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DRAM Makers Accused of Price Fixing 177

Posted by Zonk from the a-little-monopoly-between-friends dept.
AdamWeeden writes "According to the EETimes, many of the states in the U.S. have entered into a class-action lawsuit against a group of eight DRAM manufacturers. The companies are accused of price-fixing computer memory for over five years, beginning in the late 1990s." From the article: "Four companies and 12 executives have so far pleaded guilty to participating in the conspiracy and have been assessed more than $730 million in fines. In May, three of the four companies, Samsung Electronics, Hynix Semiconductor Inc. and Infineon Technologies AG agreed to pay a total of $160 million to settle class action suits related to price fixing. Elpida Memory Inc., the fourth company to plead guilty, is still involved in the class-action suits."
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DRAM Makers Accused of Price Fixing More

DRAM Makers Accused of Price Fixing

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  • DRM; oh nos! (Score:4, Funny)

    by Anonymous Coward on Friday July 14, 2006 @09:30AM (#15718253)
    Blasted DRM makers.... oh, wait a minute.....

  • Price Fixing (Score:5, Interesting)

    by richpulp ( 942320 ) on Friday July 14, 2006 @09:31AM (#15718255)
    Instead of fining these companies, they should force them to provide double the amount of memory for the same price for say 90 days, e.g. 256mb chip for the same price as 128mb chip: that way the consumer benefits instead of the government.

    • Re:Price Fixing (Score:5, Insightful)

      by arivanov ( 12034 ) on Friday July 14, 2006 @09:48AM (#15718361) Homepage
      And what if I do not want to upgrade in the next 90 days?

      This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.

      A penalty is supposed to hurt the penalised, not the improve its financial and inventory positions.
      • This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.

        You do understand that the write-off doesn't go directly against the tax bill, right? Assuming the tax rate is 20%, "writing off" a $100 loss only reduces the tax bill by $20, they still have that other $80 that is lost.
        • No, most people don't understand write offs. These are the same people who think greedy rich people donate money to avoid paying taxes.
        • You are mostly correct.

          So let's see.

          You write off 100 in BoGoF (Buy one get one free) by court decision. You lose 80, win 20 by taxes. That is what it seems.

          Well... Not so.

          You do that with old inventory only (after all you used to infringe and do not do it any more, why should you compensate punters with items that have nothing to do with the offence). You would have had to sell these at a loss to clear inventory anyway. So your loss is not 80, it is more like 40. As in any BoGoF case a certain percentage o

      • Insightful?????? (Score:5, Insightful)

        by Frankie70 ( 803801 ) on Friday July 14, 2006 @10:48AM (#15718758)
        This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.
        A penalty is supposed to hurt the penalised, not the improve its financial and inventory positions.

        Huh! If this is going to be good for them, then why don't they do it themselves?
        Is anybody going to stop them?

        • Re:Insightful?????? (Score:4, Informative)

          by arivanov ( 12034 ) on Friday July 14, 2006 @01:31PM (#15720212) Homepage
          If one of them does it all the others wills cream about selling under cost and sue the living hell out Hynix. Oops... Maybe a different one this time.

          If all of them will do it that will be price fixing and collusion.

          Lose, lose.

          But if the DOJ forces them to do that... Hmm... That is an entirely different matter...
    • Yes, but the government raises mosr of its money from taxes, so a fine collected by the government ought to either pay off a bit of the debt (thus reduced taxes slightly in the long term) or lead to a little more money in the kitty so that taxes don't need to be raised as much later.

      Bwahahaha. Sorry, can't keep a straight face any more, even I don't believe it...

  • Great news! (Score:5, Insightful)

    by Crasoum ( 618885 ) on Friday July 14, 2006 @09:31AM (#15718256) Journal
    Always good to see lawyers making more money off class actions suits, and the rest of us getting a rebate.
    • I am glad that these state governments are begining to show an awareness of technological issues. As we all know, tech issues have been off of the political radar for far too long.

