RealTime IT News

34 States Hit Chipmakers With Price-Fixing Suits

Seven computer memory chip makers, including Micron Technologies and Infineon Technologies, face price-fixing charges lodged by 34 states.

The complaint alleges that DRAM (dynamic random access memory) chipmakers, including Micron, Infineon, Hynix, Elpida, Mosel Vitelic and Nanya Technology, conspired to rig prices of memory chips between 1998 and 2002.

Micron said it was aware of the state lawsuits. Micron has been working with the states to resolve the matter "for a lengthy time," according to Daniel Francisco, a company spokesperson.

Infineon and other defendants in the price-fixing lawsuit were not immediately available for comment.

In court documents filed in U.S. District Court of the Southern District of New York, state Attorney General Eliot Spitzer said the companies "participated in one of the largest price-fixing cartels of our time." The result, the states charged, were inflated memory prices paid by consumers and state governments.

Described as a "secret, worldwide conspiracy to eliminate competition," the lawsuits charge company executives exchanged pricing information before bidding on contracts with computer makers.

Some of the same companies named in this recent lawsuit paid millions in fines stemming from a U.S. Department of Justice investigation into memory chip price-fixing.

Micron escaped federal prosecution by agreeing to cooperate with DoJ investigators. Korean chipmaker Samsung didn't fare as well. It pleaded guilty to price-fixing charges in 2005 and paid a $300 million fine for its part in a scheme the government said spanned from 1999 to 2002.

Likewise, Germany's Infineon paid a $160 million penalty and Korean Hynix forked over $185 million in fines when they settled price-fixing charges.

"The DoJ and states are working two sides of the same street," Spitzer spokesperson Mark Violette told internetnews.com. After watching the government's case against the chipmakers, Violette said it didn't take much imagination to see consumers would be impacted by the collusion.

The memory market is undergoing much consolidation, according to Joe Wilcox of JupiterResearch. The companies named in the new lawsuit control nearly 70 percent of the DRAM market, according to analysts at iSupply Corporation.