Infineon Execs Plead Guilty in DRAM Price-Fixing, Face Jail Time

Online staff -- Electronic News, 12/3/2004

Four executives at Infineon Technologies AG and its U.S. subsidiary, Infineon Technologies North America Corp., are to plead guilty to participating in an international conspiracy to fix prices in the DRAM market, the U.S. Department of Justice (DoJ) said late Thursday.

A one-count felony charge was filed yesterday in the U.S. District Court in San Francisco against Heinrich Florian, Günter Hefner, Peter Schaefer and T. Rudd Corwin for participating in a conspiracy to fix the prices of DRAM sold to certain computer and server manufacturers.

Under the plea agreements by the four, which must be approved by the court, the executives have each agreed to serve between four and six months in prison, pay a $250,000 criminal fine, and assist the government in its ongoing DRAM investigation.

“This case reinforces our commitment to investigate and hold accountable all conspirators, whether domestic or foreign, that harm American consumers through their collusive conduct,” said R. Hewitt Pate, assistant attorney general in charge of the DoJ’s antitrust division, in a statement.

“True deterrence occurs when individuals serve jail terms, and not just when corporations pay substantial criminal fines,” Pate added.

According to the DoJ, the conspiracy was accomplished by the executives participating in meetings, conversations and communications in the U.S. and elsewhere to discuss the prices of DRAM to be sold to certain customers; agreeing, during those meetings, conversations and communications, to charge prices of DRAM at certain levels to be sold to certain customers; issuing price quotations in accordance with the agreements reached; exchanging information on sales of DRAM to certain customers, for the purpose of monitoring and enforcing adherence to the agreed-upon prices; and authorizing, ordering and consenting to the participation of subordinate employees in the conspiracy.

“These four executives are the first to plead guilty to a charge of fixing prices in what is still a very active and far-reaching investigation into antitrust violations in the DRAM industry,” said Scott Hammond, director of the antitrust division’s criminal enforcement, in a statement. “We will continue in our efforts to bring to justice other domestic and foreign-based executives who were involved with fixing DRAM prices.”

In September, Infineon pleaded guilty to a charge of participating in this conspiracy and was sentenced to pay a $160 million criminal fine — the third largest fine in antitrust history.

The four Infineon executives have been charged with violating Section 1 of the Sherman Antitrust Act, carrying a maximum penalty of three years in prison and a $350,000 fine for individuals for violations occurring before June 22. The maximum fine may be increased to twice the gain the conspirators derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum, according to a DoJ statement.

Florian, a German citizen, was charged with fixing DRAM prices during 2001 and 2002. During that time, Florian worked in Munich as Infineon’s VP for sales, marketing and logistics for memory products, later serving as VP for marketing and logistics. Under his plea agreement, Florian is to serve a six-month prison sentence and pay a $250,000 criminal fine.

Hefner, also a German citizen, was charged with fixing DRAM prices during 2001 and 2002. During the relevant period, Hefner also worked in Munich as Infineon’s VP of sales for memory products. Under his plea agreement, Hefner is to serve a five-month prison sentence and pay a $250,000 criminal fine.

Schaefer, a German citizen, was charged with fixing DRAM prices during 2001 and 2002, during at least part of the relevant period, worked in San Jose, as Infineon North America's VP for marketing, sales and logistics for memory products. Under his plea agreement, Schaefer is to serve a four-month sentence and pay a $250,000 criminal fine.

T. Rudd Corwin, a U.S. citizen, was charged with fixing DRAM prices between 1999 and 2002. During this time, Corwin also worked in San Jose as Infineon North America's VP for customer marketing and sales of memory products. Under his plea agreement, Corwin is to serve a four-month sentence and pay a $250,000 criminal fine.