Reference no: EM132901838

Toshiba Seeing the Big Picture? Alliances and Price-Fixing in the LCD Industry"Toshiba products play an active role [in our lives], be it in computing, controlling, powering, or communicating, transporting, playing, or even just chillin'. The company's portfolio includes personal and professional computers (PCs, point-of-sale systems), telecommunications and medical equipment (LCDs for mobile devices, X-ray machines), industrial machinery (power plant reactors, elevators), consumer appliances (air conditioners, Blu-ray Disc recorders), electronic components (electron tubes, batteries), and semiconductors. Its portfolio also includes air traffic control and railway transportation systems...".129"[In order to grow their LCD operation] Toshiba bought out Panasonic's stake in Toshiba Matsushita Display Technology in 2009.... Renamed Toshiba Mobile Display, the company is a leading provider of LCDs used in mobile phones, in-vehicle displays, and portable computers. In 2012 Toshiba became part of a joint venture, named Japan Display, Inc. (JDI) that combined its small and medium-sized LCD panel business with those of Hitachi and Sony, along with investment by a Japanese government-backed fund. The [Japanese] government owns 70% of JDI whilethe three companies each hold 10% "130"Toshiba, LG Display and AU Optronics (AUO) have agreed to pay a combined sum of US$571 million to settle a lawsuit over the price-fixing of liquid crystal display (LCD) panels. According to newswire Bloomberg, San Francisco attorney Joseph Alioto, who was the co-lead counsel representing consumers suing the companies, said US$543.5 millionwould be awarded to consumers in 24 states who overpaid for electronics because of the alleged price-fixing. Another US$27.5 million in civil penalties to eight states would also be paid out, bringing the total settlement to US$571 million, Alioto added."131"The lawyer did not reveal how much each company would pay, but said a court document seeking approval of the settlement would be filed Thursday in a federal court in San Francisco, Bloomberg reported. The attorney told the newswire an earlier settlement with other panel manufacturers for US$553 million had been approved by a federal judge. Altogether, the two settlements totaled more than US$1 billion, setting a record for recovery in a class action lawsuit over price-fixing. The companies were alleged to have fixed prices for the LCD panels, driving up prices from 1999 to 2006, according to the class-action lawsuitfiled in 2007. A separate report by Reuters said several companies also pleaded guilty to separate criminal charges and paid fines."132In a separate Reuters report, a U.S. jury fined Toshiba US$87 million for conspiring to fix prices of LCD panels. "The class-action suit was brought against Toshiba, Samsung, Sharp and other LCD makers in 2007. It was filed by U.S. purchasers of LCD panels, both consumers and TV and computer manufacturers that incorporate the panels into their products. Toshiba has consistently maintained that there was no illegal activity on its part in the LCD business in the United States, and Toshiba continues to holdthat view, the company said. 'While Toshiba appreciates the jury's time and effort, Toshiba believes that the jury's verdict is in error as to the finding of wrongdoing on Toshiba's part. Toshiba plans to pursue all available legal avenues to correct that finding."'133

Questions

1.What antitrust legislation addresses price-fixing and alliances?

2.What are the responsibilities of the U.S. Department of Justice relative to price-fixing?

3.Why would Toshiba, Hitachi, and Sony, along with the Japanese government, have formed Japan Display, Inc., rather than merge and/or acquire the companies that are part of the alliance?