      • Re:Great news! (Score:3, Interesting)

        by Crasoum ( 618885 )
        Oh I agree, my cynicism is more towards the lawyers who get the real payoff in most of these cases.

        Smart people, and I'm extreamly jealous of the ability they have to cash in big on class action suits. When the claimant tends to get a modicum of the settlement/judgement.

        The consumer, in the end continues to get ripped off; if not by one side, the other.

        • Re:Great news! (Score:5, Informative)

          by mi ( 197448 ) <slashdot-2017q4@virtual-estates.net> on Friday July 14, 2006 @09:56AM (#15718420) Homepage Journal
          The consumer, in the end continues to get ripped off; if not by one side, the other.

          The compensatory damages would not amount to very much.

          The idea of punitive damages is to, well, punish the guilty. It does not matter, where the money goes — the consumers benefit from the companies' not doing it again.

          • Or not get caught next time.

            Thankfully I haven't purchased from any of those companies directly, nor shall I in the near future.

            That's the true punishment, when people stop paying to play the fool.
            • The drawback here is that these companies are all suppliers to all the big OEMs. Dell, HP and others use these companies for all the boxes they ship. Sometimes buying from companies like this is unavoidable.

          • Re:Great news! (Score:5, Interesting)

            by Otter ( 3800 ) on Friday July 14, 2006 @10:11AM (#15718519) Journal
            The idea of punitive damages is to, well, punish the guilty. It does not matter, where the money goes -- the consumers benefit from the companies' not doing it again.

            Punitive damages should be paid to the government, with no lawyers' cut. Then we'd see how concerned the plaintiffs and lawyers really are about serving humanity through lawsuits.

            • Punitive damages should be paid to the government, with no lawyers' cut. Then we'd see how concerned the plaintiffs and lawyers really are about serving humanity through lawsuits.

              EXACTLY! I think it's important to allow punitive damages because sometimes they're the only incentive an entity has to act responsibly. However, I don't see any justification for allowing another entity to profit from that penalty.

              If a policeman writes me a speeding ticket, he doesn't get a percentage of the fee, and that's

              • Sometime, the only incentive for lawyers to pursue class action lawsuit is the insane amount of money they make from it.

                No money for lawyers, no class action, no punitive damages, no responsability....

                • Sometime, the only incentive for lawyers to pursue class action lawsuit is the insane amount of money they make from it.

                  "Give lawyers more money" is never, never the correct solution. The honest ones won't change their practice, but the scummy ones will flock to it instantly. Well, right now we're in the position that only the scummy ones seem to be profiting - when was the last time you heard of a morally legitimate class action lawsuit? - so that would tend to indicate we've gone way too far in the wr

            • Punitive damages should be paid to the government, with no lawyers' cut.

              Do you really hate lawyers even more than the government? Do you really prefer, say, Eliot Spitzer's political motivations over the lawyers' financial ones? I don't...

              Then we'd see how concerned the plaintiffs and lawyers really are about serving humanity through lawsuits.

              It is impossible to root out the greed. The best practical solution — one that America has been exploiting since its early days — is to pitch one gre

            • Yeah, and medical insurance payments shouldn't go to doctors, then we'd see how concerned they are about serving humanity!

              In fact, we should abolish salaries in general. If people don't want to do their work for the benefit of humanity as a whole, well, fuck 'em!
          • The idea of punitive damages is to, well, punish the guilty. It does not matter, where the money goes -- the consumers benefit from the companies' not doing it again.

            Oh... I thought it was to inflate the legal team's percentage...
        • But this was states entering into a class action lawsuit. Are you sure that it wasn't lawyers that work for the state, in which case they just made their regular salary?

          I mean, the article even says the statement was release by the NY Attorney General's office.

          So while I'd normally agree with being cynical about lawyers, it wasn't necessary in this case.
        • That's because it's always easier to spread-out rip-offs over as many people as possible. The way the US is going, the majority of its people will be lawyers within 30-40 years, and *then* the lawyers will get their comeuppance as they sue each other into oblivion.

