Three Countries Probe Past Price-Fixing of LCD Screens

LCD screens are expensive as it is, but investigators in three countries are now probing the possibility that major electronics producers may have teamed up to fix prices on the popular displays.

Japan's Fair Trading Commission confirmed that it was investigating price fixing claims against LG.Philips and rivals including Korea's Samsung Electronics Co. Ltd. and Sharp Corp. of Japan.

On Monday, LG.Philips said the U.S. Justice Department and the Korean Fair Trade Commission (KFTC) were also looking into the industry.

Some reports indicated that most of the probes' focus was on past pricing, and gave no indication that current costs might be inflated.

A news report from Korean news service Yonhap speculated that the probe may zero in on suspicions of collusion during 2003-2004, when LCD makers had better control of the market.

"From what we have heard, the investigation may be stemming from a situation two or three years ago when the two companies were selling LCD panels at comparable prices," said Michael Min, an analyst at Korea Investment & Securities.

Shares of South Korean LCD panel maker LG.Philips LCD Co. Ltd. (LPL) fell sharply to a record low on Tuesday as a three-country probe into price fixing claims spread to more screen producers.

A joint venture between Japan's Seiko Epson Corp. and Sanyo Electric Co. Ltd., which specializes in small liquid crystal display (LCD) screens for mobile phones and digital cameras, is part of the investigations.

A public relations official at Taiwan's AU Optronics Corp., the world's third-largest LCD maker, confirmed late on Tuesday that the company was also under investigation from U.S. authorities.

LG.Philips share ended down 4.26 percent to 25,850 won after dropping as much as 7 percent to a record low 24,950 won. The group is already under pressure after two straight quarters of losses.

"The news of the antitrust investigation came on top of market concerns that LG.Philips' net loss would be even wider than expected," said Kim Seong-ki, chief investment officer at SH Asset Management.

"We expect LG.Philips to keep losing money at least throughout the first half. We maintain our 'underweight' rating on the stock."

Shares in Samsung Electronics, whose LCD unit accounted for less than 10 percent of operating profit in the third quarter, dropped only 0.66 percent, about in line with the broader market.

News that the Japanese firms were being investigated came after the Tokyo market had closed.

LG.Philips, a joint venture between LG Electronics Inc. and Dutch Philips Electronics, vowed to fully cooperate with authorities, as did Samsung.

LG.Philips was the world's No.1 maker of the large LCD panels used in flat-screen TVs and PC monitors in 2005. But this year it has been overtaken by rival Samsung, which teamed up with Japan's Sony Corp. (SNE).

In October, it reported a net loss of $346.7 million for the third quarter ended in September, after posting a record 321.5 billion won loss in the second quarter.

Reuters contributed to this report.