RAM Manufacturers Fined for Price Fixing

TufelKinder writes "From Law.com: 'In the largest fine ever obtained by San Francisco antitrust prosecutors, a Korean company has agreed to plead guilty and pay $185 million for its role in a conspiracy to drive up the price of computer chips.' Micron and Infineon have also been fined for their role in the scheme." From the article: "It's the third-largest fine of its kind in the United States, and it could be just a preview of even bigger penalties. The far-reaching computer chip investigation, which alleges wrongdoing from 1999 through 2002, affects thousands of consumers."

Thanks a lot....

[Solder Fumes]

So the money goes to who, instead of the customers?

US retailers

[Isopropyl]

"Last year, nearly $8 billion worth of DRAM was sold in the United States. Customers touched by Hynix's illegal activities include Dell Inc., Compaq Computer Corp., Hewlett-Packard Co., Apple Computer Inc., International Business Machines Corp. and Gateway Inc., according to the Justice Department."

This affects a lot of consumers. I wonder what the involvement of each individual retailer was?

Memory is already cheap

[ZeeExSixAre]

Comparatively, I thought even high-quality memory was cheap compared to other components of a computer, especially since they usually run at higher clock speeds than the processor. That they were price-fixed comes at a bit of a surprise to me.

What does this mean for RAM prices in the near and far future?

Will OEMs keep prices where they are now and pocket the difference? Or will they lower prices?

Re:Price Fixing...

[FFON]

yah, but GW didn't make money from RAM or ties to RAM producing families.

OIL SON!... kill kill kill.

Re:Price Fixing...

[gunnk]

The cost of gas is shooting up to sky-high levels for many reasons:

a) OPEC has too much pricing power over crude oil
b) available supply is falling (it's finite)
c) demand is climbing (China, anyone?)
d) it's REALLY hard to get permission to build refineries in the U.S.

If seems to me that claiming "price fixing!" in this case is perfect example of the H.L. Mencken quote:

For every complex problem, there is a solution that is simple, neat, and wrong.

heh

[Renraku]

Actually, the price of RAM will probably go up after this so said companies can afford to pay off their fines without reaching into their own pockets.

When a telephone company gets fined, where does the money come from? Increased prices/fees.

When an energy company gets fined, where does the money come from? Increased prices/fees.

When a car maker gets fined, where does the money come from? Increased prices/fees.

Why do you think this will be any different? They're just going to do it again, and not get caught.

Re:Thanks a lot....

[VivianC]

The Lawyers. It always goes to the lawyers. We'll get stupid coupons or something.

Re:US retailers

[hawk]

Pretty much the same: paying too much for RAM.

hawk

You know...

[rootedgimp]

this stuff happens all the time. its just usually there isnt enough hard evidence to do anything about it. as scary as it sounds, though, in big business nothing is a mistake. i bet you 186 million that that money is going to end up back in the hands of the people that started this price fix to begin with. anyway, maybe im over paranoid when it comes to money. perhaps it has something to do with the fact that the federal reserve isnt owned by the usa, and every president that attempted to change that died under odd circumstances or was assassinated. anyway, nothing to see here, go back to earning your ink'd papers. god help us all.

How much profit?

[ehiris]

I wonder how much they profited. The fine for the top music industry companies [usatoday.com] was about $143 million but due to price fixing consumers were overcharged $480 million. That's a profit of about $337 million [wikipedia.org].

Re:Well done, lads.

[StratoChief66]

No, they probably made ten times that from the price fixing, so the cost of doing the price fixing is still less than the benifits, so it was still worth it. Corporations don't have morals, they have cost/benifit analysis depts.

Re:Wow

[timeOday]

Eh? My perception is the opposite. RAM prices seem to have hardly budged in a year, which is strange.

Re:Well done, lads.

[Anonymous Coward]

Except it's only illegal in the US because collusion is illegal. OPEC isn't subject to our laws.

Re:heh

[Jeff DeMaagd]

It depends. Telephone companies are still somewhat regulated in many areas. Same with energy companies. Among those regulations are price regulations.

If one carmaker gets fined, and they raise their prices, that makes the competitor's cars more attractive.

Re:Price Fixing...

[timeOday]

What evidence do you have that the gas companies are price fixing? That gas is expensive? It's a finite resource in high demand. Welcome to the way economics works.

By "the way economics works," I hope you don't just mean fair market forces like supply and demand.

First, a lot of oil comes from OPEC, which is (openly) a cartel. They have well-publicized meetings every few months to fix oil prices.

Then there are the brokers and refiners. We have audio tapes of Enron execs laughing as they caused California's energy crisis of a few years ago by needlessly shutting down suppliers, in order to drive prices through the roof.

Then there's geopolitics. i.e. invading Iraq and then declaring Frace won't be getting any of the oil because they're uncooperative, then getting mad when we discover they weren't obeying our Oil For Food program.

I'm not saying basic economics is irrelevant, but let's not pretend Econ 101 is the real world either.

Re:Wow

[Archon]

I have plenty of ram as it is. What the hell am I gonna do with 2gigs?

I'm old enough to remember a Radio Shack employee telling me that I'd never need more than 4K of RAM. Or of an Apple employee telling me some years later that I'd never need more than a 5 MB HD. Or now of you, asking what they'd ever do with 2 GB of RAM.

The more RAM, the less has to be done in a HD. I don't ever turn my computers off as it is and leave as many apps running as possible. Things are always just a click away and my access to things is nearly instantaneous. This is what I want, and I always want more.

How about diamonds?

[grumpyman]

de Beers has been doing that for years without getting sued.

Re:Well done, lads.

[Intron]

The next generation wafer fab lines will cost ~$10B. All of which has to be paid off out of the sales of RAM chips. Since memory is a commodity part, buyers will always go to the cheapest source, so whoever is willing to accept the lowest margins wins. Unless everyone agrees to a minimum price.

This isn't a cost/benefit argument, its a life or death decision to the manufacturers.

And yet Microsoft

[gillbates]

can put others out of business running an illegal monopoly, and get off scott free...

Something tells me these folks didn't buy the right judges...