  • Wait... (Score:4, Funny)

    by Anonymous Coward on Friday July 14, 2006 @09:34AM (#15718270)
    They price fixed for 5 years ... starting in the 1990s...

    I wonder if the summary author knows that it's 2006.

    • Re:Wait... (Score:3, Informative)

      by LordLucless ( 582312 )
      Firstly, summary says more than five years, secondly that it began in the 1990s, and thirdly, just because the suit is being brought in 2006 doesn't mean that's when the price-fixing ended.

  • Corporate Charter (Score:3, Insightful)

    by professionalfurryele ( 877225 ) on Friday July 14, 2006 @09:35AM (#15718278)
    Why why why why why when these companies do crap like this don't we just abolish thier corporate charter, sell their assets to their competitors and realse their patents and copyrights into the public domain and abolish their trademarks? I'm getting very tired of hearing about large corporation X acting against the public intrest by breaking the law. Make it so that shareholders will punish them for breaking the law and a corporation will not break the law.

    • Re:Corporate Charter (Score:4, Insightful)

      by 91degrees ( 207121 ) on Friday July 14, 2006 @09:38AM (#15718304) Journal
      That would involve punishing a lot of people for crimes of a handful. Most of the sharehholders had no way of knowing that such illegal activities were going on. Why should they be punished substantially more than they gained?

      • Re:Corporate Charter (Score:2, Insightful)

        by Anonymous Coward
        Why should they be punished substantially more than they gained?

        As a shareholder in a limited-liability corporation, should the government decide to dissolve the corporation, they'd be out their stock, and that's it. This was the risk they signed up for when they invested in the company.

        My personal belief is that we should stop using the "corporate veil" to protect everyone in the company. Take Merck for instance, if I went out and gave people pills that I knew could kill them and they do, I'd probably be
    • Make it so that shareholders will punish them for breaking the law and a corporation will not break the law.

      Don't you mean "the government?" Shareholders are the company. They probably think that breaking the law is good if it turns a profit and they don't get caught.
      • What I meant by this comment is make corporate punishment so severe that any illegal activity or potentially illegal activity will have the shareholders firing the board for fear of thier share value dropping drastically as the assets are sold off and distributed to them (after creditors).
      • "Don't you mean 'the government?' Shareholders are the company. They probably think that breaking the law is good if it turns a profit and they don't get caught."

        One: Shareholders are not the company. They are the owners of the company. They are driven by profit motive, obviously, however, doing anything illegal to the point where the shareholders can find out is WAY too high a risk for the shareholders.

        Your entire statement shows a critical misunderstanding of how a publicly traded business works. Do you
        • Nowhere in my previous point did I say that shareholders are going to be finding out about the illegal activity. Only that they would probably be happy with it. You can have the latter without the former. But that's a red-herring.

          Doing anything illegal to the point where shareholders can find out might be the same as getting caught, and if so it fits under my initial argument of not getting out.

          What we can talk about here, though, is that few shareholders will drop a company because it's questionable if
    • Unfortunately that would put a whole lot of people out of work, and 99% of what the government does is make sure there's a lot of jobs.

      There's probably a reason my plan is faulty, too, but I'd much rather see any company guilty of price fixing lose the right to set its own prices. You do it, you give the government 200 grand a year to pay for a group of three guys (or however much and many is necessary for your company size) to continuously audit you and set your prices for you at some mandated lowered pro
      • Ah I don't agree with more government involvement. The market does a fine job regulating price when it is allowed to (if there is health competition, no monopolies and no collusion). If you make it so that it is very inadvisable to price fix the shareholders will make sure no one does it. Massive fines and invest that in public research in the field if you don't like the corporate death penalty. Just don't let them get away with it with a tiny fine.
        • Ah I don't agree with more government involvement

          You know a way for the government to shut down a company without government involvement? If they break the law, the government kind of has to get involved.

