RealTime IT News

Price-Fixing Costs Samsung $300M

WASHINGTON -- Korean chipmaker Samsung agreed today to take a guilty plea and pay a $300 million fine for its participation in a global price-fixing scheme among memory chip manufacturers. The fine is the second-largest criminal antitrust fine in United States history.

The guilty plea is the latest in a three-year investigation by the Department of Justice (DoJ) that Samsung and other dynamic random access memory (DRAM) chip makers agreed to fix prices from 1999 to 2002.

Last September, German chipmaker Infineon pleaded guilty to similar charges and paid a $160 million fine.

In April, Samsung's Korean rival Hynix also pleaded guilty and agreed to a $185 million fine.

A fourth chipmaker, Boise, Idaho-based Micron, agreed to participate in the DoJ's Corporate Leniency Policy. The deal provides that, in exchange for Micron's complete cooperation in the still on-going investigation, Micron will not be subject to prosecution, fines or other penalties.

"This case demonstrates the need for vigorous antitrust enforcement in high-technology markets, which is one of the most important sectors of the American economy," said Thomas Barnett, acting assistant attorney general in charge of the DoJ's Antitrust Division.

"This case also illustrates the worldwide scope of our criminal investigations and exemplifies the need to prosecute and deter cartels that target American businesses and consumers."

According to the one-count felony charge filed today in the U.S. District Court in San Francisco, Samsung and its U.S. subsidiary, Samsung Semiconductor, conspired to fix the prices of DRAM chips sold to Dell , Compaq, HP , Apple Computer , IBM and Gateway.

According to the DoJ, Samsung carried out the conspiracy by participating in meetings, conversations and communications with competitors to discuss the prices to charge to certain customers.

In addition, the DoJ said Samsung issued price quotations in accordance with the secret price-fixing agreement and exchanged information on sales of DRAM chips for the purpose of monitoring and enforcing the scheme.

As the world's largest maker of DRAM chips, Barnett said, "Samsung was certainly one of the leaders [of the price-fixing scheme]."

Samsung issued a statement after the DoJ announcement of the plea deal stressing that the settlement "will in no way affect Samsung's day-to-day operations or its ability to meet existing or future obligations."

DRAM is the most commonly used semiconductor memory product, providing storage and retrieval of electronic information for a wide variety of computers and other electronic devices.

Last year, DRAM sales in the United States hits $7.7 billion.

Barnett said despite roping the world's four largest DRAM makers into settlements, the investigation is hardly over, noting seven Samsung officials had been "carved out" of the plea deal. He added that "punishment and deterrence" of individuals is also an important part of enforcing antitrust laws.

In December, four Infineon executives pleaded guilty for their roles in the DRAM price-fixing conspiracy. All four served prison terms ranging from four to six months and each has paid a $250,000 fine.

Two years ago, the DoJ charged Alfred P. Censullo, a Micron regional sales manager, with obstruction of justice in the DoJ's investigation. Censullo pleaded guilty to the charge and admitted to having withheld and altered documents requested by a grand jury.

As for prosecuting the Samsung executives, Barnett said, "That's a decision for us to make moving forward."