Hitachi Fined $31 Million For LCD Price Fixing

MojoKid writes "The Japanese electronics manufacturer has just agreed to pay a staggering $31 million fine for its role in a conspiracy to fix prices in the sale of TFT-LCD panels sold to Dell, Inc. The United States Department of Justice made the proclamation, and details show that Hitachi has plead guilty to a one-count felony. The charge, which was filed in the U.S. District Court in San Francisco, blames Hitachi Displays Ltd., a subsidiary of Hitachi Ltd., with 'participating in a conspiracy to fix the prices of TFT-LCD sold to Dell for use in desktop monitors and notebook computers from April 1, 2001 through March 31, 2004.'"

Comments

Fixed which way?

[NotQuiteReal]

High or low? I guess it would be "dumping" if low...

How Much?

[Rik Rohl]

did they make more than $31 mil profit by fixing the prices? If they did then they got away with it.

Re:How Much?

[justsomecomputerguy]

Exactly! It's not like this is going to hurt their reputation in any significant way, so the fines HAVE to be higher than the illicit profits for them to have any real teeth.

Re:How Much?

[sjames]

Since we can't put a corporation in jail, I suggest instead that they spend the same amount of time forced to operate as a 501c non-profit organization.

Re:How Much?

[hardburn]

They've also been hit with criminal fines of over $585 million.

Re:How Much?

[freedom_india]

Who said we can't? A corporation is a trust run by its board for its investors.
Put the board in prison or its Chairman.
That's what India and Russia do.

Pay $31M, Made $300M

[cc_pirate]

Once again a corporation is allowed to steal and not pay back what it stole...

While an individual would have to pay every DIME back and then pay a penalty on TOP of that...

Pathetic

Re:Pay $31M, Made $300M

[bluefoxlucid]

You know how much they made? Do you know the point of price fixing?

Re:Pay $31M, Made $300M

[Idiomatick]

To be fair companies are people. Punitive charges don't make as much sense. Charging the people who made the decisions punitive amounts does and I believe they have/will do so. Hurting a company of thousands of employees for the actions of 2~3 people is pretty pointless. The people that made the decision will be replaced so it doesn't matter.

Re:Pay $31M, Made $300M

[FlyingBishop]

Those jobs might not exist if the company hadn't been price fixing. Lack of significant consequences means a lack of significant laws.

Re:Pay $31M, Made $300M

[muszek]

If the worst that can happen to our company is giving back what we stole, we're gonna do the naughty thing.

Re:Pay $31M, Made $300M

[Afforess]

The best part, the new LCD screens will cost more because they have to cover "court costs." It's a lose-lose situation for consumers.

Re:Pay $31M, Made $300M

[earlymon]

Not so fast, compadre - according to TFA, some guys from Chunghwa were sentenced to jail time and indictments have been handed down to LG execs.

Lousy summary - Hitachi didn't price fix by themselves, they had (above named) partners.

It is beginning to look like fines are only part of the picture here.

Re:Pay $31M, Made $300M

[Idiomatick]

No, pay back the full amount taken. But punitive fees for people can be much more than the cost of damage (in mp3s case many 1000x). I don't think wipeing a company of thousands of employees off the face of the earth is a good idea when the act was perpetrated by a select few. And as the article states the people directly involved are getting hefty fines AND prison time. So lesson learned without having to devalue the company.

Re:Pay $31M, Made $300M

[AmberBlackCat]

The best part, the new LCD screens will cost more because they have to cover "court costs." It's a lose-lose situation for consumers.

Unless that makes a competitor's product cost less than the Hitachi LCD...

Agreed

[LingNoi]

The Japanese electronics manufacturer has just agreed to pay....

How come when companies break the law they get to "agree" on the punishment?

Re:Agreed

[jcnnghm]

Because the only other sensible thing to write is, "plans to file an appeal?"

Re:Agreed

[Anonymous Coward]

Never heard of plea bargains, huh?

So who's going to gaol??