          Although my plan doesn't work anyway. It would make it very difficult for competitors entering the market to compete, so the price would have to be mandated to be an estimate on what the product would be sold at by an honest company and then have the additional profits funneled into road repair or governm
          • Ah, but selling off company assets can be handled by the private sector, you don't need government to do it, just to sanction that it should be done. You just turn it into a debt owed to the creditors, then to the shareholders. Then the assets are sold in the usual way.

            Your system requires a new branch of government that would set 'fair prices'.
            • Your system requires a new branch of government that would set 'fair prices'.

              Yup. But only applicable to companies convicted of price fixing and paid for by the criminal. You'd have a hard time convincing me that's bad.
      • "I'd much rather see any company guilty of price fixing lose the right to set its own prices."

        This alone would collapse any business with variable costs, R&D, or any other nonstatc drain on their bottom line (ie: every company on the planet). If they survive the initial shock (for five to ten years), they will be able to utilize new technology and make rediculous profits on old tech.

        Usually, this is only provided in combination with government mandated monopoly (like the airline industry of the pre-70'
        • This alone would collapse any business with variable costs, R&D, or any other nonstatc drain on their bottom line

          Why? The team of guys you're being forced to pay for are there to look at those things and adjust for them. That's what they're there for.
    • I think you're largely onto something but there's a lot of colateral damage to [potentially] innocents.

      But it's mostly "foe-show!" that "corporate entities" manage to escape punishment for breaking laws that ordinary people might otherwise be thrown in jail for.

      At present, "breaking laws and getting away with it" is translated as business risk and just another part of doing business. Crimes against humanity and all that are just a part of it. There has been some improvements in the corporate accounting re
    • Or maybe a free country where a company can sell whatever product they want at whatever price they'd like without the government interfering would work well.

      Free market always solves the problem better. If those 8 companies were splitting the sales of ram, it only takes one company to come in and sell it at a proper price and take 100% of the business.
      • Yeah, that's all nice and all but when the colluders own 100% of the market it's hard to get in. You think there is only 8 dram manufacturers in the world? Hell no. You just haven't heard of the others.

        The problem with price fixing is the same as with monopolies. It reduces your ability to choose competition. If company A and company B collude and sell otherwise identical products (e.g. they're not competing) and they sell them at the same price, they're effectively one company.

        Also, price fixing usual
      • If those 8 companies were splitting the sales of ram, it only takes one company to come in and sell it at a proper price and take 100% of the business ...and it only takes one member of the cartel refusing to license their DRAM patents to the upstart to make that business 100% illegal. The free market is almost always powerless to correct abuses of a monopoly or a cartel.
    • 'price fixing' usually involves a large enough segment of the industry to make that impossible. ie: you can't price fix if the price fixing group has competition that can undersell the fixed prices.

  • Was it really that bad? (Score:4, Insightful)

    by RingDev ( 879105 ) on Friday July 14, 2006 @09:36AM (#15718289) Homepage Journal
    So they fixed prices, so what, memory prices in the mid/late nineties plummited. Early 90s buying a 4 meg chip costed hundreds, mid 90s a 32 meg chip cost under a hundred, by the end of the 90s we were paying under a buck a meg, heck now it's what, under a buck for 10 megs?

    In the end, the consumers will see none of it (who's really going to go through to paper work for a $3 rebate?), the lawyers will see millions, and the government will get the unclaimed payouts.

    IOW, a complete waste of time.

    -Rick
    • who's really going to go through to paper work for a $3 rebate?

      I've seen a few places that now offer "e-rebates." So you can just fill out the rebate info at their website instead of mailing it in. Hopefully this will catch on.

    • You're right. It wasn't that bad per meg, now just multiply the cost difference by the number of megabytes purchased in the last 5 years.

    • In the end, the consumers will see none of it (who's really going to go through to paper work for a $3 rebate?), the lawyers will see millions, and the government will get the unclaimed payouts.

      I've been an involuntary class member for several of these worthless fucking class action suits that only make the lawyers richer. And what did I get? Twenty minutes of free long distance phone calls, or maybe a free CD from the same damned company that screwed me in the first place.

