LG Electronics Inc. confirms that it has been imposed an administrative fine of €491,567,000 by the European Commission for allegedly infringing European competition law with regard to the sale of cathode ray tubes in the late 1990s and up to 2006. LG Electronics is currently reviewing the European Commission's decision with the intention to appeal the decision.

The European Commission contends that LG Electronics is liable for the period prior to July 2001 when it made and sold cathode ray tubes in addition to a period after that date, even though it had transferred its cathode ray tube business to LG Philips Displays, a joint venture between LG Electronics and Royal Philips Electronics NV. In 2006, LG Philips Displays went bankrupt.During the European Commission's investigation of the case, LG Electronics consistently maintained that it should not be held liable. In particular, LG Electronics has maintained that it cannot be held liable for any conduct of LG Philips Displays, which operated independently from LG Electronics at all times. For the period prior to the transfer of LG Electronics' cathode ray tube business to LG Philips Displays, any action by the European Commission is in any event time-barred.

"Other leading competition authorities, including the Korean Fair Trade Commission, the US Department of Justice and the Canadian Competition Bureau have investigated the same facts and concluded that LG Electronics should not be held liable for the conduct of LG Philips Displays," said John Kwon, Executive Vice President of LG Electronics. "In Europe, the Czech Republic's antitrust authority reached the same conclusion. LG Electronics fails to understand why the European Commission, which publicly values convergence of competition law enforcement, has taken a wholly different approach."

Furthermore, LG Electronics disagrees with the European Commission's calculation of the amount imposed on LG Electronics. It appears that the European Commission has calculated the fine imposed on LG Electronics partly on the basis of TV sets and PC monitors sold by LG Electronics in Europe rather than just cathode ray tubes. LG Electronics objects to this approach as there is no evidence that such sales, which relate to downstream products, were affected by the alleged infringement investigated by the Commission. In addition, LG Electronics further objects to the discriminatory fashion in which the European Commission has imposed its fines on the basis that it defies principles of fairness by treating similarly situated entities differently.

Any impact of the European Commission's decision on the financial results of LG Electronics will be announced at the next earnings report.