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DRAM Price Fixing Investigations
An anonymous reader writes "A few days ago after FTC antitrust charges against Rambus were thrown out, the U.S. Department of Justice and EU have both begun probes against the 4 largest memory makers in accusation of price fixing during 2001/2002. News.com.com has information regarding the pending EU investigation. Anandtech and Silcon.com both have primers on the U.S. investigation. If you thought you paid too much for RAM in 2002, chances are you may have been more right than you originally thought."
I've read cases where the same laws have been used to prosecute companies no matter what they do:
A law that you can't know you're breaking in advance is no law: it's a license for prosecutors to go after anybody.
Lets say there is a wendys and a burger king in the mall, bout 4 stores down from each other
They are allowed to set the prices as they wish, and hence get into price wars from time to time
This is all fine and dandy, until the two managers get together and say, 'You know what, if we agree to keep our prices at $2.00 per burger, we both will make more money.' At that point it's illegal.
Gillette is not going with razorx and making deals nor printer manufactures.
understand?
Expect in those cases you have specifically designed a product that nobody else can make because if they do make it you'll sue them for copyright violation and/or DCMA violations. You don't have any motivation to lower your prices if nobody else has any motivation to make cartridges for your particular line of razors or printers -- mainly because they all have their own lines. If a third-party tries to make them you'll just sue them out of existence.
This might not be illegal per say but it's just as bad imho. My ass it costs $35 to make a 15ml blank ink cartridge or $10 to make eight replacement cartridges for my Mach Three Turbo.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
Then that's a monopoly on that market... Which isn't in and of itself illegal. Prices couldn't be fixed in this case, because by definition, more than one party is required to fix the prices!
I'm no longer in the standalone DRAM business, but I did spend about 20 years, there.
Much of the time, there's no money to be made. Much of the time, just about everyone runs at a loss. The industry is also cyclical, and sometimes there's good money to be made. It doesn't help that it takes serious time to build a chip, so build-to-order doesn't really work very well. There's also time involved in packaging chips into a usable form, especially because it may involve transportation to a remote site. This aspect may be key, later.
IF there is price-fixing involved, and I suspect that there really isn't, it's the general idea of flattening out the bottom of the price curve a little in the cycle. I suspect it's far more likely that memory makers have decided, "It's just not worth bringing memory to market for less than $xx.xx." Remember the thing about packaging? At some price point, it may be better to not even bother packaging chips. It may even be better to grind them back into sand. Each manufacturer has different costs, but they're all doing the same thing. I suspect that they all have different, but similar package/hold/destroy price points for their chips.
This might appear to be price-fixing, but isn't. It's simple economics.
Years back, I bought my Mom a pair of earrings made from defective 4Mbit chips I had worked on for 6 or 7 dollars. At the time, perfect chips were selling on the open market for $4.50.
This is also why airline prices move in some strange waves.
When there's going to be a price increase, one airline has to announce its increase to the world, they can't tell the competition first. Now, for a few hour, that airline is $20 higher than everybody flying the same route... who's going to buy tickets that route from that airline? Nobody. The ball is now in the court of all of the other airlines that fly that route... if they agree it's time for a price increase, they'll move their prices up to match. However, if a major player disagrees, they'll keep their prices where they are, and eventually everybody who raised their prices will realize this isn't going to stick, and the company that originally stated the fare hike will retract it.
Fare cuts move the same way. Once somebody announces a cut, everybody else has to either match it or wait for the airline who made the cut to get locked out of the market by filling up their planes.
That's how fair play happens without collusion. Those in charge of the prices have to guess what they other guys are going to do in the future, but once it's public information, everybody can use that info.
We all understand why patents are necessary... so you're 100% correect but there's a big problem with the law
If you don't believe me, then look at the profits HP makes on selling printer refills compared to _all_ of it's other business wings combined. (over half the total revenue). The fact that all printer manufactors engage in the same policy can be regarded as a new way around the price fixing problem.
Lets face it, the industry is deliberately vendor locking their customers and then charging ridiculous prices. Mum and Dad get sold on a wonderful printer that costs only $150, but then sigh in resignation when the salesman tells them that _all_ the ink cartridges are very expensive.
So they get around price fixing charges by all producing different (but functionally identical) components and over charging for them. Seems like the price fixing laws need to be fixed.
Like all pain, suffering is a signal that something isn't right