AUO's legal woes bring an antitrust cloud that hangs over IT industry

Lee, who heads the BenQ Group of which AUO is one subsidiary, also has to find a stand-in for a third executive who had his passport confiscated in the U.S., former AUO executive vice president Hsiung Hui, who is now the president & CEO of electronics maker Qisda Corp., another BenQ Group subsidiary.

On June 10, the U.S. District Court in San Francisco filed an indictment against six current and former senior AUO executives, AU Optronics Corporation, and AU Optronics Corporation America for conspiring to fix the prices of TFT-LCD panels from Sept. 14, 2001 to Dec. 1, 2006.

At the end of July, Chen Hsuan-bin, Chen Lai-juh and Hsiung Hui went to the U.S. on their own initiative to explain their roles in the case, but it now appears they will not be returning to Taiwan anytime soon, after the U.S. District Court in San Francisco barred them from leaving California and ordered their passports confiscated.

Though this case is limited to flat panel makers, it has implications for many leaders of Taiwan's high-tech companies, for whom antitrust law and price collusion have become major topics of concern.

Never-ending Lawsuits

Taiwanese companies, which struggle to earn 2-3 percent net margins, are barely able to cover basic antitrust fines with their earnings, and if they are found guilty of conspiring to fix prices and fined three times as much, the burden becomes even more onerous. The Taiwanese flat panel maker Chi Mei Optoelectronics Corp. (now Chimei Innolux Corp. after merging with Innolux Display Corp.) was fined US$220 million in December, an amount that exceeded its total net income for a typical quarter.

At AUO's Investor Conference in January, Chief Financial Officer Andy Yang pre-emptively announced that the company had budgeted nearly NT$10 billion to cover legal expenses related to antitrust matters.

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