Thursday, November 11, 2010

Justice Department Indictes Three Men in Price-Fixing Plot

Numerous news outlets are covering this press release from the U.S. Department of Justice about an indictment against three Korean nationals reducing competition through a  price-fixing, output reducing and allocating market share conspiracy of Color Display Tubes (CDT's) that are used in Cathode Ray Tube (CRT) computer monitors.  According to PACER, the clerk of the court's preliminary assignment is to Judge William H. Alsup.

The indictment explains that there are three co-conspirators and four companies involved.  The conspirators are named the companies are listed anonymously as A-D.

Company A and Company D are Korean companies.  Company A and Company C formed Company B as a joint venture in 2001.  Company B is a Netherlands corporation with its corporate headquarters in Hong Kong.  Company B and Company D engaged in the business of producing and selling CDTs to customers in the United States and elsewhere.   

According to the indictment, Company A and later Company B employed Seung-Kyu Lee.  Beginning around 2004, at Company B, Mr. Lee was responsible for CDT sales.  From January 2000 until December 2005 Mr. Lee was involved in the conspiracy. Company B employed Yeong-ug Yang from as early as June 2003 to March 2006.  Beginning around 2004, Mr. Yang was responsible for CRT sales at Company B.  Company D employed Jae-Sik Kim from at least 2002 to March 2006.  Beginning around 2002, Mr. Kim was the CRT Sales Division Head for Company D.  From June 2003 to March 2006, both Mr. Yang and Mr. Kim were in the conspiracy.

According to the indictment, the named co-conspirators attended meetings in Taiwan, Korea, Malaysia and China where they discussed and agreed upon prices, output and market share of CDT's.  They acted on these agreements, exchanging CDT sales, production, market share and pricing information so they could implement, monitor and enforce the agreement.

While there is no discussion in detail of the legal theory involved.  Presumably the government is pursing this as an "antitrust per se" action.  In a per se action the activity is presumed to be an illegal restraint on trade rather than having to prove that there is a market and the action would affect competition within the market under the rule of reason analysis.  The latter can be difficult as this blog noted here.  See e.g. FTC v. Superior Court Trial Lawyers Assn. (U.S. 1990) (boycotts are a per se violation); United States v. Socony-Vacuum Oil Co. (U.S. 1940) (so are price-fixing agreements); United States v. Brown (9th Cir. 1991) (so are market allocation agreements).

The case is U.S. v.  Lee No. CR 10-0817, and the indictment is below the jump.

Antitrust Indictment

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