Antitust Update: AU Optronics Learns the Steep Price of Price-Fixing

On September 20, a federal judge taught AU Optronics a hard lesson in U.S. antitrust law when she handed down sentences to the company and its executives for their participation in a global conspiracy to fix the prices of LCD screens. From law firm Skadden Arps:

“… Judge [Susan] Illston sentenced AU Optronics to a fine of $500 million, matching the largest corporate fine ever imposed for a price-fixing violation… She also imposed three-year prison terms and $200,000 fines on the executives.”

What can the rest of the corporate world learn from the ruling? Five things:

1. Cooperating with authorities pays off:

“AU Optronics received a fine that was nearly 50 percent beneath the Guidelines’ recommended range, a significant discount typically afforded only to companies that agree to plead guilty and provide cooperation.” (Skadden Arps)

2. The Department of Justice knows no boundaries: 

“AUO was alleged to have fixed prices during multiple meetings with rivals in hotel rooms and karaoke bars across Taiwan. The verdict thus confirms the willingness and ability of the Antitrust Division to target activities outside the United States. Now, more than ever, executives should be aware that their activities in a foreign country may result in penalties in this country.” (McKenna Long & Aldridge)

3. Claiming innocence when the facts show otherwise just won’t work:

“AUO argued that it was too new and too small to enter into agreements with larger, more established companies. Also, it used information from competitors to undercut them, according to its defense, and increase its market share. DOJ countered these defenses with scores of minutes from the meetings, internal AUO emails strongly suggestive of agreements, and the testimony of cooperating witnesses, several of whom had served prison time for their role in the alleged offenses.” (Sheppard Mullin)

4. Executives responsible for illegal activity will be punished too:

“The two former AUO senior executives convicted were former AUO president Hsuan Bin Chen and former executive vice president Hui Hsiung… The guilty verdicts against the two AUO executives also mark the first time the Antitrust Division has convicted a foreign national at trial for a Sherman Act offence.” (King & Spalding)

5. The risks of fighting charges in court just went up:

“By going to trial, AU Optronics faced a significantly higher fine based on a larger volume of commerce than it would have faced had it pleaded guilty like its co-conspirators. The AU Optronics case underscores the risks that companies must evaluate when deciding how to resolve a criminal antitrust investigation. The Division will not hesitate to go to trial when the evidence warrants, which means that companies must promptly evaluate their exposure to determine an appropriate course of action.” (Skadden Arps)

The updates:

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