Infineon Admits to Price Fixing

By Jeff Chappell -- Electronic News, 9/15/2004

Infineon Technologies AG has agreed to plead guilty and to pay a $160 million fine for participating in an international conspiracy to fix prices in the DRAM market, the U.S. Department of Justice (DOJ) said today.

According to the one-count felony charge filed today in the U.S. District Court in San Francisco, from July 1, 1999 to June 15, 2002, Infineon conspired with other DRAM manufacturers to fix the prices of DRAMs sold to certain computer and server manufacturers. Under the plea agreement, which must be approved by the court, Infineon has agreed to cooperate with the government in its ongoing investigation of other DRAM makers.

The company was specifically charged for violating section one of the Sherman Antitrust Act of 1890.

"Infineon is the first company to agree to plead guilty to price-fixing charges in our ongoing investigation of antitrust violations in the DRAM industry," James M. Griffin, the DOJ Antitrust Division’s deputy assistant attorney general for criminal enforcement, said in a statement. "Infineon's fine is the third largest criminal fine in the history of the Antitrust Division. More importantly, Infineon will provide valuable assistance in our continued investigation of the DRAM industry."

While the DOJ didn't name the other DRAM makers under investigation, a number of DRAM makers large and small, including the other three major memory players, Samsung, Hynix and Micron, are all currently named as defendants in antitrust litigation in U.S. district court. A number of plaintiffs have signed onto that case, including distributors and the federal government.

Meanwhile, the DOJ specifically charged Infineon today with carrying out the conspiracy by: participating in meetings, conversations, and communications in the United States and elsewhere with competitors to discuss the prices of DRAM to be sold to certain customers; agreeing to charge prices of DRAM at certain levels to be sold to certain customers; issuing price quotations in accordance with the agreements reached; and exchanging information on sales of DRAM to certain customers to monitor and adhere to the agreed-upon prices.

The computer makers directly affected by the price-fixing conspiracy were: Dell, Compaq, Hewlett-Packard, Apple, IBM and Gateway, according to the DOJ.

For its part, Infineon released a statement today from its headquarters in Munich stating that the matter between it and the DOJ has been fully resolved, as far as its price-fixing investigation. The $160 million fine will be paid in equal installments through 2009, according to the company.

Infineon also said that it had been in contact with its OEM customers affected by the price fixing and that it has achieved or is in the process of achieving settlements with all of these customers. "Infineon strongly condemns any attempt to fix or stabilize prices. (It) is committed to vigorous and fair competition based solely on superior products and services," the company stated in a release posted to its Web site today.

The charge filed today against Infineon is the result of an ongoing investigation being conducted by the DOJ Antitrust Division's San Francisco field office and the Federal Bureau of Investigation. Late last year, the DOJ charged Alfred P. Censullo, a one-time regional sales manager for Idaho-based Micron Technology Inc., with obstruction of justice in connection with its investigation.

Early this year Censullo, the first individual to be charged in the ongoing investigation, pled guilty to the charge and admitted to having withheld and altered documents responsive to a grand jury subpoena served on Micron in June 2002. Censullo will be sentenced later this year.