dcsimg
RealTime IT News

Infineon Pleads Guilty to DRAM Price-Fixing

WASHINGTON -- German chipmaker Infineon has agreed to plead guilty and pay a $160 million fine for participating in what the Department of Justice (DOJ) calls an international price-fixing conspiracy in the memory chip market. The fine is the third largest in U.S. antitrust history.

According to the felony charge filed in the U.S. District Court in San Francisco, Infineon conspired with other, still unnamed, dynamic random access memory manufacturers to fix DRAM prices to major U.S. computer and server companies, including Dell , Compaq, HP , Apple , IBM and Gateway .

Munich-based Infineon issued a statement saying the fine would be paid in equal installments through 2009. "Infineon [has] already been in contact with these customers and has achieved or is in the process of achieving settlements with all of these [customers]," the Infineon statement said.

In addition to the fine, Infineon's guilty plea requires the company to cooperate in the DOJ's ongoing investigation of price fixing in the $5 billion a year DRAM market. Assistant Attorney General R. Hewitt Pate, head of the DOJ's Antitrust Division, declined to name other DRAM manufacturers that may be the targets of the investigation.

"Today's charge and its resulting guilty plea represent an important victory in the Department's ongoing fight to break up and prosecute cartels that harm American consumers," Pate said.

According to the DOJ, Infineon carried out the conspiracy from July 1, 1999, to June 15, 2002, by participating in meetings, conversations and other communications in the United States and elsewhere to fix DRAM prices to be sold to certain customers. Subsequently, Infineon issued price quotations in accordance with the agreements reached with the other, unnamed DRAM manufacturers.

"Infineon is the first company to agree to plead guilty to price-fixing charges in our ongoing investigation of antitrust violations in the DRAM industry," said James M. Griffin, the Antitrust Division's deputy assistant attorney general for criminal enforcement. "More importantly, Infineon will provide valuable assistance in our continued investigation of the DRAM industry."

The DRAM price-fixing probe first came to light in December when Alfred P. Censullo, a regional sales manager for Micron, was charged with obstruction of justice. On Jan. 21, Censullo pleaded guilty and admitted to having withheld and altered documents requested by a grand jury subpoena. Censullo is scheduled to be sentences later this year.

"This case sends the message that high-tech price-fixing cartels will not be tolerated -- a message reinforced by the largest criminal fine levied in a Department of Justice case in the past three years," Attorney General John Ashcroft said in a statement. "We are committed to pursuing illegal price-fixing cartels that harm American consumers, regardless of whether they are at home or abroad."

DRAM is the most commonly used semiconductor memory product, providing high-speed storage and retrieval of electronic information for a wide variety of computer, telecommunication, and consumer electronic products. DRAM is used in personal computers, laptops, workstations, servers, printers, hard disk drives, personal digital assistants, modems, mobile phones, telecommunication hubs and routers, digital cameras, video recorders and televisions, digital set top boxes, game consoles, and MP3 digital music players.