Samsung has been described as engaging in illegal cartel activity after another senior Samsung marketing executive agreed to plead guilty and serve prison time for taking part in price-fixing in the computer memory chip business, the Justice Department said. This is the same division that supplies memory for the Apple iPods.
Samsung marketing executive Thomas Quinn is the fourth Samsung manager to plead guilty in the U.S. government’s memory chip probe. He will serve eight months in prison and pay a $250,000 fine under the plea deal, the department said.
The charged executive, participated in the price-fixing conspiracy in his capacity as VP of marketing for memory products at Samsung Semiconductors. Quinn was charged with violating the Sherman Act in by participating in an agreement to fix prices of DRAM and coordinating bids in an auction held by a DRAM purchaser.
“Prison time for price-fixers remains the most potent deterrent to illegal cartel activity,” Thomas O. Barnett, assistant attorney general in charge of the Department’s antitrust division, said in a statement. “Today’s action sends a clear message — those who engage in price-fixing schemes will be held accountable for their illegal conduct.”
Including today’s charge, four companies and 13 individuals have been charged and fines totaling more than $731 million have resulted from the Justice Department’s DRAM investigation. The $731 million in criminal fines is the second highest total obtained by the Justice Department in a criminal antitrust investigation into a specific industry.
According to the one-count felony charge filed today in federal court in San Francisco, Quinn conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain original equipment manufacturers from, on, or about April 1, 2001 to, on, or about June 15, 2002, and to coordinate bids on a Dec. 5, 2001 Sun Microsystems Inc., auction. The price-fixing scheme directly affected sales to U.S. computer makers Dell Inc., Hewlett-Packard Co., Compaq Computer Corp., International Business Machines Corp. (IBM), Apple Computer Inc., Gateway Inc., and Sun Microsystems Inc., the Justice Department said.
Quinn is the fourth Samsung executive to agree to a prison sentence in the DRAM investigation. Three foreign-based Samsung executives, Sun Woo Lee, Young Woo Lee, and Yeongho Kang, have already pleaded guilty and agreed to serve prison terms ranging from seven to eight months and to pay fines of $250,000 each. In addition, four Hynix Semiconductor Inc., executives, Dae Soo Kim, Chae Kyun Chung, Kun Chul Suh, and Choon Yub Choi, were charged with participating in the DRAM price-fixing conspiracy and agreed to plead guilty and serve jail terms ranging from five to eight months and to each pay a $250,000 fine. In December 2004, four Infineon executives, T. Rudd Corwin, Peter Schaefer, Gunter Hefner, and Heinrich Florian, pleaded guilty to the DRAM price- fixing conspiracy. The Infineon employees served jail terms ranging from four to six months and each paid a $250,000 fine.
In total, four companies have been charged with price fixing in the DRAM investigation. Samsung pleaded guilty to the price-fixing conspiracy and was sentenced to pay a $300 million criminal fine in November 2005. Hynix, the world’s second-largest DRAM manufacturer, pleaded guilty and was sentenced to pay a $185 million criminal fine in May 2005. In January 2006, Japanese manufacturer Elpida Memory agreed to plead guilty and pay an $84 million fine. In October 2004, German manufacturer Infineon pleaded guilty and was sentenced to pay a $160 million criminal fine.