Hynix makes $185m price-fixing confession to US DoJ

Memory is all too good

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If nothing else, the US DoJ (Department of Justice) is remarkably good at nailing foreign memory makers for price-fixing. Hynix Semiconductor, it emerged today, is the latest firm to plead guilty in a far-reaching DRAM scandal and has agreed to pay the DoJ a $185m fine.

The charge against Korean Hynix is the third-largest criminal antitrust fine in US history. It is, however, less than Hynix was prepared to pay. Last month, some nosey reporters discovered $341m piled away in Hynix's coffers just in case the DoJ came knocking.

German memory maker Infineon was the first company busted for participating in what has been described as a memory cartel. It pleaded guilty last September to price-fixing and paid a $160m fine. Micron was then implicated in the matter, and Samsung has a $100m DoJ fund of its own. Along the way, four Infineon executives pleaded guilty to price-fixing and were awarded jail time.

The DoJ has accused all of these memory makers of keeping the price of their products artificially high between 1999 and 2002. Executives from the companies are said to have held phone calls and meetings and to have exchanged e-mails about setting memory prices. Numerous computer makers complained about the "memory cartel" during this period, although Dell was the most openly critical vendor.

“Price fixing imperils free markets, impairs innovation, and harms American consumers,” said Attorney General Alberto R. Gonzales. “Today’s charge and its resulting guilty plea are another significant step forward in the Department’s ongoing fight to break up and prosecute international cartels that harm American consumers. This case shows that high-tech price-fixing cartels will not be tolerated.”

In the case of Hynix, the DoJ found evidence of price-fixing that affected Dell, Compaq, HP, Apple, IBM and Gateway.

It's so rare to see a company admit to wrongdoing in this day and age that one wonders what goes on behind closed doors with the DoJ officials. They seem to have a real way with words on the memory front. ®

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