Samsung, LG and four Taiwanese firms have been fined heavily for price-fixing of liquid crystal display (LCD) panels on the Chinese mainland.
These companies have been ordered to pay 144 million yuan in fines and return 172 million yuan of extra payment to Chinese mainland buyers. The government also confiscated 36.75 million yuan of their illegal gains, China’s top price regulator said Friday.
The four firms from Taiwan are Chi Mei Optoelectronics, AU Optronics, Chunghwa Picture Tubes and HannStar Display.
The six companies were fined for price-rigging on the Chinese mainland between 2001 and 2006, according to the National Development and Reform Commission (NDRC).
The NDRC launched an investigation after receiving multiple complaints since Dec. 2006 about price-fixing involving the six companies.
During the investigation, the firms confessed that they held 53 meetings between 2001 and 2006 to fix the prices of flat panels supplied to the Chinese mainland market. This harmed the interests of both other LCD panel suppliers and consumers, according to the NDRC.
LCD panels accounted for about 80 percent of the production cost of color TVs during the 2001-2006 period. More recently, the rate is around 70 percent, according to NDRC data.
The 172 million yuan that was illegally obtained from Chinese television manufacturers has now been reimbursed to these companies, said the NDRC.
The six companies also vowed to extend the free warranty period of their LCD panels for TV producers on the Chinese mainland from 18 months to 36 months, which could save manufacturers 395 million yuan each year on maintenance costs, the NDRC added.
Up until recent years, TV manufacturers on the mainland have suffered from their reliance on LCD panel imports, as the core technology of LCD production has been kept among LCD panel suppliers in South Korea, Japan and Taiwan.
“The NDRC’s move will help establish a fair market,” said Bai Weimin, vice president of the China Video Industry Association.
TV producers on the mainland have always hoped for fair treatment from overseas LCD panel suppliers, whose products now cover nearly half of the global LCD TV output, said Bai.
Meanwhile, Chinese netizens voiced their support for the commission’s firm stance.
“It may shock all the foreign-funded companies in China running against Chinese laws and regulations,” said a netizen on Friday in a post at the Twitter-like Sina Weibo.
“All the domestic TV makers could do nothing but accept the prices those giants fixed, which impacts the industry,” said a user with the screen name “Fanrenyanzhongkanshjie”.
However, some online comments showed their dissatisfaction, saying the fine could not be compared to that levied by the United States and the European Union on companies for similar deeds, which amounted to about 1 billion U.S. dollars.
“The fine means very little for them,” “Donghuahudegui” posted.
The amount of the fine was made based on the companies’ illegal income and was in accordance with the Pricing Law of China, the NDRC said. It also took their confession into consideration.
Others thought what matters is the penalty itself, not the exact fine.
“The incident is a milestone for Chinese market regulators who will act hard if anyone plays against rules,” said Prof. Wu Hong, Dean of School of Economic Laws under East China University of Political Science and Law.