Authorities from The United States Department of Justice and the Japan Fair Trade Commission were involved in the investigation; however, the European Commission has announced that it is also investigating whether or not there is evidence of price fixing.
Price fixing is an antitrust violation that occurs when various manufacturers or distributors agree to set the price of a product or service. The practice can take a variety of forms including holding prices firm, eliminating or reducing discounts, maintaining certain price differentials, fixing credit terms and not advertising prices. Price fixing does not have to involve all companies selling the product or service at the same price. In fact, agreeing to a minimum price counts as price fixing, even if the companies sell the product at a price higher than the minimum set.
Price fixing can involve a variety of products and services including televisions, airplane tickets, computer chips, and videotapes. Manufacturers and distributors can both be involved in price fixing. In the case of the TFT LCD, the manufacturers have been accused of price fixing; however, stores can also be involved in price fixing. Lawyers are also investigating allegations that big box stores and major national chains may have illegally fixed the prices of televisions, putting smaller retailers at a distinct disadvantage.
According to the website of the New York State Attorney General, "antitrust laws seek to ensure that industry is competitive, with a number of manufacturers or distributors of a product or service all striving to attract customers." Price fixing is prohibited by the Sherman Act, which was enacted in 1890. Various state laws may also cover price fixing. In New York, the Donnelly Act, Sections 340-347 of New York's General Business Law, prohibits price-fixing.
At least one law firm is investigating illegal conduct on the part of LG. Philips. A class action lawsuit against the LCD monitor maker is pending in the United States District Court for the Southern District of New York claiming that company executives violated the Securities Exchange Act of 1934. The plaintiffs allege that between July 16, 2004 and December 11, 2006, executives made positive statements about the company's LDC TV business. These statements were then undermined by allegations of price fixing on the part of LG. Philips. The suit claims that when the company announced it was being investigated for antitrust violations, shares in the company dropped to dramatically. The lawsuit is seeking to represent investors who purchased securities in LG. Philips LCD Co., Ltd. Between July 16, 2004 and December 11, 2006.