September 16, 2004

Infineon to pay $160m fine in U.S. for chip-price fixing

German computer chip maker Infineon Technologies AG has agreed to plead guilty to price fixing and will pay a $160 million fine, the Justice Department announced Wednesday. NewsForge/ITMJ's Melanie Hollandscovered this story at its beginning in May 2003.

In a plea agreement filed in U.S. District Court in San Francisco, Infineon acknowledged conspiring with other companies to fix prices of widely used computer memory products between July 1999 and June 2002. (See the government's filing; WSJ subscription required.)

The victims included some of the world's largest computer companies: Dell Inc., Hewlett-Packard Co., IBM Corp., and Gateway, Inc.

The fine is the third-largest imposed in a criminal case by the Justice Department's antitrust division. The 1999 breakup of a vitamin cartel led to a $500 million payment by Hoffmann-La Roche Ltd. and $225 million by BASF AG.

Infineon and other chip makers produce "dynamic random access memory" products used in digital recorders, personal computers, printers, video recorders, mobile phones and many other electronics. The U.S. market for these products is about $5 billion a year.

The conspiracy drove up the prices for electronic products for businesses and millions of consumers, said R. Hewitt Pate, assistant attorney general for the Justice Department's antitrust division. "Today's charge and its resulting guilty plea represent an important victory in the department's ongoing fight to break up and prosecute cartels that harm American consumers," Mr. Pate said.

The agreement, which a federal judge must approve, calls for Infineon to plead guilty to one felony count of price fixing and to cooperate with the investigation of other producers of computer memory products.

None of the other alleged members of the price-fixing cartel was named in the court papers filed yesterday.

Infineon's competitors in the memory-products market include Samsung Electronics Co., Micron Technology Inc., Hynix Semiconductor Inc. and Nanya Technologies Corp.

Infineon, based in Munich, said in a statement the $160 million would be paid in installments through 2009 with money set aside from its third-quarter profits. Infineon also said it "has achieved or is in the process of achieving settlements" with all customers affected by its wrongdoing.

"Infineon strongly condemns any attempt to fix or stabilize prices," the company said.

- Associated Press

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