New York And Samsung Settle Hi-tech Price-fixing Case

NEW YORK, NY (February 6, 2007)—New York Attorney General Andrew M. Cuomo today announced a $90 million settlement with Samsung, a leading manufacturer of computer memory chips, that resolves price-fixing charges against the company.  Samsung has also agreed to assist New York and other states in litigating against other computer chip manufacturers that participated in the price-fixing conspiracy. 

The settlement covers consumers and state and local governments nationwide that overpaid on purchases of equipment containing dynamic random access memory (“DRAM”) chips, the prices of which were illegally set by Samsung and other major chip manufacturers.  DRAM chips are used to hold data and temporary instructions used by personal computers and other digital products.

The $90 million settlement will be used to benefit victims that paid artificially high prices for personal computers and other hi-tech equipment that contained the chips.  $10 million is reserved for states and localities to recover their losses; $80 million will be used to benefit consumers and other victims.  New York State’s specific share will be determined in the future.

Cuomo said, “Consumers, states, and localities were victims of an international conspiracy that artificially raised the price of memory chips, and thus illegally boosted the price of computers and popular hi-tech products.  This settlement is a major step in recovering the overcharges that Samsung and its co-conspirators illegally foisted on consumers and taxpayers.”

New York’s lawsuit, filed in July of 2006, charged that Samsung and several other DRAM manufactures entered into secret agreements to inflate the prices of their memory chip products.  Many of the chips are sold to computer manufacturers (known in the industry as original equipment manufacturers, or “OEMs”) who install them in their computers and other hi-tech products.

New York’s complaint alleged that during a roughly four-year period the conspirators restrained competition for DRAMs by exchanging price and other confidential competitive information, thereby inflating the price.  The illegal activity continued until the U.S. Department of Justice began a criminal price-fixing investigation in June of 2002.

The Justice Department investigation revealed one of the largest price-fixing conspiracies on record, and resulted thus far in over $730 million in criminal fines and guilty pleas by Samsung and three other major DRAM manufacturers – Elpida, Hynix, and Infineon.  A fifth manufacturer, Micron, admitted participating in the conspiracy, but avoided federal criminal charges under the Justice Department’s corporate leniency program, applicable to price-fixing violations.  All five manufacturers are defendants in New York’s lawsuit.  In addition, 17 corporate executives from the various companies have pleaded guilty to federal criminal charges.

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