Antitrust Law Daily Wrap Up, ANTITRUST—W.D. Wash.: $62M verdict stands in TFT-LCD price fixing suit, (Mar 7, 2016)

By Greg Hammond, J.D.

Manufacturers of thin-film transistor liquid crystal display (TFT-LCD) panels were unable to convince the federal district court in Seattle to scrap a nearly $62 million judgment entered against the manufacturers for participating in a conspiracy to fix the prices of TFT-LCD panels that were incorporated in LCD products sold across the United States. The court rejected the manufacturers’ motions for judgment as a matter of law or, in the alternative, new trial, finding that the plaintiff produced sufficient evidence to demonstrate antitrust injury, standing, and participation in the price fixing conspiracy (Costco Wholesale Corp. v. AU Optronics Corp., March 3, 2016, Jones, R.).

A series of class action suits were filed against manufacturer AU Optronics Corp., its subsidiary AU Optronics Corp. America, and other manufacturers—including LG Display Co., Inc. and LG Display America, Inc.—for allegedly engaging in a conspiracy to fix the prices of TFT-LCD panels that were incorporated in LCD products sold throughout the United States. Retailer Costco Wholesale Corp. indirectly purchased LCD panels by buying finished products containing the panels from a number of different vendors. Following trial, judgment was entered in favor of Costco and against the defendants for nearly $62 million based on the jury’s verdict and the court’s findings of fact and conclusions of law. LG and AU filed motions for judgment as a matter of law and amendment of the findings in bench trial.

Antitrust injury. The court agreed that the evidence Costco presented at trial was sufficient to show that it suffered antitrust injury as a result of the defendants’ wrongdoing. In particular, the court concluded that there was adequate evidence to show that Costco purchased products containing price fixed panels; that increases in panel prices were passed through; that the relationship between panel price and finished product prices was well understood; that the conspirators supplied information regarding their views on the market for finished products with each other; and that the prices of finished products was closely tied to that of panels. On this record, the jury could have found that it was more likely than not that Costco was injured as a result of the defendants’ conduct, the court concluded.

Antitrust standing. Costco also presented sufficient evidence to establish that it had standing to recover under Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519(1983), the court determined. Specifically, Costco introduced evidence showing it purchased products containing price fixed panels from members of the conspiracy and evidence demonstrating that a significant portion of the price of finished products was related to the price of price-fixed panels. The evidence was sufficient to demonstrate that the market for LCD products and LCD panels was inextricably linked, the court stated.

FTAIA. LP and AU next argued that no reasonable jury could have found that Costco’s claims were allowed under the Foreign Trade Antitrust Improvements Act (FTAIA). The court agreed with Costco, however, that its instructions permitted the jury to find that the import commerce exception to the FTAIA was met based on evidence that conspirators sold their panels or finished products for resale to Costco in the United States.

Even if the import commerce exclusion did not apply, Costco presented sufficient evidence to show that the domestic effects exception was satisfied. The court reasoned that Costco purchased the finished products from U.S. vendors who, in turn, purchased from conspirators; the domestic effect—the increased prices as a result of the cartel’s price fixing—was felt by Costco entirely in the United States; and the increased prices that Costco paid for the products containing fixed-price panels was specific to Costco.

Participation. Lastly, the court concluded that there was sufficient evidence for the jury to reasonably find that Philips and Panasonic both participated in the conspiracy. With regard to Philips, the court noted that there was evidence that Philips exchanged confidential information concerning the panels, establishing opportunity, method, and actual exchanges of information, as well as impermissible price fixing. Similarly, the evidence regarding Panasonic was sufficient to support the jury’s conclusion, including witnesses who testified to meeting with Panasonic; documents indicating that representatives of Panasonic may have met with representatives of other conspirators; and documents reflecting that conspirators learned of Panasonic’s willingness to abandon its supply of certain panels if the price dropped below $220.

The case is No. C13-1207RAJ.

Attorneys: Cori Gordon Moore (Perkins Coie LLP) for Costco Wholesale Corp. Carl L. Blumenstein (Nossaman LLP) for AU Optronics Corp.

Companies: Costco Wholesale Corp.; AU Optronics Corp.

Cases: Antitrust WashingtonNews