A San Francisco federal judge ordered Taiwanese electronics manufacturer AU Optronics Corp. on Thursday to pay $500 million for its role in a long-running global conspiracy to fix prices for liquid crystal display screens.
The punishment matches the largest fine ever imposed in a criminal antitrust case but falls far below government demands for a historic $1 billion sanction.
U.S. District Judge Susan Illston imposed the sentence before a courtroom crowded with defense attorneys, government lawyers and journalists. She sentenced two AU Optronics executives to each spend three years in prison and pay $200,000 in fines.
Prosecutors persuaded a jury in March that AU Optronics schemed with its rivals at a series of so-called “crystal meetings” to inflate prices for thin-film transistor liquid crystal display screens, known as TFT-LCD screens, in a five-year conspiracy that ended when federal agents raided their offices in 2006.
At Thursday’s hearing, government lawyers pushed for the maximum possible penalties, arguing that stiff punishment would send a signal to other price fixers.
In halving the government’s requested fine, Illston said she considered that AU Optronics paid nearly $200 million to settle two consumer class actions and faces additional civil lawsuits.
“A $500 million fine is enough but not excessive,” said Illston, who presides over the related civil cases against the TFT-LCD screen makers. “The financial ramifications for these defendants have already been massive and they are not over yet.”
Heather Tewksbury, a San Francisco-based trial attorney with the Justice Department’s Antitrust Division, objected to the sentence, telling Illston a $500 million fine would not be enough to deter other cartels.
AU Optronics was the only screen manufacturer charged in the case to go to trial. Seven rival firms including LG Display Co. and Sharp Corp. agreed to plead guilty and pay more than $890 million in criminal fines.
LG Display alone paid $400 million to resolve criminal allegations in 2008 and then assisted the government, Tewksbury said, calling it unfair that AU Optronics should receive a comparable punishment “without ever providing a shred of cooperation.”
“What the defendants are asking you to do is treat them more favorably for having gone to trial and lost,” Tewksbury said.
Illston also rejected the government’s recommendation of 10-year prison terms and $1 million fines for AU Optronics executives Hsuan Bin Chen and Hui Hsiung, both Taiwanese nationals.
“For a considerable period of time, the defendants thought they were doing the right thing vis-à-vis their company and their industry,” Illston said. “I think they did know it was illegal, but there were a lot of business pressures they were responding to. It was bad judgment but there was relatively little personal motivation.”
Lawyers for AU Optronics and the individual executives plan to fight their convictions on appeal. Defense lawyers had argued the company should not be fined more than $285 million.
AU Optronics attorney Dennis Riordan of Riordan & Horgan accused government lawyers of trying to bankrupt the company with a draconian fine.
“The government’s objective is to kill the corporation,” Riordan said.
The company is also represented by attorney Kirk Jenkins, a Chicago-based partner with Sedgwick, and San Francisco lawyer Martha Boersch. Cooley partner Michael Attanasio represents Chen. San Francisco solos William Osterhoudt and Brian Berson represent Hsiung, along with Christopher Handman, a Washington, D.C., appellate partner at Hogan Lovells.
The $500 million fine imposed on AU Optronics matches the previous record for an antitrust case — $500 million paid by F. Hoffmann-La Roche Ltd. in 1999 for its part in a vitamin price-fixing scheme.
Illston set a three-year schedule for AU Optronics to come up with the funds after Riordan insisted immediate payment would bring down the company. She also ordered AU Optronics to implement a compliance program, hire an independent monitor and take out ads in U.S. and Taiwanese newspapers publishing the fact of its conviction and punishment.
Vanessa Blum is a reporter for The Recorder, a Legal affiliate based in San Francisco. •