Infineon to pay $160 million fine for DRAM price-fixing

WASHINGTON - Infineon Technologies AG, a German manufacturer of DRAM (dynamic RAM) has agreed to plead guilty and pay a $160 million fine for attempting to fix prices in the DRAM market, the U.S. Department of Justice (DOJ) announced Wednesday.

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The fine, the third largest criminal fine in the history of the DOJ's Antitrust Division, stems from a one-count felony charge filed Wednesday in U.S. District Court in San Francisco. The DOJ charged Infineon with violating the Sherman Antitrust Act by conspiring with unnamed DRAM manufacturers between July 1999 and June 2002 to fix prices on DRAM sold to computer and server vendors.

Under the plea agreement, which must be approved by the court, Infineon has agreed to cooperate with the DOJ in its ongoing investigation of other DRAM manufacturers. Robert LeFort, president of Infineon North America, said he couldn't comment on whether he expected other DRAM manufacturers to face similar charges.

The settlement was in the best interest of stockholders and the company, an Infineon spokesman said. The settlement shows the company has "taken seriously" internal concerns about its corporate governance, said Christoph Liedtke, the Infineon spokesman.

The company has conducted employee training, created corporate compliance guidelines and appointed a legal compliance officer in response to the DOJ investigation, LeFort said. "It really was strengthening up the safeguards within the organization so something like this cannot happen again," LeFort said.

Infineon doesn't plan additional changes to its business in response to the plea and fine, LeFort added. "(The investigation) was somewhat of a drain on resources," he added. "We're very happy to have it behind us and focus on the business of competing with our technologies and products. It's going to be business as usual to support our customers and grow our business."

The computer makers directly affected by what the DOJ calls a "price-fixing conspiracy" were Dell Inc., Compaq Computer Corp., Hewlett-Packard Co., Apple Computer Inc., IBM Corp. and Gateway Inc. Infineon has contacted the affected companies and has settled claims or is in the process of settling claims, according to the company.

"Infineon strongly condemns any attempt to fix or stabilize prices," the company said in a press release. "Infineon is committed to vigorous and fair competition based solely on superior products and services."

R. Hewitt Pate, assistant attorney general in charge of the Department's Antitrust Division, called the guilty plea "an important victory in the department's ongoing fight to break up and prosecute cartels that harm American consumers," in a statement released Wednesday.

Infineon is charged with carrying out the conspiracy by:

-- Participating in meetings, conversations and communications with competitors to discuss the prices of DRAM to be sold to certain customers;

-- Agreeing to price levels of DRAM to be sold to certain customers;

-- Exchanging information on sales of DRAM to certain customers, for the purpose of monitoring and enforcing the agreed-upon prices.

Infineon's guilty plea follows years of allegations about DRAM price-fixing. The DOJ began investigating DRAM price fixing in 2002, and in May, Rambus Inc. filed an antitrust lawsuit against four companies, including Infineon, accusing them of banding together to eliminate competition.

The Rambus suit was filed in the Superior Court for the State of California against Infineon, Hynix Semiconductor Inc., Micron Technology Inc. and Siemens AG, and alleged that executives from those four memory vendors colluded to set cost parameters for Rambus' RDRAM (Rambus DRAM) product and to restrict output of that product in order to raise its price and kill its chances of becoming a mainstream memory technology.

In December 2003, the DOJ charged Alfred P. Censullo, a regional sales manager for Micron, with obstruction of justice in connection with its investigation of possible price fixing in the DRAM market. In January, Censullo, who was the first person to be charged in the ongoing investigation, pled guilty to the charge and admitted to having withheld and altered documents in response to a grand jury subpoena served on Micron in June 2002, according to the DOJ. Censullo is scheduled to be sentenced later this year.