      Fuck that. These class

    • So they fixed prices, so what, memory prices in the mid/late nineties plummited.

      In other news, transistor densities doubled every 18 months or so during the same timeframe. Also, water is wet and the sun is hot. In what way does anything you or I said make it OK for a company to break the law?

    • Price fixing is artificially inflating the price across the industry.

      So prices were dropping. That just means costs were dropping even more dramatically, and the memory companies were using it as a cover for their inflated prices.

      Just think. By the end of the nineties, we could have been paying under a buck for 5 megs. By today, that could be 30-40/$.

      IE: Just 'cos prices are dropping doesn't mean they're not still screwing you. It just means they're being smart enough about it to convince you you're gett
  • Does this mean I will be getting some of my money back from Crucial on the $1,000+ dollars I spent on a gigabyte of RAM back in 2002?
    • Yes you will.

      You will be recieving a $2.00 off voucher for your next purchase of $1000.00 or more at crucial.com

  • Haha (Score:5, Funny)

    by Rinisari ( 521266 ) on Friday July 14, 2006 @09:48AM (#15718362) Homepage Journal
    If the DRAM market is corrupt, I'll just switch to something else: Rambus! Oh wait...
  • 730.000.000$ / 200$ = 3.650.000Gb = Free RAM to everyone.
    Yahooooo !!!
    • Hello, I am a representative from Yahoo! Inc. - you have utilized our Trademarked name without prior consent, As damages we seek to acquire your recent windfall of RAM, along with that of any persons who have participated in this breach of our intellectual property rights. Thank you and good day.

  • I want to see them on the stand. (Score:5, Funny)

    by Rob T Firefly ( 844560 ) on Friday July 14, 2006 @09:56AM (#15718411) Homepage Journal
    PROSECUTOR: Did your company engage in price fixing?

    DRAM MEMORY: Maybe, maybe not... I just woke up, so I can't remember anything before that.

    FLASH RAM: He did! He did! I'm sure of it.

    BUBBLE MEMORY: We never had this nonsense in my day, I tellya what. *cough cough*

    PUNCH CARD: You're tellin' me. *wheeze*
  • ...assessed more than $730 million in fines

    Okay, now that the lawyers have been paid, where do I pick up my share - a 10% discount coupon on future DRAM purchases?

  • They weren't very good at it (Score:5, Insightful)

    by acvh ( 120205 ) <geek.mscigars@com> on Friday July 14, 2006 @10:25AM (#15718604) Homepage
    1993 - 4 MB SIMM $160
    2003 - 256 MB DIMM $160

    Spitzer should go after real criminals, and stop using threats and publicity to extort big settlements.
    • 1993 - 4 MB SIMM $160
      2003 - 256 MB DIMM $160

      Spitzer should go after real criminals, and stop using threats and publicity to extort big settlements.


      Well, if it should have been "2003 - 512 MB DIMM $160" then they were pretty good at it. As it stands though, your post is meaningless."
      • There are worse crimes being committed than toying with the price of computer parts.
        • There are worse crimes being committed than toying with the price of computer parts.

          There are worse crimes than carjacking too. Doesn't mean we don't prosecute them. So again, I don't see your point.
          • considering that this will be resolved by companies paying money to the NY AG, and not a criminal prosecution, my point is that this is grandstanding, and not law enforcement.

            1-murder
            2-rape
            .
            .
            10-carjacking
            .
            .
            .
            129-DRAM price fixing

            • considering that this will be resolved by companies paying money to the NY AG, and not a criminal prosecution, my point is that this is grandstanding, and not law enforcement.

              Three things. First, the fact that the AG gathered enough evidence against them to make a solid case caused them to plead guilty. That means that they'll have to pay the fines, and hopefully if the fines hurt enough, they'll be discouraged from trying it again (and this isn't the first time they've done it).

              Second, the guilty plea


    • 1993 - 4 MB SIMM $160
      2003 - 256 MB DIMM $160

      Spitzer should go after real criminals, and stop using threats and publicity to extort big settlements.

