The US Justice Department drove home the scale of its probe into DRAM price fixing yesterday when it announced that Infineon Technologies AG has agreed to plead guilty to conspiring to set prices and pay a $160m fine.
The fine is the third largest ever in an anti-trust case, and the DoJ’s victory will likely send a shiver through the rest of the industry, as Infineon has also agreed to help the agency with its investigation of other DRAM vendors.
While the agreement gets the DoJ off Infineon’s back, the German vendor will now have to deal with angry OEM customers demanding compensation for past overcharging, as well as disgruntled shareholders.
The probe first came to light back in July, 2002, when memory vendors revealed they had been called to appear before a grand jury investigation into allegations of price fixing by memory vendors.
After two years of silence, Infineon said in July it had increased its accruals relating to the probe, adding a further $226m, which brought its total accruals relating to the case to $261m.
Yesterday, the DoJ announced that Infineon had agreed to plead guilty to a one count felony charge in the US District Court in San Francisco. According to that charge, Infineon conspired with other vendors, from July 1, 1999 to June 15, 2002 to fix the DRAM prices charged to certain computer and server manufacturers.
According to the charge the top-ranking PC vendors in the industry were all victims of the conspiracy: Dell, Compaq, HP, Apple, IBM and Gateway.
A spokesman for Infineon said the company had already settled with the majority of OEMs concerned, and expected to conclude agreements with the others soon. It also faces a number of class action suits. The spokesman said the earlier accruals were expected to cover yesterday’s fine, as well as the settlements with OEMs and the class action shareholders.
The firm has overhauled its internal practices, the spokesman said, to ensure it did not run into similar problems in the future.
The spokesman added that the agreement with the DoJ covered Infineon executives, meaning they will not face individual action from the DoJ. Infineon parted company with CEO Ulrich Schumacher earlier this year. The spokesman said Schumacher’s departure was unrelated to the price fixing probe, though he will also be covered by the settlement.
Having dealt with Infineon, the DoJ can now turn its full glare on the other vendors under investigation. It seems fair to assume that further agreements, or court proceedings, can be expected.
Hynix and Micron Technology are amongst the other DRAM vendors who confirmed back in 2002 that they had been contacted by the grand jury and were cooperating with the investigation.