LG Display says lawsuit old story

By Cathy Rose A. Garcia

Staff reporter

Korean investors sued LG Display in New York last week, claiming that they have lost millions of dollars because of the company's involvement in a price-fixing scheme in the thin film transistor liquid crystal display (TFT-LCD) panel market.

In response, an LG Display official said, "LG Display believes this lawsuit overlaps with prior lawsuit that has already been filed in 2007 in the United States."

He declined to say more, citing the ongoing nature of the lawsuit, but added that an appropriate step was being taken.

Investors Son Eun-ja and Han Sang-ik filed a complaint with the U.S. District Court for the southern district of New York, alleging that LG Display pumped up its profits in the LCD panel market, while keeping its participation in a price-fixing scheme with other companies a secret. Profits declined after the scheme ended in 2006, resulting in losses for investors.

LG Display's role in the scheme came to light only when it agreed to pay a $400 million fine in an antitrust settlement with the U.S. Department of Justice in 2008. It was reportedly the second-largest criminal fine ever imposed by the department's antitrust division. Two other companies, Sharp Corp. and Chunghwa Picture Tubes, have also paid fines of $120 million and $65 million, respectively.

According to the settlement, the three companies colluded to charge predetermined prices for the TFT-LCD panels, between 2001 and 2006.

In the complaint, Son and Han are seeking to establish a class of investors who purchased LG Display stocks between July 16, 2004 and Nov. 13, 2008.

LG Display raised $1 billion in its initial public offering in 2004, and another $1.5 billion in its secondary offering in 2005.

However, Korea's Fair Trade Commission launched the first formal investigation on the price-fixing scheme in Dec. 8, 2006, when it visited the headquarters of LG Display, then known as LG Philips LCD. As a result, the complaint noted that LG Display's stock crashed by approximately 50 percent on the Karachi Stock Exchange from its highs in 2005, over the course of two trading days. After LG Display paid the fine in 2008, the stock price in Karachi also fell by another 11 percent.

Jeffrey C. Zwerling, a partner at Zwerling, Schachter & Zwerling LLP which represents the investors, said this was an example of a ``foreign-cubed'' case ― foreign investors using a foreign company over shares purchased on a foreign exchange. ``As we read most of the law that's developed in the area, there certainly is an aspect that affects the United States,'' he said, referring to the DOJ fine.

Zwerling said the investors have not yet filed a case in the courts in Korea, but are planning on such a move.