States settle price-fixing complaint against DRAM makers

Six DRAM makers agree to pay $173 million to 33 states and affected organizations

Thirty-three states, including California, have reached a US$173 million settlement with six DRAM makers alleged to have fixed prices for their products between 1998 and 2002, California Attorney General Edmund "Jerry" Brown Jr. announced.

California and the other states -- including Massachusetts, Florida, New York and Pennsylvania -- filed a class-action lawsuit against the DRAM makers in July 2006 alleging that a price-fixing scheme hurt consumers, state agencies, universities and other groups.

The DRAM manufacturers named in the lawsuit are U.S. companies Micron Technology and NEC Electronics America, as well as Infineon Technologies from Germany, Hynix Semiconductor from South Korea, Elpida Memory from Japan, Mosel Vitelic from Taiwan and their American subsidiaries.

"These companies conspired in an illegal global scheme to fix prices on chips used in computer equipment sold to consumers, schools and government offices," Brown said in a statement. "The large price tag of this settlement should serve as a warning that we will crack down on any manufacturers around the world that choose to gouge consumers through illegal price-fixing schemes."

The breakdown of how much money each company will pay in the settlement has not yet been determined, said Christine Gasparac, a spokeswoman for Brown.

Micron declined to comment on the settlement. Representatives for NEC and Infineon didn't immediately respond to a request for comments.

An investigation conducted by Brown's office alleged that between 1998 and 2002, the salespeople and upper management of the DRAM makers held frequent meetings, made telephone calls and initiated other contacts in which they exchanged confidential pricing information. The companies agreed to charge customers inflated prices on DRAM chips, Brown alleged.

The U.S. Department of Justice has conducted its own investigation into DRAM price fixing. Four companies, Samsung Semiconductor, Hynix, Infineon and Elpida, and 12 people have pleaded guilty to criminal price-fixing in the federal case.

In October 2008, Brown filed a second lawsuit in state court on behalf of 96 local California government entities, including cities, counties, school districts, special districts and the University of California, all of which had purchased computer equipment containing DRAM chips.

The settlement requires the companies to refrain from illegal price fixing and to conduct extensive employee-compliance training, Brown said in a press release. The settlement must be approved by the court.

The defendants agreed to resolve both lawsuits, as well as lawsuits by private plaintiffs, by paying $173 million over two years plus interest to the affected consumers, schools and government offices. Samsung and another company, Winbond, reached a settlement for $113 million in 2007.

"The settlement money is welcome, but the illegal overcharging never should have happened in the first place," Brown said in his statement. "Especially when times are tight, schools and government agencies can't afford to be ripped off by companies that violate our anti-trust laws to keep profits high."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantusG. Grant's e-mail address is grant_gross@idg.com.

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