted Samsung as my first choice it is good to hear that “they weren't part of the mess” I don't know about that but I do know that other than a couple of resellers that contribute millions in sales per quarter Samsung holds people very tightly to their MAP policies especially in the online world. I will definitely bookmark this site and check back often for relevant info about my new venture.

  • TVS_TELEVISIONS

    I have been looking for blogs related to my foray into e-commerce with lcd's as the focus for my niche. I enjoyed reading your thoughts on price fixing. Since I targeted Samsung as my first choice it is good to hear that “they weren't part of the mess” I don't know about that but I do know that other than a couple of resellers that contribute millions in sales per quarter Samsung holds people very tightly to their MAP policies especially in the online world. I will definitely bookmark this site and check back often for relevant info about my new venture.

  • TVS_TELEVISIONS

    I have been looking for blogs related to my foray into e-commerce with lcd's as the focus for my niche. I enjoyed reading your thoughts on price fixing. Since I targeted Samsung as my first choice it is good to hear that “they weren't part of the mess” I don't know about that but I do know that other than a couple of resellers that contribute millions in sales per quarter Samsung holds people very tightly to their MAP policies especially in the online world. I will definitely bookmark this site and check back often for relevant info about my new venture.

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