Three More Execs Indicted for DRAM Price-Fixing

By Colleen Taylor -- 10/19/2006

In the latest DRAM conspiracy proceedings, a federal grand jury in San Francisco Wednesday indicted two executives from Samsung Electronics Ltd. and one executive from Hynix Semiconductor America Inc. for their participation in price fixing of the memory.

Including these charge, four companies and 16 individuals have been charged and fines totaling more that $731 million have resulted from the Department's ongoing antitrust investigation into the DRAM industry. The $731 million in criminal fines is the second highest total obtained by the Department of Justice in a criminal antitrust investigation into a specific industry.

The indictment charged that Il Ung Kim, Young Bae Rha, and Gary Swanson participated with co-conspirators in the conspiracy from on or about April 1, 2001, until on or about June 15, 2002. At the time, Kim was VP of marketing for the memory division at Samsung and Rha was VP of sales and marketing for the memory division at Samsung. Both Kim and Rha are citizens and residents of Korea. Also at the time, Swanson was senior VP of memory sales and marketing for Hynix America, the U.S.-based subsidiary of Hynix Semiconductor Inc., which is headquartered in Korea. Swanson is a resident and citizen of the United States.

"The Antitrust Division will vigorously pursue individuals who engage in criminal cartel conspiracies," Thomas O. Barnett, assistant attorney general in charge of the Department of Justice's antitrust division, said in a statement. "Criminal cartel enforcement is the division's top priority and both companies and individuals must comply with the antitrust laws."

Kim, Rha and Swanson are each charged with participating in the conspiracy to suppress competition in violation of the Sherman Act. The maximum penalty for the conviction of a Sherman Act violation occurring before June 22, 2004 is three years imprisonment and a fine of $350,000 for individuals. The maximum fines may be increased, however, to twice the gain derived from the crime or twice the loss suffered by the victims if either of those amounts is greater than the Sherman Act maximum fines, the Department of Justice said.

The Samsung execs charged yesterday are not the only employees at the company connected with DRAM price-fixing. Three foreign-based Samsung executives, Sun Woo Lee, Yeongho Kang and Young Woo Lee, pleaded guilty to DRAM price-fixing in March and August. The Samsung employees agreed to serve prison terms ranging from seven to eight months and to each pay a $250,000 fine. In September, Thomas Quinn, the fourth Samsung executive charged, agreed to plead guilty to the DRAM price-fixing conspiracy, and charges have been filed. Under a plea agreement, which must be approved by the court, Quinn has agreed to serve eight months in prison and to pay a criminal fine of $250,000.

Hynix isn’t unfamiliar with these charges, either. Four Hynix Semiconductor Inc. executives, Dae Soo Kim, Chae Kyun Chung, Kun Chul Suh and Choon Yub Choi, were charged with participating in the DRAM price-fixing conspiracy and agreed to plead guilty and serve jail terms ranging from five to eight months and to each pay a $250,000 fine.

Meanwhile, in December 2004, four executives of Infineon Technologies AG, T. Rudd Corwin, Peter Schaefer, Gunter Hefner and Heinrich Florian,  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.

Further, 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.

At the corporate level, four companies have been charged with price-fixing in the DRAM investigation. Samsung pleaded guilty to the price fixing conspiracy and was sentenced to pay a $300 million criminal fine in November 2005. Hynix pleaded guilty and was sentenced to pay a $185 million criminal fine in May 2005. Japanese manufacturer Elpida Memory pleaded guilty and was sentenced to pay an $84 million fine in March. And Infineon pleaded guilty and was sentenced to pay a $160 million criminal fine in October 2004.

In related news, the Department of Justice is also investigating the SRAM industry. Both Cypress Semiconductor Corp. and Mitsubishi Electric Corp. have been notified that the Department is set to investigate sales of SRAM in the United States.

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