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Samsung to Pay $300 Million Fine for Price Fixing
(Oct. 05) – Samsung, the
world’s largest maker of memory chips for computers and other
electronic gadgets, has agreed to plead guilty to price fixing and pay
a $300 million fine, U.S. officials said Thursday.
The penalty is the second-largest criminal antitrust fine ever and caps
a three-year investigation into the largest makers of dynamic random
access memory computer chips, a $7.7 billion market in the United
States.
The guilty plea to the single felony charge by South Korea-based
Samsung Electronics Co. Ltd. and its U.S. subsidiary, Samsung
Semiconductor Inc., was to be entered Thursday in U.S. District Court
in San Francisco.
The government’s acting antitrust chief, Thomas O. Barnett, said seven
Samsung employees were not protected by the guilty plea, an indication
they may individually face criminal antitrust charges.
“That’s a decision for us to make moving forward,” Barnett said. He
added that prosecuting individuals – not just companies – in
price-fixing cases is an important deterrent against similar abuses.
The Justice Department already has secured similar guilty pleas from
two other companies and collected more than $345 million in fines.
“Price-fixing threatens our free market system, stifles innovation and
robs American consumers of the benefit of competitive prices,” Attorney
General Alberto Gonzales said.
Samsung said in a statement the company “strongly supports fair
competition and ethical practices and forbids anti-competitive
behavior.” A spokeswoman, Chris Goodhart, declined to identify the
seven employees or say whether they still worked for Samsung.
Samsung received grand jury subpoenas in connection with the
investigation during 2002, and put aside $100 million late last year to
pay potential criminal penalties.
Samsung’s top competitor, Seoul-based Hynix, agreed earlier this year
to plead guilty to price fixing and pay a $185 million fine. Last
September, rival Infineon Technologies AG of Germany agreed to a $160
million fine. Another competitor, Micron Technology Inc. of Boise,
Idaho, has been cooperating with prosecutors and was not expected to
face charges.
The government accused the companies of conspiring in e-mails,
telephone calls and face-to-face meetings to fix prices of memory chips
between April 1999 and June 2002. The chips are used in digital
recorders, personal computers, printers, video recorders, mobile phones
and many other electronics.
The government said the victims of the alleged price-fixing were Dell
Inc., Compaq Computer Corp., Hewlett-Packard Co., Apple Computer Inc.,
International Business Machines Corp. and Gateway Inc.
Barrett said Apple and Dell raised computer prices to compensate, and
other companies responded by reducing the amount of memory installed in
computers they sold but kept consumer prices the same.
The investigation started in 2002, a year after memory chip prices
began to climb even though the high-tech industry was in a tailspin. At
the time, the hikes were attributed to tight supplies, although
then-Dell Computer CEO Michael Dell blamed them on cartel-like behavior
by chip makers
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