      That doesn't make much sense.

      Suppose I then told you that in the alternate history with no price fixing, the 2003 line looked like this:
      2003 - 256 MB DIMM $16

      Surely you'd then agree that a >$100 profit per dimm from price fixing wasn't exactly a good situation for the consumer?

      Price fixing is bad for the consumer, regardless of other improvements in the techno
  • I misread the subject as "DRM Makers Accused of Price Fixing" and got all excited!
  • Here is one area that is very difficult to win the anarcho-capitalist debate on -- the cartelization of this particular market in this particular industry sounds very insidious and hard to compete with without the government intervening and bringing the hammer down.

    Most people believe that memory manufacturing is a VERY expensive business. This is true in terms of overall numbers (billions), but it is false in terms of actual products required on the market. Memory is used in much more than just computers (cars, microwaves, cell phones, digital cameras, DVD players, etc), and it is a huge market, possibly a trillion dollar one coming soon. When you have a big market, a big demand and a low supply of manufacturers, it doesn't take much to raise the billions needed to enter a market where there is obvious collusion. 1 million Americans risking US$3000 in a market that you can prove is selling at a overwhelming profit is not a big risk -- and many people were aware of the over-priced memory market back in the 90s.

    Yet I think the debate is won by the free marketeers when you realize that one of the biggest reasons for the cartelization in this case is patent and copyright law. Memory chips are heavily burdened by patents, and many of those patents are cross licensed by those in the cartel. This smacks of government-paternalism and is one reason why patents generally help the cartels and the State rather than the inventor. The cartel:inventor ratio in terms of who is helped by patents is very very high (more cartels are helped than individual inventors).

    I believe the government is wrong for starting class-action lawsuits. We all know that few companies are hurt by class-action lawsuits, and even fewer "victims" are helped. The lawyers (who are the biggest supporters of the expanding State) win the most! Why don't we roll back before the cartel-State collusion and see what the real cause of this problem is? The biggest barrier to the market is NOT money -- stop thinking that! No matter what the financial cost is, if there is a profit to be made, people will invest. I don't care if it is quadrillions that are needed, as long as it is profitable (and cartels can always be beaten in price), people will risk money. The real barrier is the State -- no one can raise enough "force" to overcome the force of government patents and copyrights.
  • Why when any two or more companies in the world get together and settle on a price for their product do we come down on them like a ton of bricks for price-fixing, yet when OPEC gets together and "FIXES" a price for oil we just bend over and take it up the tailpipe? Anyone besides me ever think about how hypocritical that is? Price fixing is bad, but why do we allow it for oil?

    • err (Score:3, Insightful)

      by TrekkieGod ( 627867 )

      Maybe because American laws against price fixing wouldn't apply to an internation organization of which the US isn't even a member?

      What do you think that we can do? We're a large consumer of oil, so we can apply economic pressue. That already happens though, and we already get very good deals. Believe me, gas is much less expensive in the US than in just about any other country.

    • Price fixing is illegal in the US. But to confront a group of nations on the same issue would require some sort of jurisdiction to take them to court in. What do you expect us to do about it exactly, invade one of their major member countries?
  • Companies hurt the consumer, via price fixing, or stock manipulation (Enron, WorldCom), yet its the government that recieves the fines, those screwed are left holding the bag...
  • DRAM prices used be as predictible as MicroSoft stock: the price halved (doubled) every two years. Even faster during a price war. But its been stuck at $100 (+/- $50) a gigabyte for about five years. This compared to flash which has fallen to $20 / GB from $300 in the same time period.

  • Re-Occuring Theme (Score:3, Insightful)

    by nurb432 ( 527695 ) on Friday July 14, 2006 @06:07PM (#15722031) Homepage Journal
    Havent we seen this a few times in the past? " Oh, bad industry.. you are fixing prices.. *slap on wrist* .. now be good.. " then we go thru it again in a few years as nothing ever changes. Governmental 'fines' are considered a cost of doing business anymore, and have long since stopped being a deterrent.

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