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LCD Conspiracy Verdict Upheld by 9th Circuit

(CN) - The 9th Circuit on Thursday affirmed a $500 million fine and the convictions of two foreign executives charged in connection with the price-fixing of liquid-crystal display panels.

The FBI raided the Houston offices of Taiwan-based AU Optronics Corporation of America in 2006, and later indicted president and CEO Hsuan Bin Chen, executive vice president Hui Hsiung and seven other individuals it said had run a five-year, half-billion-dollar conspiracy to fix LCD prices around the world.

During an eight-week trial in San Francisco, federal prosecutors alleged that the defendants and other LCD manufacturers had held periodic secret meetings in Taiwan between 2001 and 2006 to "stabilize" the prices of display panels sold to big U.S. technology companies, such as Dell, Hewlett Packard, Compaq, Apple and Motorola.

A federal jury convicted the defendants for violating the antitrust Sherman Act. Hsiung and Chen both received a three-year prison term and a $200,000 fine. The company itself was fined $500 million.

In affirming Thursday, a three-judge appellate panel rejected various arguments by the defendants related to "the reach of the Sherman Act in a globalized economy."

The defendants had claimed that they were wrongly convicted under the Sherman Act because the antitrust law did not apply specifically to their alleged crimes, which they argued had little to do with the United States.

The three-judge panel disagreed.

"The defendants' efforts to place their conduct beyond the reach of United States law and to escape culpability under the rubric of extraterritoriality are unavailing," Judge M. Margaret McKeown LCDs for the panel. "In light of the substantial volume of goods sold to customers in the United States, the verdict may be sustained as import commerce falling within the Sherman Act; thus, the nexus to United States commerce is a given and is not at issue."

The panel also rejected AU Optronics Corporation's claim that the $500 million fine was excessive because, among other things, it was based on "the collective gains to all members of the conspiracy rather than the gains to AUO alone."

"The jury found $500 million in gross gains from that offense," Mckeown wrote. "The unambiguous language of the statute permitted the district court to impose the $500 million fine based on the gross gains to all the coconspirators."

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