Are LCD Manufacturers the World’s Worst Colluders?
Apparently we weren’t the only ones who noticed that LCD makers were teaming up as a way to ease the competitive intensity. LG.Philips says investigated by S.Korea, Japan, U.S.: Financial News – Yahoo! Finance
South Korean flat screen maker LG.Philips LCD Co. Ltd. (LPL) on Monday said it was being investigated by fair trade watchdogs from Korea and Japan and had received a subpoena from the U.S. Department of Justice. The company, a joint venture between LG Electronics Inc. and Philips Electronics, said it would cooperate fully with authorities.”Last Friday, as part of an investigation of possible anticompetitive conduct in the LCD industry, officials from the Korean Fair Trade Commission (KFTC) visited the offices of LG.Philips LCD in Seoul, Korea,” LG.Philips said in statement.
The real joke here, of course, is that the cartel laws are typically designed to protect consumers from companies controlling the market to raise prices. As we have noted many times, exactly the opposite is happening in the LCD space. The article notes this as well:
The company is struggling with weak prices and high costs for its mainstay TV panels. Analysts point to its lack of a diversified client base as one of the reasons behind its weak pricing power.
So all we can say is, if the LCD manufacturers are colluding, they are really bad at it.
Disclosure: Author is long IShares MSCI Japan Index (EWJ) at time of publication.
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[...] Are LCD Manufacturers the World’s Worst Colluders? [...]
[...] Investigation May Be Unwarranted, But Still Bad for LCD Business We were the first to point out that the price-fixing investigation aimed at LCD panel makers seemed a bit silly. And at least one firm is using our point as a defense, even at the expense of looking a bit inept. Plummeting prices all but prove the industry has not gotten together to reap excess profit. If anything, the industry needs to cut back production to get supply back in balance with demand. However, Goldman Sachs points out that the investigation may hinder them from doing so. Investment firm doubts in feasibility of production cut plans for panel makers, report says Panel makers may hesitate over their production cut plans in the first half of next year, as they will face a long-term investigation from justice departments in various countries, according to investment firm Goldman Sachs, as quoted by the Chinese-language Commercial Times. The hesitations may negatively impact the possibility for panel prices to rebound, the investment firm added, according to the paper. [...]