[femto]

See, that's where it's so unfair to treat companies as people. They get the benefits, but not the downsides. If *I* committed a felony I would go to gaol. A company gets a smack on the wrist and it is business as usual.

What we need is a gaol for companies. If a person has to lose "X" years of their life by being locked up, why not a company? Being in "gaol" might mean that the company is nationalised for the length of the sentence and all profits go to the government.

Re:So who's going to gaol??

[enoz]

Just because your colony resorted to spelling everything phonetically...

Re:So who's going to gaol??

[eln]

I'd love to see a way to really punish corporations. Jailing their chief officers is a good start, but that usually only happens in the most egregious cases involving something that brings the company itself down. However, your idea to temporarily nationalize the company in order to punish it, while definitely giving the government incentive to enforce the laws, may be going a bit too far.

Considering the country is currently many trillions of dollars in debt, and adding almost 2 trillion more to that debt this year alone, the temptation to use nationalization as the default punishment for a wide variety of infractions may prove too great for the government to resist. Before you know it, the money-hungry government will have "temporarily" nationalized hundreds of corporations in order to siphon the profits and balance its own books.

The best option to control corporate malfeasance, in my opinion, is to make it as painful as possible to the people in the position to make decisions. The chief executives get rewarded with millions of dollars for doing a good job, and if they screw up badly enough they get...rewarded with tens of millions of dollars in severance. If screwing up carried an actual penalty for them, maybe at least some of them would think a little harder before going down that path.

Re:So who's going to gaol??

[fractoid]

He shoost, he scroes! GAAAAOOOOOOOOOOOLLLLLL!!!

Using all caps is what you're *meant* to do when someone scores a gaol, silly flitter!

Who gets the $31 million?

[AlexCorn]

Does the government keep the $31 million, or does it get distributed to those people who bought price-fixed displays? If the government keeps it, do the victims get a tax cut?

I'd rather a profitable, productive company like Hitachi keep the money than the parasitic government.

Re:Who gets the $31 million?

[LoverOfJoy]

Don't worry. The $31 million will just barely cover the costs of the lawyers. The government won't see a dime.

Re:Who gets the $31 million?

[fractoid]

In the words of the late Doctor Asimov: "What you're really saying is 'Up with Slavery for Other People!'"

Re:Staggering

[The Grim Reefer2]

$25 billion in profits last year. Yep, that $31 million fine is staggering.

Citation please? According to http://investing.businessweek.com/businessweek/research/stocks/earnings/earnings.asp?symbol=6581.T

Hitachi's revenue for 2008 was 175B yen or $1.8B. Which is not even the net profit, it's the all monies coming in before expenses. This is no where near $25B in profit.

In fact they made a net profit of 1.5B yen or $129 Million for 2007. $31 million is almost a quarter of their profits for 2007. For 2008(3-08 to 3-09) they are posting a $7.8B loss.

http://retrenchment-blog.breaking.sg/2009/01/hitachi-cuts-7000-jobs-worldwide/

Which Hitachi?

[Jane Q. Public]

Remember, this Hitachi is only a small subsidiary of the bigger Hitachi, and mentioned in TFA.

Rights

[darkpixel2k]

details show that Hitachi has plead guilty to a one-count felony.

Damn. Poor Hitachi. They just lost their right to vote and carry a gun.

Re:Who gets this $$?

[Anonymous Coward]

Those class-action lawsuits are totally bogus from the consumer's POV. Based on the notices I've received in the past, the outcome always seems to be

1. to participate, you must log onto some web site, enter your address and two phone #'s, date of birth, SSN, Visa account #, and three personal references; they'll send you a check for $14.50 in the mail. If the check doesn't arrive in six weeks, send a request by certified mail.
2. Court-approved plaintiff attorneys Dewey, Cheatem, and Howe LLP will receive 40 pct of the settlement as their court-awarded fees, which comes out to $55 million.

I'm happier just to have the company pay the fine to the government. This way, at least the lawyers won't get quite so obscenely rich in the process, although I'm sure some have already done handsome business in this case.

