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Antitrust suit alleging price fixing in computer chip sales

Discussion in 'News' started by D_o_S, Jul 14, 2006.

  1. D_o_S

    D_o_S Moderator

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    AUSTIN - Texas Attorney General Greg Abbott will be joining several other state attorneys general today in suing several high-profile, high-tech industries in the U.S., Europe and Asia for conspiring to control the price of the widely used “dynamic random access memory” chip.
    Commonly known as “DRAM,” the chip is a form of high-speed computer memory universally found in personal computers, servers and other electronic devices.
    The domestic and foreign companies, and their subsidiaries, which as a group controlled virtually all DRAM chip manufacturing and were allegedly found violating federal antitrust laws regarding price-fixing, are:
    • Hynix Semiconductor Inc. (South Korea)
    • Elpida Memory Inc. (Japan)
    • Micron Technology Inc (Idaho)
    • NEC Electronics America Inc. (California)
    • Infineon Technologies AG (Germany)
    • Mosel Vitelic Corp. (Taiwan)
    • Nanya Technology Corp. (Taiwan)
    Price-fixing will not be tolerated in our free enterprise system,” said Attorney General Abbott. “We believe these companies worked in collusion to manipulate the chip market and drive up the prices of computers sold to consumers, corporations and state institutions.”

    The complaint to be filed today in California and joined by 33 other states contends that high-volume purchasers of computers, such as public schools and state agencies on fixed budgets, paid excessive prices from 1998 to 2002. The suit seeks restitution and penalties, and an order prohibiting the companies from ever again manipulating pricing that harms the public, resulting also in extraordinary profits.
    As a group, the companies were virtually the sole sources for the acquisition of DRAM chips by computer manufacturers such as Dell Corp., a major supplier of computers for Texas public schools, universities and state agencies. The suit alleges the companies’ deliberate scheme to systematically trim production to inflate chip prices caused computer manufacturers to increase their wholesale prices for units, resulting in an inflationary ripple effect in the marketplace. Worldwide sales of these chips jumped from $14 billion in 2001 to $17 billion in 2003, with the U.S. accounting for a significant slice of the market.
    The U.S. Department of Justice, which launched its own criminal investigation of the practices in 2002, called the scheme “one of the largest cartels ever discovered.” Micron cooperated with investigators in the federal investigation in exchange for amnesty from criminal charges. Since then, Samsung, Hynix, Infineon, Elpida and 12 individuals have pleaded guilty to criminal price-fixing and together paid more than $730 million in fines.

    Source: Attorney General of Texas News
     

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