The EU is following the lead of the FTC in America and investigating alleged price fixing in the memory market.

In July 2002, German memory chip supplier Infineon complained to the EU about unfair pricing practices by South Korean computer memory (DRAM) manufacturers. This week, David Packard, a spokesperson for US memory chip supplier Micron, revealed that the EU had taken the complaint seriously and has been investigating computer memory price fixing since April last year.

Infineon's director of corporate communications, G√ľnter Gaugler confirmed that such an investigation was ongoing: "We have initiated this investigation against undue subsidies and market-distorting practices by Korean competitors in 2002," he told us. "Considerable distortions in competition resulted mainly due to billion-dollar subsidies by the Korean government to the semiconductor manufacturer Hynix. The dramatic price decay that took place in 2001 and 2002 cannot be explained by the market cycle, as alleged by the Koreans."

However, both the EU and US investigations are reviewing whether memory manufacturers including Micron, Infineon, Hynix and Samsung colluded to force prices up in late 2001. It is alleged that they worked together to kill off a rival memory standard, RDRAM - created by Rambus - in preference to their own DDR SDRAM.

Once that aim was achieved however, it is thought the improved communication between the memory companies enabled them to collude to force prices higher. It was certainly within their interests as the memory market is notoriously unstable.

Emails released by the FTC following an investigation in Rambus and whether it had illegally attempted to control the memory market have certainly given some weight to the suggestion that the heads of the other memory companies were in close contact.

Infineon, for one, sees a different reason for the unusual price movement in the past: "Without the subsidization, Hynix would have had to exit the market, removing a substantial part of the over-capacity from the market," Infineon's Gaugler said. "This normal market development was prevented by the measures of the Korean government."

He continued: "There is a threat that the Korean government will continue to provide subsidies that are not consistent with fair competition and violate WTO rules. Infineon Technologies has therefore filed the complaint in respect of subsidized DRAM imports against Korea with the European Commission, with a view of re-establishing fair market conditions and a level playing field."

Gaugler said that as a result of his company's complaint, "the EU has officially announced [the decision] to impose duties on shipments of Hynix DRAM chips to the EU."