Wednesday, November 12, 2008

LCD Price Fixing

Three Asian flat panel screen makers today agreed to settle a price-fixing suit going back to 2006. From

"Three of the largest makers of computer and video screens, Sharp Corp., LG Display Co. and Chunghwa Picture Tubes Ltd., pleaded guilty to criminal price-fixing charges and will pay fines totaling $585 million."

I'm old enough to remember when the idea of a flat screen, whether it was LCD or plasma, was a big deal if it could display anything other than ugly alphanumeric characters. I also remember as the price elasticity was kicking in, what a huge deal it was. The price of the display relative to the rest of the bill of materials was absolutely dictating the pace of the substitution effect.

If you were the first person in your office to ditch the CRT monitor and get a flat screen, you were big time.

If this is the first time you've heard about this story, don't be shocked about the fact that all three companies named are Asian. Every flat panel manufacturer is Asian. All of them.

No xenophobia opportunity here. In fact, the opposite may be true.

"LG Display, Taoyuan, Taiwan-based Chunghwa and others met several times from 2001 to 2006 in so-called ``crystal meetings'' to set prices on desktop-computer, laptop and television screens, said Assistant Attorney General Thomas Barnett, who heads the antitrust division." according to Bloomberg.

The WSJ article specifically names only three companies - all obviously American - Dell, Apple and Motorola as customers who were outwitted by the scheme to fix prices. I'm sure these fine organizations are mortified that they didn't figure it out sooner.
As an institutional investor, I managed at times investments in LG Display and all three of the named customers. More to come on the value, or lack of value, of meeting with managements of public companies soon, but probably not tomorrow since I'm in Philly all day.

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