Illinois joins massive price-fixing suit against computer chip makers

Chris Dickerson Jul. 20, 2006, 8:23am

CHARLESTON, West Va. – West Virginia Attorney General Darrell McGraw and 33 other AGs -- including Illinois' Lisa Madigan -- have filed a lawsuit against the world's largest manufacturers of computer chips seeking monetary relief for consumers and state agencies that paid more for computers because of alleged price-fixing.

Dynamic Random Access Memory (DRAM) is a widely-used computer memory chip that is found in personal computers, servers and other electronic devices.

"For years, West Virginia consumers and state agencies paid more for computers because of a price-fixing conspiracy by companies that make memory chips, which is a crucial component of many high-tech products," McGraw said in a July 14 press release. "Our lawsuit seeks to prohibit manufacturers from manipulating prices in the future and to recoup some of the public's losses."

The 34 states filed the lawsuit in United States District Court in San Francisco, seeking damages, restitution, civil penalties and injunctive relief for consumers and state agencies that paid higher prices for computers from 1998 to 2002. The states' suit is the result of a multi-state investigation that began in 2004, as well as a federal investigation.

Specifically, the states are suing Elpida Memory, Inc.; Infineon Technologies AG; Hynix Semiconductor, Inc.; Micron Technology, Inc.; Mosel Vitelic Corp.; Nanya Technology Corp.; and NEC Electronics America, Inc. and subsidiaries of these companies. The states allege the defendants violated federal and state antitrust laws by coordinating prices they charged for DRAM.

In June 2002, the U.S. Department of Justice launched a criminal investigation into what officials have called "one of the largest cartels ever discovered."

Micron agreed to cooperate with investigators in exchange for amnesty from federal criminal charges. Several defendants and 12 individuals since have pleaded guilty to criminal price-fixing and collectively paid more than $730 million in fines, including Samsung Electronics Co., Ltd., Hynix, Infineon and Elpida.

"They all did it," Douglas Davis of McGraw's office said last week. "They have pleaded guilty. Our office only has the authority to sue on behalf of consumers and state agencies. Private firms are suing on behalf of commercial interests."

David said other companies not named in the suit could be added later.

"We're hoping we'll get deals worked out," David said. "If not, then we'll litigate."

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