Hitachi has announced that it has inked a purchase agreement with its former rival company Canon that will lead to a LCD panel business alliance. Hitachi has previously sold an important part of its Display Unit shares to Matsushita Electric Industrial Co. who manufactures LCD TVs under the Panasonic brand.

The agreement between the two companies outlines the fact that Canon will take control of 24.9% of Hitachi Displays, Ltd, that will be transferred to Canon no later than March 31this year. The agreement has been signed, but the deal is still pending approval from the regulatory organizations on the LCD market. If the purchase gets approved, Canon will have to pay about $400 million USD.

However, the terms of the deal buy Canon a 50% shareholders equity stake in IPS Alpha Technology, but Canon plans on getting all the shares of Hitachi Displays Ltd. currently held by Hitachi and Matsushita. Canon is world's largest manufacturer of digital cameras and will use the displays in its own products, such as cameras, camcorders, copiers, and printers.

The agreement between Canon and Hitachi follows Sony's announcement of buying one third of the $3.5 billion LCD panel plant that is currently being built by Sharp.

Things are starting to get complicated on the LCD market and the series of buyouts lead to some sort of LCD cartel suspicions. The trade authorities started to get suspicious because the activity in the LCD market is intensifying. The Japanese Fair Trade Commission announced today that it is investigating both Sharp and Hitachi in order to prove that they intend to form a LCD cartel for Nintendo's DS Lite.

However, it won't be easy for the Trading Commission to untangle the intricate knots in the panel business, because firms holding stakes in other ventures is a common practice. For instance, Samsung works with Sony and Toshiba collaborates with Sharp on the Asian market alone, which means that the global picture is much too complicated.