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Europe fines DRAM makers €331 million for price fixing

by Scott Bicheno on 19 May 2010, 14:56

Tags: Samsung (005935.KS), European Commission

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Bad memories

In his Enquiry into the nature and causes of the wealth of nations, economist Adam Smith wrote: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

While the bible of free-market economics was written in 1776, Smith could just as easily have been referring to the European DRAM market from 1998 to 2002. According to the European Commission it was subject to a cartel, in which all the major players cooperated with each other in order to keep the price DRAM was sold to OEMs - and thus, us - at an artificial level. The rotters.

Having apparently been looking into this for the past eight years, the EC has sped to a settlement with all the DRAM-makers concerned, resulting in a total fine of €331 million after a reduction of ten percent awarded for the acknowledgement of their guilt from the companies in question.

Samsung was by far the most heavily fined of the group, having to cough-up €145,728,000, while Infineon was fined €56,700,000 and Hynix €51,471,000. Micron escaped punishment because it grassed the rest of them up in 2002. The cartel operated between 1 July 1998 and 15 June 2002 and involved extensive, bilateral sharing of secret information in order to coordinate price levels and quotations for DRAM to PC and server OEMs.

"This first settlement decision is another milestone in the Commission's anti-cartel enforcement," said competition commissioner Joaquín Almunia. "By acknowledging their participation in a cartel the companies have allowed the Commission to bring this long-running investigation to a close and to free up resources to investigate other suspected cartels. As the procedure is applied to new cases it is expected to speed up investigations significantly."


HEXUS Forums :: 6 Comments

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Are we sure the cartel completely disbanded in 2002?
We must assume the EC is satisfied of this.
Micron escaped punishment because it grassed the rest of them up in 2002.

Douche bags :p
Hopefully this will mean cheaper RAM prices?
The problem being, firstly, between them they probably raked in several times that which they were fined, so were basically rewarded heavily for fixing prices and then given effectively a light tap on the wrists.

Which only encourages them to do it again. If you can make a billion extra, and know you'll only pick up a couple hundred million in fines, thats an 800million incentive to do it, rather than a 200 million disincentive.