Samsung to pay $300M fine for DRAM price fixing

It will plead guilty to being part of an 'international conspiracy'

Samsung Electronics Co. and its U.S. subsidiary Samsung Semiconductor Inc. have agreed to plead guilty and pay a $300 million fine for participating in an "international conspiracy" to fix prices on dynamic RAM (DRAM), the U.S. Department of Justice announced Thursday.

Samsung's fine is the second-largest criminal antitrust fine in U.S. history and the largest criminal fine since 1999, the DOJ said.

Resolving the investigation was "paramount" to Samsung, said Chris Goodhart, the company's director of marketing communications. The settlement won't affect Samsung's day-to-day operations, she said in an e-mail statement.

"Samsung is strongly committed to fair competition and ethical practices and forbids anticompetitive behavior," Goodhart added.

The Justice Department filed a one-count felony charge against Samsung yesterday in U.S. District Court in San Francisco. Between April 1999 and June 2002, the Seoul, South Korea-based company and its San Jose-based subsidiary conspired with other DRAM manufacturers to fix prices of DRAM sold to PC and server manufacturers, the DOJ said.

Computer makers affected by the price-fixing scheme included Dell Inc., the former Compaq Computer Corp., Hewlett-Packard Co., Apple Computer Inc., IBM and Gateway Inc., according to the Justice Department.

Under a plea agreement, which must be approved by the court, Samsung has agreed to cooperate with the DOJ in its continuing investigation of other DRAM producers, the agency said.

Samsung is charged with contributing to the conspiracy by communicating with competitors about the prices of DRAM to be sold to some customers and then agreeing to charge the agreed-upon prices, the DOJ said.

With yesterday's announcement, three semiconductor companies and five people have been charged in the ongoing antitrust investigation into price fixing in the DRAM industry. So far, the DOJ has collected more than $646 million in fines.

In May 2005, South Korean manufacturer Hynix Semiconductor Inc. agreed to plead guilty and was sentenced to pay a $185 million fine. In October 2004, German manufacturer Infineon Technologies AG pleaded guilty and was sentenced to pay a $160 million fine.

In December 2004, four Infineon executives pleaded guilty to the DRAM price-fixing conspiracy. The four Infineon employees served prison terms ranging from four to six months, and each paid a $250,000 fine.

In December 2003, the DOJ charged Alfred Censullo, a regional sales manager at Micron Technology Inc. in Boise, Idaho, with obstruction of justice. Censullo pleaded guilty and said he withheld and altered documents related to a grand jury subpoena served on Micron in June 2002. Censullo was sentenced to serve six months of home detention.

Copyright © 2005 IDG Communications, Inc.

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