Competition Matters

In a competitive market, businesses will try to attract consumers by offering low prices or improving the quality of goods or services offered, which are advantageous to consumers. When businesses abandon competition to engage in anticompetitive conduct, however, consumers are forced to pay higher prices and are deprived of new or better goods or services. As such, the antitrust laws seek to foster and protect competition among businesses by putting an end to anticompetitive conduct—such as price-fixing.
 
Price-fixing occurs when two or more competing businesses conspire with each other to set pricing at certain price points in order to increase revenue. Price-fixing, as a consequence, reduces the incentive for businesses to attract prospective consumers by discounting prices or improving quality, depriving consumers of the beneficial by-products of competition.
 
In 2012, Shiu Lung Leung, a former senior manager in the Desktop Display Business Group at AU Optronics Corp., was found guilty in federal court for participating in a scheme to fix the prices of Liquid Crystal Display (LCD) panels used in televisions, computer monitors, and smart phones. According to court documents, for years, Leung met in hotel rooms with top executives at competing companies on a regular basis. At what they called “crystal meetings,” the executives planned and coordinated how they would keep LCD panel prices high. As time passed, however, the conspirators began to worry that law enforcement might be getting suspicious. To throw the authorities off the track, they sent secretaries and other non-executive employees to exchange information and plans with their competitors at karaoke bars and tea rooms throughout Taiwan. This anticompetitive scheme occurred from about 2001 to about 2006.
 
In 2013, Leung was sentenced to serve 24 months in prison and to pay a $50,000 criminal fine. Additionally, Leung’s co-conspirators were charged, pleaded guilty or been convicted, and sentenced for their participation in the price-fixing scheme.
 
The LCD case serves as a reminder of one of the red flags of collusion – competitors who regularly socialize with one another. While there is nothing inherently wrong with competitors who have dinner together or attend sporting events together – or whose employees sing karaoke together on a regular basis – it is something that public purchasers should document in their notes when they learn of it. It may be nothing but good fun, or it could be something more.
 
If you suspect unscrupulous behavior like this, or have questions about how to recognize anticompetitive activity, please call the Antitrust Section of the Ohio Attorney General’s Office at 614-466-4328.