Tweet
Samsung to Pay $300 Million Fine for Price Fixing
By VIKAS BAJAJ
Published: October 13, 2005
The Department of Justice said today that it had reached a $300 million antitrust settlement with Samsung Electronics, the South Korean technology conglomerate, and that the company agreed to plead guilty to conspiring to fix prices on memory chips sold to the world's biggest computer makers.
It was the second largest fine in United States antitrust history and the third time a memory chip maker has agreed to settle antitrust charges in less than 12 months. Hynix Semiconductor, also from South Korea, agreed to pay $185 million in May and Infineon Technologies, the German chip company, reached a $160 million deal in November 2004. (The largest antitrust fine ever was a $500 million penalty levied against Hoffmann-La Roche in 1999 for fixing vitamin prices.)
The Justice Department said Samsung colluded with competitors to artificially inflate the price of dynamic random access memory chips, or DRAM, sold to computer makers like Dell, Apple Computer, I.B.M. and Compaq from 1999 to 2002. The chips are essential building blocks in all kinds of electronic products from personal computers to digital cameras and accounted for $7.4 billion in United States sales in 2004.
"Price-fixing threatens our free market system, stifles innovation, and robs American consumers of the benefit of competitive prices," Attorney General Alberto R. Gonzales said in a statement.
Samsung, the world's biggest memory chip maker, said the settlement fully resolved its involvement in the investigation and noted that it "strongly supports fair competition and ethical practices and forbids anti-competitive behavior."
The memory chip business went through an intense shakeout in the late 1990's after years intense competition and brutal price wars, and a number of companies like Texas Instruments stopped making memory chips or sold their memory businesses. In recent years, the market has been dominated by a few large companies like Samsung.
The Justice Department said these large producers often met in the United States and elsewhere to set prices and exchange information on sales to certain customers to make sure each supplier was living up to the pact.
Some computer makers like Dell have complained about high memory chip prices in recent years, and have sometimes blamed the high costs for not being able to meet quarterly profit forecasts. The technology industry has been closely following these cases and analysts had anticipated that Samsung and other companies might face antitrust charges.
Government prosecutors have also won convictions and sentences against four Infenon executives and one sales manager at Micron Technology, a chipmaker based in Boise, Idaho. The investigation has been led by the Justice Department's Antitrust Division and the Federal Bureau of Investigation offices in San Francisco.
By VIKAS BAJAJ
Published: October 13, 2005
The Department of Justice said today that it had reached a $300 million antitrust settlement with Samsung Electronics, the South Korean technology conglomerate, and that the company agreed to plead guilty to conspiring to fix prices on memory chips sold to the world's biggest computer makers.
It was the second largest fine in United States antitrust history and the third time a memory chip maker has agreed to settle antitrust charges in less than 12 months. Hynix Semiconductor, also from South Korea, agreed to pay $185 million in May and Infineon Technologies, the German chip company, reached a $160 million deal in November 2004. (The largest antitrust fine ever was a $500 million penalty levied against Hoffmann-La Roche in 1999 for fixing vitamin prices.)
The Justice Department said Samsung colluded with competitors to artificially inflate the price of dynamic random access memory chips, or DRAM, sold to computer makers like Dell, Apple Computer, I.B.M. and Compaq from 1999 to 2002. The chips are essential building blocks in all kinds of electronic products from personal computers to digital cameras and accounted for $7.4 billion in United States sales in 2004.
"Price-fixing threatens our free market system, stifles innovation, and robs American consumers of the benefit of competitive prices," Attorney General Alberto R. Gonzales said in a statement.
Samsung, the world's biggest memory chip maker, said the settlement fully resolved its involvement in the investigation and noted that it "strongly supports fair competition and ethical practices and forbids anti-competitive behavior."
The memory chip business went through an intense shakeout in the late 1990's after years intense competition and brutal price wars, and a number of companies like Texas Instruments stopped making memory chips or sold their memory businesses. In recent years, the market has been dominated by a few large companies like Samsung.
The Justice Department said these large producers often met in the United States and elsewhere to set prices and exchange information on sales to certain customers to make sure each supplier was living up to the pact.
Some computer makers like Dell have complained about high memory chip prices in recent years, and have sometimes blamed the high costs for not being able to meet quarterly profit forecasts. The technology industry has been closely following these cases and analysts had anticipated that Samsung and other companies might face antitrust charges.
Government prosecutors have also won convictions and sentences against four Infenon executives and one sales manager at Micron Technology, a chipmaker based in Boise, Idaho. The investigation has been led by the Justice Department's Antitrust Division and the Federal Bureau of Investigation offices in San Francisco.
Samsung is also under investigation by the Korean FTC for their deal regarding flash memory used in Apple's iPod Nano.
Comment