May 20, 2010

EU Fines Chip Makers $403 Million

Samsung, Infineon and Toshiba are at the top of the list of the world's biggest memory chip makers being fined a total of 403 million US dollars by the European Commission on Wednesday for operating an illegal union, or cartel.

In all, ten companies were included in the fine. However, South Korea's Samsung Electronics, the world's top memory chip producer, received a staggering fine totaling nearly 180 million US dollars, for its part in the cartel which shared confidential info and coordinated prices.

Germany-based Infineon Technologies received a 70 million dollar fine and South Korea-based Hynix Semiconductor Inc. was fined about 64 million. Other companies also fined for their parts in the illegal partnership include Japan-based Hitachi, Toshiba, Mitsubishi, NEC Electronics and Elpida Memory and Taiwan-based Nanya.

US chip maker Micron Technology reported the cartel, which it was part of, and therefore escaped a fine.

The European Commission announced they had reduced the fines by 10 percent after the companies acknowledged their involvement in the cartel.

Some of the companies also had their fines reduced by up to 45 percent for fully cooperating with the investigation and for what the commission said were "mitigating circumstances".

Infineon, which saw a 45 percent reduction in fines, was the only European company involved in the cartel, but all the members of the cartel which operated between 1998 and 2002 sold their products in Europe.

Samsung's fine was reduced by 18 percent.

This is the first case involving a cartel where a settlement has been reached. "The companies concerned have acknowledged that they coordinated prices," Said EU Competition Commissioner Joaquin Almunia.

"This first settlement decision is another milestone in the Commission's anti-cartel enforcement. By acknowledging their participation in a cartel the companies have allowed the Commission to bring this long-running investigation to a close and to free up resources to investigate other suspected cartels," he said.

As the procedure is applied to new cases it is expected to speed up investigations significantly, the EU commissioner added, as it would offer a simplified procedure.

The cartel was first busted in the United States in 2005 for price-fixing of dynamic random access memory (DRAM) chips, widely used in computers and other electronics. In November 2005, Samsung pleaded guilty in the US for its part in the conspiracy and agreed to pay a 300-million-dollar fine in what was the second largest criminal antitrust fine in American history.

Six senior Samsung executives also received prison sentences in the US as a result of the case.

The case marked the shift of price-fixing into the technological age.


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