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September 19, 2012
"Optronics Sentencing Could Break All Sorts of Antitrust Records"The title of this post is the headline of this new Wall Street Journal article, which gets started this way:
A San Francisco federal courtroom on Thursday could be home to a watershed moment in the history of U.S. antitrust law.
U.S. District Judge Susan Illston is scheduled to sentence Taiwan’s AU Optronics Corp. on its March conviction for participating in a scheme to fix prices on liquid-crystal-display panels. The Justice Department is asking her to impose a $1 billion fine. Yes, that’s billion, with a B.
“This sentencing is one of the most important antitrust events in recent history,” says Allen & Overy partner John Terzaken, a former director of criminal enforcement in the department’s Antitrust Division.
The sentencing hearing is a rare event for several reasons and not all have to do with the financial stakes. But let’s start with the money. The fine sought by the government is twice the size of the largest single fine it has ever collected in an antitrust case — $500 million against F. Hoffmann-La Roche Ltd in 1999, which pleaded guilty to leading a price-fixing cartel on vitamins.
The $1 billion request also is nearly double the amount the Justice Department obtained in total criminal antitrust fines — in all cases — during the last fiscal year. It’s also more than the $890 million in combined criminal fines that seven Asian companies have agreed to pay in the LCD investigation, which dates back to 2008.
Of course, those seven companies, including LG Display Co. and Sharp Corp., agreed to plead guilty. AU Optronics chose to fight the charges at trial, a decision companies rarely make because the potential criminal fines imposed after a conviction can be very high. The AU Optronics jury found the LCD conspiracy resulted in ill-gotten gains of more than $500 million, a finding that allowed the Justice Department to seek the $1 billion fine.
Also of note in Thursday’s hearing, the department is seeking stiff sentences for two convicted company executives, asking Judge Illston to impose 10-year prison terms. That’s far beyond the longest jail sentence the department ever has obtained for a Sherman Act violation: four years.
Lawyers for the two executives say there’s no justification for the lengthy sentences the department is seeking, especially because LCD executives who pleaded guilty have received sentences of 14 months or less.
This sentencing matter could bring new meaning (and a notable price-tag) to the term "trial penalty" for both the company and its executives.
UPDATE: This AP story reports on the sentencing outcome handed down by the sentencing judge on Sept. 20: "A Taiwanese company has been fined $500 million and two of its former top executives sentenced to three years in prison for their leading roles in a global LCD screen price-fixing conspiracy."
September 19, 2012 at 07:37 PM | Permalink
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