TOKYO - Japan's fair trade watchdog raided two electronics companies Thursday on suspicion of fixing prices of display panels for Nintendo's popular DS portable game machines, officials said.
Fair Trade Commission investigators searched several offices and factories of Sharp Corp. and Hitachi Display Ltd., a display unit of Hitachi, an FTC official said on condition of anonymity.
The two companies are accused of fixing prices of LCD panels before supplying them to Nintendo for its DS consoles since about 2005, the FTC official said.
Osaka-based Sharp and Hitachi Displays, based in Tokyo, are the only two suppliers of small LCD panels for DS and DS Lite models produced by Nintendo Co. and the allegation deals an embarrassing blow to the leading game-maker.
Sharp has been supplying the panels since DS machines debuted in November 2004 and Hitachi Display became a second DS panel supplier for Nintendo a year later, the FTC official said. Investigators believe the alleged price-fixing began around the time of Hitachi's participation, he said.
A violator of anti-monopoly law would face a fine of 10 per cent of their sales. The sales figure was not disclosed.
Sharp and Hitachi Display acknowledged Thursday's raid. Sharp spokeswoman Miyuki Nakayama said she could not release any details of the allegations. Hitachi Display spokesman Masayuki Ishibashi said the raid involved its LCD products but he could not identify its client.
Nintendo spokesman Yasuhiro Minagawa said it was too early to comment on the impact of the allegations or whether to consider changing panel suppliers.
Nintendo's DS portable machine, which comes with a touch panel, has introduced new kinds of gaming, including brain teasers, virtual pets and cooking recipes. It has drawn interest from a wide range of users. Since its debut in 2004, the machine has sold 64.79 million units in cumulative global sales.
The Kyoto-based company said it expects to sell 29.5 million DS machines, as well as 18.5 million of another popular Wii game machines for the fiscal year through March 31.
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