Samsung Execs Plead Guilty in DRAM Price Fixing

Online staff -- Electronic News, 3/23/2006

Three executives from Samsung Electronics Company Ltd., the world’s largest manufacturer of DRAM, have agreed to plead guilty and 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 Wednesday.

The Korean executives participated in the price-fixing conspiracy while they worked for Samsung or its subsidiaries in the United States and Europe. Sun Woo Lee, senior manager of DRAM sales, faces eight months of jail time; Yeongho Kang, associate director of DRAM marketing for Samsung’s subsidiary in the U.S., faces seven months; and Young Woo Lee, sales director for Samsung’s subsidiary in Germany, faces seven months.

“True deterrence occurs when guilty individuals serve jail terms, and not just when corporations pay criminal fines,” said Attorney General Alberto R. Gonzales, in a statement. “These pleas should send a clear message that we will hold accountable all conspirators, whether domestic or foreign, that harm American consumers through their illegal conduct.”

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. In pleading guilty, the executives have agreed not to contest the jurisdiction of the U.S., so extradition will not be required. The pleas and sentences are subject to the approval of the U.S. District Court in San Francisco.

According to the one-count felony charge filed in federal court in San Francisco, at various times during the period from April 1, 1999, to June 15, 2002, these three Samsung employees conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain computer and server manufacturers in the U.S., in violation of the Sherman Act. The conspiracy directly affected sales to U.S. computer makers Dell Inc., Hewlett-Packard Company, Compaq Computer Corp., International Business Machines Corp., Apple Computer Inc. and Gateway Inc., the charge said.

“These are the first executives from Samsung to plead guilty to fixing prices in what is still an active investigation into antitrust violations in the DRAM industry,” said Thomas O. Barnett, assistant attorney general in charge of the department’s antitrust division, in a statement. “We will continue our efforts to bring to justice other domestic and foreign-based executives who were involved with fixing DRAM prices.”

Samsung could not be reached for comment.

Including today’s charge, four companies and 12 individuals have been charged and fines totaling more than $731 million resulted from the DOJ’s Antitrust Division DRAM investigation in San Francisco. It is the second largest amount of fines ever collected by the DOJ from a single price-fixing conspiracy.

The Samsung executives are the third wave of individuals to agree to prison sentences in the DRAM investigation. On March 15, four Hynix Semiconductor Inc. executives pleaded guilty to the DRAM price-fixing conspiracy. The Hynix employees have been sentenced to serve jail terms ranging from five to eight months and to pay a $250,000 fine. In December 2004, four Infineon executives pleaded guilty to DRAM price-fixing. 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 for 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.

Four companies have been charged with price-fixing in the DRAM investigation. In October 2004, Infineon pleaded guilty and was sentenced to pay a $160 million criminal fine. Samsung 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.