Samsung gets massive fine for price fixing
Published: 14 Oct 2005 09:20 BST
The international conspiracy to fix memory prices uncovered in 2002 was real after all.
Samsung, the world's biggest memory maker, has agreed to pay $300m (£168m) and plead guilty for conspiring with others to fix prices on Dynamic Random Access Memory, or DRAM, the most common form of memory found in computers.
Hynix, another South Korean memory manufacturer, earlier pleaded guilty and paid a $185m fine. Germany's Infineon Technologies also admitted to DRAM price fixing and paid a fine, although other defendants remain.
Samsung's fine is the second-largest criminal antitrust fine in US history and the largest criminal fine since 1999.
"Price fixing threatens our free market system, stifles innovation, and robs American consumers of the benefit of competitive prices," said Attorney General Alberto R. Gonzales. "Today's guilty plea is evidence of the department's ongoing commitment to protect consumers from corporations that engage in illegal conduct."
The one-count felony charge filed Thursday in the US District Court in San Francisco stated that Samsung and its chip subsidiary, Samsung Semiconductor, conspired with others to fix prices for DRAM for servers and PCs from 1 April, 1999 to 15 June, 2002.
The Department of Justice made its investigation public in 2002 following a spurt of price increases in the memory market. Before the investigation became public, Michael Dell, then chief executive of Dell Computer, complained that memory makers were engaged in "cartel-like behaviour".
Ironically, the manufacturers didn't reap huge profits from the conspiracy. Although Samsung has generally turned a profit off DRAM, many companies, including Hynix, have collectively lost billions trying to sell the products during various periods over the last seven years.
In addition, a glut of manufacturers and manufacturing capacity has often forced memory makers to sell their products below production costs and close factories.
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