Samsung Pleads Guilty to RAM Price Fixing

Samsung has agreed to pay $300 million and plead guilty to Justice Department accusations it conspired to fix DRAM prices from 1999 to 2002.

Korean electronics manufacturer Samsung Electronics and its U.S. subsidiary Samsung Semiconductor, Inc., have agreed to plead guilty to charges it conspired with fellow chipmakers to fix prices from DRAM (computer memory) from 1999 to 2002, thereby cheating consumers who were forced to pay artificially inflated prices for computers and other technology. The company will also pay a $300 million fine, the largest criminal fine levied by the Justice Department since 1999, and the second largest in U.S. history.

Two of Samsung’s rivals in the DRAM market, Germany’s Infineon Technologies AG and South Korea’s Hynix pleaded guilty to the price fixing conspiracy earlier this year, and agreed to pay $160 million and $185 million fines, respectively. Another DRAM manufacturer, Idaho’s Micron Technology is expected to avoid price fixing charges in exchange for its cooperation with the Justice Department’s investigation.

Samsung’s plea agreement does not protect seven Samsung employees from further prosecution. In the wake of recent corporate scandals (such as Enron and MCI Worldcom) the Justice Department is seen to be more likely to hold executives criminally responsible for corporate wrongdoing as a deterrent against similar actions by corporate officers.

Samsung, Hynix, and Infineon were accused of conspiring to fix the prices of memory chips between April 1909 and June 2002 during face-to-face meetings as well as via telephone and email. The Justice Department cited IBM, Apple, Dell, Compaq, Hewlett-Packard, and Gateway as victims of the conspiracy, specifically citing Apple and Dell both raised computer prices specifically because of the cost of DRAM, while other companies kept reduced the amount of memory installed in their computers.

Samsung’s $300 million fine in this case is exceeded in U.S. criminal history only by 1999’s $500 million fine against Switzerland’s Hoffmann-La Roche Ltd. in a price fixing case surrounding dietary supplements.