US federal prosecutors announced on Wednesday that they had cracked a global cartel that had illegally fixed prices of memory chips in personal computers and servers for three years, and that one of the companies involved, Infineon Technologies, had agreed to plead guilty to one criminal count and pay a fine of US$160 million.
At a news conference announcing the plea agreement, Hewitt Pate, the assistant attorney general in charge of the antitrust division at the Justice Department, said Infineon had participated in a series of discussions in the US and elsewhere from July 1999 through June 2002 to set prices of memory equipment, known as dynamic random access memory, or DRAM.
Such chips are used in an array of consumer and industrial products, including cell phones, hand-held organizers, digital cameras, television sets, games and MP3 music players. The US market for the memory equipment is about US$5 billion a year.
Complaints by computer makers of possible collusion in the memory equipment market led to the investigation. The computer makers that were hurt by the collusion, the government said, included Dell, Compaq, Hewlett-Packard, Apple, IBM and Gateway. Officials said that in some instances, the computer makers passed the price increases on to consumers, and in other instances, they responded by limiting the amount of memory in their computers.
"Today's charge and its resulting guilty plea represent an important victory in the department's ongoing fight to break up and prosecute cartels that harm American consumers," Pate said.
He emphasized that the investigation was continuing but declined to identify the other companies, which he called co-conspirators. He would not say how much the cartel had cost consumers and computer makers, but noted that the memory chip was among the most expensive components of computers.
A related class-action lawsuit filed by the computer makers identifies the cartel's other participants as including Micron Technology, Samsung, Hynix and Taiwan's Nanya Technology Corp (南亞科技).
Pate said that the scheme was conducted with the approval of top executives of Infineon.
"There were high-level employees involved," he said. "This was not a question of a couple of low-level bad apples."
He said the plea agreement offered immunity to some executives and not others, but declined to elaborate.
Last December, the Justice Department accused Alfred Censullo, a regional sales manager for Micron, with obstruction of justice in connection with the inquiry.
Censullo has since pled guilty and acknowledged that he with-held and altered documents that were relevant to a grand jury subpoena served on Micron in June 2002. Censullo has not yet been sentenced.
Infineon, with headquarters in Munich, Germany, issued a statement on Wednesday afternoon saying that it accepted responsibility for its role in the cartel and that it would pay the fine over the next five years.
"Accepting responsibility for mistakes made by certain employees and resolving this matter is in the best interest of our shareholders, our employees and our customers," a company spokesman, Guenter Gaugler, said.
The US$160 million penalty is the third-largest criminal fine under the Sherman Act and the biggest one under Attorney General John Ashcroft.
The two larger fines, US$500 million against the vitamin makers Hoffman-La Roche and US$225 million against BASF, were levied in 1999.
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