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.”