AU Optronics

Has the U.S. govt. confused Apple with AU Optronics?

August 3, 2013: 3:16 PM ET

Meet the only other convicted price-fixer assigned a court-ordered compliance monitor.

397248142246FORTUNE -- Once a month starting in 2001, according to the DOJ's complaint, senior sales executives at AU Optronics (ADR) met secretly with their competitors in a Taipei hotel room to set prices for the thin-film transistor LCD screens used in computers and TVs -- a blatant violation of Section 1 of the Sherman antitrust act.

The conspirators called these monthly gatherings the Crystal Meetings, and they continued undisturbed until the spring of 2005. That's when some of their clients began to sense that something was rotten in the TFT-LCD market.

To keep their meetings secret and avoid detection, AUO's senior executives sent lower-level sales staffers in their place and had them meet not in a hotel but in various Taipei eateries.

In the spring of 2006, word of a possible U.S. Department of Justice investigation reached the Crystal Meeting participants. To keep ahead of the feds, they cancelled the group meetings and replaced them with a round-robin series of one-on-one meets in Taipei restaurants and cafes. These continued until AU Optronics was indicted and ultimately convicted on criminal charges of illegal price-fixing.

U.S.A. v. AU Optronics was back in the news this week because, according to Apple's (AAPL) lawyers, it is the only litigated price-fixing case in which an American court imposed an external compliance monitor like the one the government wants to sic on Apple in the wake of its loss in the e-book antitrust case.

"The contrast with this case could not be clearer," Apple wrote Friday in a response to the government's proposed remedies:

AU Optronics was a criminal case involving allegations of naked price-fixing. And the Government argued that, "from its very inception, AUO's standard operating procedure has been collusion. AUO has never known any other way of doing business and has never willingly operated lawfully." There was no conceivable procompetitive conduct associated with the Section 1 violation. And the defendant had "an inherent business culture of collusion" and "no antitrust compliance program whatsoever." As a result, "[a] new corporate culture [had to] be created, and [the defendant had] neither the will nor the experience to institute these new business practices on its own."

For Apple, the imposition of a court-appointed monitor with the power to parse all of Apple's conduct for antitrust compliance across all its businesses for the next 10 years is one of a half-dozen ways in which the government has overstepped its authority. As the opening paragraph of Apple's response put it:

Plaintiffs' proposed injunction is a draconian and punitive intrusion into Apple's business, wildly out of proportion to any adjudicated wrongdoing or potential harm. Plaintiffs propose a sweeping and unprecedented injunction as a tool to empower the Government to regulate Apple's businesses and potentially affect Apple's business relationships with thousands of partners across several markets. Plaintiffs' overreaching proposal would establish a vague new compliance regime—applicable only to Apple—with intrusive oversight lasting for ten years, going far beyond the legal issues in this case, injuring competition and consumers, and violating basic principles of fairness and due process. The resulting cost of this relief—not only in dollars but also lost opportunities for American businesses and consumers—would be vast.

Strong words. But they may be wasted on Denise Cote, the U.S. District Judge in whose hands all decisions about remedies rest. See Will the e-book judge give DOJ the Apple remedies it asked for?

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