Thirty-three states settle computer chip suit

By Keith Loria | Jun 25, 2010


LOS ANGELES (Legal Newsline) - Thirty-three state attorneys general have reached a $173 million settlement with six computer chip manufacturers who were accused of conspiring to fix prices.

The DRAM manufacturers named in the lawsuit include the American companies Micron Technology, and NEC Electronics America, as well Infineon Technologies A.G., based in Germany; Hynix Semiconductor, based in South Korea; Elpida Memory, based in Japan; Mosel-Vitelic Corp., based in Taiwan; and the companies' American subsidiaries.

California Attorney Jerry Brown led the charge for the 32 other state attorneys when the multi-state group filed a complaint in federal district court in July 2006 alleging that California's consumers, state agencies, universities and local governments were forced to pay illegally inflated prices for products containing Dynamic Random Access Memory computer chips.

The DRAM memory chip, believed to account for $17 billion in sales worldwide last year, stores information temporarily for quick access and is found in desktop computers, laptops, servers, printers and networking equipment.

"These companies conspired in an illegal global scheme to fix prices on chips used in computer equipment sold to consumers, schools and government offices," Brown said. "The large price tag of this settlement should serve as a warning that we will crack down on any manufacturers around the world that choose to gouge consumers through illegal price-fixing schemes."

Brown says that from 1998-2002, salespeople and upper management of all of the defendants agreed, through frequent meetings, calls and other contact, to charge customers illegally inflated prices on DRAM chips.

In October 2008, Brown filed a second lawsuit in state court in San Francisco on behalf of 96 local California government entities, including cities, counties, school districts, special districts and the University of California, all of which had purchased computer equipment containing DRAM chips.

The U.S. Justice Department called the scheme, "one of the largest cartels ever discovered." Four of the companies - Samsung, Hynix, Infineon and Elpida - and 12 individuals have already pleaded guilty to criminal price-fixing.

According to the settlement, each company is required to refrain from illegal price-fixing and must conduct extensive employee compliance training. The companies will revolve both lawsuits by agreeing to the $173 million figure, as well as lawsuits brought by private plaintiffs.

"The settlement money is welcome," Brown said, "but the illegal overcharging never should have happened in the first place. Especially when times are tight, schools and government agencies can't afford to be ripped off by companies that violate our anti-trust laws to keep profits high."

The other states participating in the settlement are Arizona, Arkansas, Colorado, Florida, Hawaii, Idaho, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, West Virginia and Wisconsin.

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