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Record antitrust fines in China
These sanctions set an absolute record for antitrust offenses in China. NDRC's decision is also significant in that it is the first that exclusively sanctions "foreign" companies (from outside Mainland China).
LCD panels are the main components of flat TV and computer monitors. China's many TV and computer makers are buyers of LCD panels, and hence were the direct victims of the price-fixing activities.
The companies punished by NDRC are Samsung and LG from South Korea, and Chimei, AU Optronics, Chunghwa Picture Tubes and HannStar from Taiwan. With the exception of LG, these companies were also fined by the European Commission for the same cartel activities in 2010, and some of them were also targeted in investigations by the US Department of Justice and/or sued in private litigation in the United States.
The decision and the infringement
Some details of the NDRC decision can be found in a press release and a question-and-answer session between an NDRC official and a journalist ("Q&A") posted on NDRC's website, as well as in statements made by NDRC officials to the Chinese press.
Still, overall, the underlying facts, procedures and NDRC's legal reasoning are only outlined in these materials.
In terms of the illegal conduct, the press release states that the six defendants had manipulated prices for LCD panels from 2001 to 2006, to the detriment of TV makers and end consumers. The decision also mentions exchanges of information on market conditions and consultation on prices between the six companies.
The Q&A states that NDRC's decision is based on the Price Law, not the Anti-Monopoly Law ("AML"). The reason given was that the AML only entered into force in 2008 and has no retroactive effect. Given that the objectionable events occurred from 2001 to 2006, the AML was found not to apply.
Complex, intriguing set of sanctions
NDRC imposed heavy sanctions on each of the six participants in the cartel. In total, the amount of the sanctions was RMB 353 million (around USD 56 million). With around RMB 118, 101 and 94 million (approximately USD 19, 16 and 15 million) respectively, LG, Samsung and Chimei received the highest penalties.
Reports in the Chinese press suggest that AU Optronics acted as the whistle-blower and voluntarily approached NDRC to self-report. The official materials on NDRC's website do not confirm this point explicitly, but the Q&A notes that the six defendants all "turned themselves in," receiving different degrees of mitigation in the sanctions imposed. However, the press release also contains information on the volume of LCD panel sales in China for each of the six companies, and AU Optronics' share of the total amount of sanctions is below what its sales volume would imply. What is clear is that AU Optronics was not granted immunity and still had to pay a penalty of around USD 3.5 million.
Interestingly, NDRC said that the sanctions imposed on the companies consisted of two elements: the "unlawful gains" which the perpetrators realised through the anti-competitive conduct (RMB 208 million) and the fines themselves (RMB 144 million). In addition, the sanctions imposed in relation to the unlawful gains were also split into two parts: the "price overcharge" (RMB 172 million) and the "confiscation" (RMB 36.75 million).
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