Hynix Execs Plead Guilty in DRAM Price Fixing
Online staff -- EDN, March 2, 2006
Four Korean executives from Hynix Semiconductor Inc. have agreed to plead guilty and to serve jail time in the United States for participating in a global conspiracy to fix DRAM prices, the U.S. Department of Justice (DOJ) announced on Wednesday.
The executives participated in the conspiracy while they worked for Seoul, South Korea-based Hynix or its subsidiaries in the United States and Europe, according to the DOJ.
The four Hynix executives and their agreed upon jail terms include the following: D.S. Kim, Hynix's general manager, worldwide sales and marketing, will serve eight months; C.K. Chung, Hynix's director, global strategic account sales, will serve seven months; K.C. Suh, Hynix's senior manager, memory product marketing, will serve six months; and C.Y. Choi, general manager, marketing and sales support, for Hynix's German subsidiary, will serve five months.
"We strive to preserve the integrity of our free market economy," said Attorney General Alberto R. Gonzales in a statement. "Individuals who defraud American businesses and consumers by participating in international price-fixing conspiracies will be prosecuted and sent to prison no matter where they live or where they commit the crime."
Each executive also has agreed to pay a $250,000 fine and to cooperate in the antitrust division's ongoing investigation of the DRAM industry, said the DOJ. In agreeing to plead guilty, the executives have agreed not to contest the jurisdiction of the United States, so extradition will not be required. The pleas and sentences are subject to the approval of the U.S. District Court in San Francisco.
"Prison time for price fixers is the most potent deterrent to illegal cartel activity," said Thomas O. Barnett, assistant attorney general in charge of the department's antitrust division, in the statement. "These guilty pleas demonstrate our commitment to ensuring that participants in cartels serve time in prison."
According to the one-count felony charges filed yesterday in federal court in San Francisco, “at various times during the period from April 1, 1999 to June 15, 2002, these four Hynix employees conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain computer and server manufacturers in the United States, in violation of the Sherman Act.” The conspiracy is said to have directly affected sales to U.S. computer makers Dell Inc., Hewlett-Packard Company, Compaq Computer Corporation, International Business Machines Corporation, Apple Computer Inc. and Gateway Inc.
Including yesterday’s charge, four companies and nine individuals have been charged and fines totaling more than $731 million have resulted from the DOJ’s DRAM investigation.
The Hynix executives are the second wave of individuals to agree to prison sentences in the DRAM investigation. In December 2004, four Infineon executives, T. Rudd Corwin, Peter Schaefer, Gunter Hefner, and Heinrich Florian, pleaded guilty to the DRAM price-fixing conspiracy. The Infineon employees served jail terms ranging from four to six months and each paid a $250,000 fine.
Also, in December 2003 the Department charged Alfred Censullo, a regional sales manager from Micron Technology Inc., with obstruction of justice. Censullo pleaded guilty and admitted to having withheld and altered documents responsive to a grand jury subpoena served on Micron. Censullo was sentenced to serve six months of home detention, according to the DOJ.
In total, four companies have been charged with price-fixing in the DRAM investigation. In October 2004, German manufacturer Infineon pleaded guilty and was sentenced to pay a $160 million criminal fine. Samsung, the world's largest DRAM manufacturer, pleaded guilty to the price-fixing conspiracy and was sentenced to pay a $300 million criminal fine in November 2005. Hynix, the world's second-largest DRAM manufacturer, pleaded guilty and was sentenced to pay a $185 million criminal fine in May 2005. In January, Japanese manufacturer Elpida Memory agreed to plead guilty and pay an $84 million fine.
Hynix could not be reached for comment.
