Samsung Officials Accused of Price Fixing

Posted by: Ihlwan Moon on October 19, 2006

In connection with a major antitrust investigation in U.S. history, executives at Korea’s Samsung Electronics and Hynix Semiconductor, were indicted for conspiring to fix prices for computer memory chips, a charge denied by defendants. The indictment is part of a four-year inquiry into price fixing in the memory chip industry that also involved two other major makers of dynamic random access memory chips (DRAM) – Infineon of Germany and Micron Technologies based in Boise, Idaho.
Samsung’s Senior Vice President Kim Il Ung and Rha Young Bae, former head of Samsung worldwide sales and marketing, and Gary Swanson, senior vice president of memory sales and marketing at Hynix, are accused of taking part in a global conspiracy to artificially inflate DRAM prices between April 1999 and June 2002, according to a grand jury indictment filed in U.S. District Court in San Francisco. Samsung, the world’s largest memory chip maker, agreed to pay a $300 million fine last year to settle U.S. antitrust claims. Already, 16 former and current executives from the involved companies have also been fined $731 million. (see BusinessWeek.com, 11/30/05, “Samsung’s fuller disclosure”)
The three men, if found guilty, each face up to three years in prison and a $350,000 fine or twice the gain or loss caused by the price fixing, whichever is largest. Four other Samsung executives have pleaded guilty to a DRAM price-fixing conspiracy and agreed to serve prison terms ranging from seven to eight months and to each pay a $250,000 fine. Samsung, which has said the case won’t have any impact on its results, reported on Oct. 16 a 16% year-on-year net profit jump to $2.29 billion in the third quarter of this year. (see BusinessWeek.com, 10/16/06, “Samsung, Huge Profit Jump”)

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