Infineon has pleaded guilty to fixing memory prices and agreed to pay a $160 million fine, the US Department of Justice (DoJ) has announced. The fine is the third largest in the history of the DoJ's anti-trust division.
The DoJ charged Infineon with violating the Sherman Anti-trust Act by conspiring with unnamed DRAM manufacturers between July 1999 and June 2002 to fix prices on DRAM sold to computer and server vendors.
Under the plea agreement, which must be approved by the court, Infineon has agreed to co-operate with the DoJ in its ongoing investigation of other DRAM manufacturers. Robert LeFort, president of Infineon North America, said he couldn't comment on whether he expected other DRAM manufacturers to face similar charges.
The settlement was in the best interest of stockholders and the company, an Infineon spokesman said. It shows the company has "taken seriously" internal concerns about its corporate governance, said an Infineon spokesman. What is more likely is that the company's new CEO, Wolfgang Ziebart, took the issue seriously. He has only been in the job two weeks and was clearly keen to mark a new start in the company.
LeFort admitted. "The investigation was somewhat of a drain on resources. We're very happy to have it behind us and focus on the business of competing with our technologies and products. It's going to be business as usual to support our customers and grow our business."
Business as usual maybe for Infineon, which had already put $250 million aside to pay for expected fines in the US and in Europe where it is still being investigated for the same price-fixing charges.
Not so fortunate are the other memory manufacturers that have held firm against the accusations. Samsung and Micron Technology have both admitted to receiving subpoenas. The fourth company, Hynix is also under investigation. The share prices of all three companies fell on the news of Infineon's deal. Together with Infineon, they control more than 75 percent of the DRAM market.
The computer makers directly affected by what the DoJ calls a "price-fixing conspiracy" were Dell, Compaq, HP, Apple, IBM and Gateway. Infineon has contacted the affected companies and has settled claims or is in the process of settling claims, according to the company.
"Infineon strongly condemns any attempt to fix or stabilize prices," the company said in a press release. "Infineon is committed to vigorous and fair competition based solely on superior products and services."
R. Hewitt Pate, assistant attorney general in charge of the department's anti-trust division, called the guilty plea "an important victory in the department's ongoing fight to break up and prosecute cartels that harm American consumers."
Infineon is charged with carrying out the conspiracy by:
- Participating in meetings, conversations and communications with competitors to discuss the prices of DRAM to be sold to certain customers
- Agreeing to price levels of DRAM to be sold to certain customers
- Exchanging information on sales of DRAM to certain customers, for the purpose of monitoring and enforcing the agreed-upon prices.
Infineon's guilty plea follows years of allegations about DRAM price-fixing. The DoJ began investigating DRAM price fixing in 2002, and in May, Rambus filed an anti-trust lawsuit against four companies, including Infineon, accusing them of banding together to eliminate competition.
The Rambus suit was filed against Infineon, Hynix, Micron and Siemens, and alleged that their executives had colluded to set cost parameters for Rambus' RDRAM and restrict output in order to raise its price and kill its chances of becoming a mainstream memory technology.
In December 2003, the DoJ charged Alfred P. Censullo, a regional sales manager for Micron, with obstruction of justice in connection with its investigation of price fixing. In January, Censullo, who was the first person to be charged in the ongoing investigation, pled guilty to the charge and admitted to having withheld and altered documents in response to a grand jury subpoena served on Micron in June 2002. He is scheduled to be sentenced later this year.