Industrial Organization: Contemporary Theory and Empirical Applications, 5th Edition

14

Price Fixing, Repeated Games, and Antitrust Policy

On December 5, 2012, the European Commission announced the fines totalling 1.5 billion ($1.92 billion) on seven firms that had participated in two related, but distinct illegal cartels. This is the largest single price-fixing fine ever imposed by the Commission and the firms involved include some of world's largest electronics firms such as LG Electronics, Philips, Samsung, Panasonic, and Toshiba.¹ Notably, in this last case, the fine imposed on Asahi/AGC was reduced by 50 percent to 113.5 million in return for that firm's cooperation with the cartel investigation and its providing information that helped expose the cartel.

The European case was related to an earlier case in the United States involving the liquid crystal displays used in flat panel TVs and computer screens. That case also involved several major electronics firms including Hitachi, Sharp, Samsung, and Toshiba. Settlements with these firms in late 2011 and early 2012 resulted in fines totaling $1.1 billion. That was before the final fine levied on Au Optronics of $500 million in September of 2012. That fine matched the largest single fine the US authorities had ever levied on any price-fixing firm.

The good news is that the above conspiracies were caught and prosecuted. ...