Seriously, I'd like to see some law passed regarding class action suits where the per-consumer reward is under $30. Give the money to the government instead, and cap the attorney fees at 15 pct.

Short list

[sjames]

Does anyone know where I can find the short list of corporations that are not convicted felons?

It's odd the way that people who would never in a million years do business with an individual with a felony record (would you buy a house from someone convicted of fraud?) keep on sending their cash to three time loser corporations.

Re:Short list

[sjames]

Market fixing maximizes the effects of the market's ill health and conspires to make it even less healthy (since the conspirators effectively become a single entity as far as market competition is concerned). An act of shoplifting causes a few hundred dollars worth of economic damage at most. An act of market fixing runs into the millions. Keep in mind that price fixing only happens in markets where the barriers to entry are high. Meanwhile, the price fixing creates malinvestment by convincing another player to enter the market only to have the competitors' prices "magically" fall as soon as they do (and well before they have a chance to recoup their initial investment). That is, the price fixing creates an illusion of inelasticity in selling price that simply does not actually exist.

Consider, as an outsider, I observer that the price of widgets seems stuck at around 150. I know I can produce them at a cost that allows me to sell for 110. I may conclude that apparently the other manufacturers can't figure out how to make them that cheaply, and go into business. Next day, magically the going rate for widgets is 109. That can only happen because the other manufacturers actually had a slightly lower production cost than me (perhaps because of volume) or because they have already recouped their initial investment. Either way, the price fixing created the illusion that neither was true and convinced me I could profitably enter the market. However, now that the illusion is broken, I'm left with no way to recoup my investment in a reasonable time. Meanwhile, I *could* have invested in something else with slightly lower expectations where the economy (and I) would have benefited more.

Re:Not Smart

[eln]

You're right. When the economy is bad, we should let corporations get away with breaking any laws or regulations they want to in order to maintain a healthy profit, thereby maintaining jobs. This is especially important when the economy is bad in large part because we let corporations get away with breaking any laws or regulations they wanted to in order to maintain a healthy profit.

$31m Is Small, Not "Staggering"

[meehawl]

In 2005, Samsung paid $300m for price fixing. Hynix paid $185m. Infineon paid $160m, and four of its execs went to prison and paid $250,000 each.

In 2008, LG paid $400m in fines for price fixing. Sharp paid $120m. Chunghwa paid $65m.

So... $35m. In this context, not very "staggering".

Siemens Paid $1.6 BILLION (Dr Evil Voice)

[meehawl]

I'd just like to add that to settle global bribery and corruption charges, Siemens recently agreed to pay $1.6 billion in fines - ~$900m to the US, and the rest to the EU. Now that's what I call "staggering".

Some other good reforms?

[jhylkema]

Our legal system needs to recognize that legal persons have a significant advantage over legal persons in court. To level that playing field:

-- Make the 14th Amendment's guarantee of equal protection under the law inapplicable to corporations.

-- After that, you raise the burden of proof, on both liability and damages, when corporations sue individuals. In other words, make the RIAA prove up every last penny of its damages when it sues file sharers. By that I mean, make them produce evidence that every song downloaded equals a lost sale. Hint: There isn't any.

-- By contrast, when individuals sue corporations, you reduce the burden of proof. Upon a finding of liability, damages are presumed.

-- Extend the right to counsel to individuals being sued by corporations.

On another note, the government can use its buying power to significantly (and positively) influence corporate behaviour. In other words:

-- Want to do business with the government? Great. You agree to a long list of "good corporate citizen business practises" (easy union recognition, no outsourcing, a living wage, caps on executive pay and perks, firings only for just cause, a fully funded pension plan, etc.) and we'll THINK about doing business with you.

Shit

[jhylkema]

Our legal system needs to recognize that legal persons have a significant advantage over legal persons in court.

Legal persons have a significant advantage over natural persons in court.

'Course, /. could add post revision functionality like every other web board has had for nearly a decade . . .