by Joshua Druckerman
LCD screens are everywhere. These power-efficient,
lightweight, and slim liquid crystal displays are ubiquitous in just about
everything in consumer and industrial electronics these days. Televisions,
cars, laptops, cell phones, computer monitors, MP3 players, and many other devices
all sport LCD screens. As an example of their widespread adoption, there are no
fewer than five such screens in the room where this post was written!
Now, imagine that the manufacturers of these screens have
all been colluding to hold the pricing of these LCDs artificially high. Such a
scheme would involve an awful lot of panels, and create an enormous amount of
profit. It would affect a staggering number of consumers, businesses, and
industries. It would also, of course, be completely illegal, and might have
potentially ruinous effects on the conspiring companies if discovered and
Such are the facts alleged by the plaintiffs in In re
TFT-LCD (Flat Panel) Antitrust Litigation, a massive multidistrict class action
that targets some pretty big names in the electronics world. Included in the
lengthy list of defendants are such consumer electronics heavyweights as
Samsung, Sharp, LG, Chi Mei, AU Optronics, and Chunghwa. Many of these
corporations are household names, and those six companies alone control over
80% of the TFT-LCD market.
The plaintiffs allege that between 1996 and 2006, the
defendants formed a cartel that carefully controlled the supply and pricing of
LCD screens. The defendants agreed to set prices via telephone and email
correspondence, and through so-called "crystal meetings" between the
management, executives, and CEOs of the various companies involved. The
plaintiffs filed suit for injunctive and equitable relief, and produced
voluminous evidence of collusion in the form of meeting transcripts, memoranda,
These allegations were significant enough for the
Department of Justice's Antitrust Division to get involved in 2006, and as a
result of the DOJ's investigation seven defendants (including Sharp, LG,
Chunghwa, Hitachi, Epson, and Chi Mei) eventually pled guilty to Sherman Act
violations related to price fixing and were forced to pay fines. However, as
part of their guilty pleas, none of these defendants made or promised any sort
of compensation to the consumers who were overcharged for LCD panel-equipped
devices. This is where the class actions came in: to force the defendants to
make restitution to the many consumers they fleeced.
In order to qualify for class certification, the
plaintiffs were eventually split into two categories: those who bought the
TFT-LCD panels indirectly from one of the defendants through a retailer,
distributor, or other intermediary for their own use (the "indirect"
plaintiffs), and those who bought the TFT-LCD panels directly from a defendant for
their own use (the "direct" plaintiffs.)
In March 2010, the Northern District of California
certified a nationwide class for injunctive and declaratory relief for the
indirect plaintiffs, along with twenty-three separate state classes for damages
according to each state's individual laws. The direct plaintiffs' were divided
into similar classes, although there were only eight state classes in that
category in addition to the national one.
Both categories and all classes included "all persons and
entities" (including corporations) who bought TFT-LCD panels for their own use
between January 1, 1999 and December 31, 2006. The defendants failed to prevent
the class certifications, and none of their motions to dismiss were granted. As
trial dates loomed closer, many defendants decided to settle. Because of the
strength of the plaintiffs' case, however, any settlement was going to cost
At the time of writing, the Northern District has
approved settlement agreements between the direct plaintiffs and ten of the
twelve corporate defendants. These settlements add up to $405 million, which is
a massive 14% of each settling defendant's total volume of commerce during the
class period. That's a pretty large percentage, especially as antitrust cases
As if that weren't enough, the indirect plaintiffs and
the defendants have agreed upon a settlement agreement totaling $539 million
subject to court approval. This means that, as of right now, the settling
defendants have agreed to a $944 million total payout. This is the largest
antitrust class action settlement in history!
The total dollar amount might still climb, too. Toshiba
and AU Optronics have not settled and are still scheduled for trial in April.
The real kicker, though, is that on top of these unprecedented
settlements, the Department of Justice has previously forced the corporations
found guilty of Sherman Act violations to pay $890 million in fines. That
means, with the fines and settlements taken into account, LCD manufacturers
have paid out a total of $1.83 billion (plus their own attorneys' fees) as a
result of their price fixing. Considering the blatant illegality of defendants'
conduct, the sheer scale of profits from their wrongdoing, and the amount of
individuals and corporations affected, this certainly appears to be a just (and
And, of course, it couldn't have happened without the
efficiency and judicial economy created by the class action. If you
believe that a company is acting in an anticompetive manner please contact us.
Joshua Druckerman is a second-year student at New York
Law School and a member of its Law Review.
Abbey Spanier Rodd & Abrams, LLP, located in New York
City, is a well-recognized national class action and complex litigation law
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