AU Optronics Corp. (AUO:US) executive Steven Leung was a key part of a liquid-crystal display screen price- fixing conspiracy that has yielded a $500 million penalty against the company, prosecutors said as Leung’s retrial began.
Prosecutors told a jury in San Francisco federal court today that Leung, an executive at the Taiwanese company’s desktop-display unit, had pricing authority for computer monitor panels, was responsible for large accounts including Dell Inc. (DELL:US), Apple Inc. (AAPL:US) and Hewlett-Packard Co. (HPQ:US) and was a key player in meetings held from 2001 to 2006 where prices were fixed.
“The evidence will show that Steven Leung’s company was already engaged in a price-fixing conspiracy and Leung knew about that conspiracy,” Heather Tewksbury, a U.S. Justice Department attorney, said in her opening statement.
A jury in March convicted AU Optronics, its vice chairman and a senior vice president, while deadlocking on the charges against Leung, leading government lawyers to retry his case. He has pleaded not guilty.
“He was faced with a choice,” Tewksbury told jurors. “He could fight it out with his competitors and charge a fair price, or he could break the law to join with competitors to fix the price of products sold to his customers. He chose not only to join the conspiracy, he became a key part.”
Leung was responsible for $2.1 billion of $3 billion in the company’s monitor sales in 2004, Tewksbury told jurors.
The executives (AUO:US) met with competitors secretly in hotel rooms, karaoke bars and other locations in Taipei from 2001 to 2006 to set LCD prices in response to an oversupply that pushed down prices by 40 percent, the government said in court filings. AU Optronics is based in Hsinchu, Taiwan.
Leung’s lawyers claim that the government’s key witness, an AU Optronics employee, has testified that he didn’t know whether executives in Taiwan were meeting with competitors to fix prices.
Leung “had no authority to set prices, no authority to bargain,” Dennis Cashman, Leung’s attorney, told jurors today in his opening statement. Leung took notes at meetings on competitor’s prices and market trends and gave the information to other executives who made pricing decisions.
“You will hear that it is not illegal to meet with competitors,” Cashman said. “It is not illegal to discuss prices and it is not illegal to take notes.”
AU Optronics was the only LCD maker charged with price- fixing by the U.S. to take its case to trial. Since 2008, rivals including LG Display Co. (034220), Chunghwa Picture Tubes (2475), Chi Mei Optoelectronics Corp. and Sharp Corp. (6753) agreed to plead guilty and pay more than $890 million in fines. Seventeen executives have been charged and 10 have pleaded guilty and been sentenced to prison, the Justice Department said in March.
U.S. District Judge Susan Illston, who is presiding over Leung’s trial, ordered AU Optronics to pay $500 million, half the penalty the Justice Department had sought. AU Optronics and its executives have appealed the convictions.
The case is U.S. v. Lin, 3:09-cr-00110, U.S. District Court, Northern District of California (San Francisco).
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