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DRAM Price Fixing Investigations

Posted by timothy on from the at-least-it's-still-cheap dept.

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."

26 of 246 comments (clear)

  1. I need some clarification... by numbski · · Score: 5, Interesting

    I don't like paying high prices any more than anyone else, however I have to wonder...

    Let's say I have a monopoly on widgets, or myself and my compeptitors agree to keep the price of widgets artificially high.

    At what point are we no longer allowed to sell our widgets at whatever price we see fit? When do we cross over into breaking the law for price fixing?

    --

    Karma: Chameleon (mostly due to the fact that you come and go).

    1. Re:I need some clarification... by numbski · · Score: 4, Interesting

      So I can go sue Gillette for price fixing on razor blade refills?

      Or the printer manufacturers for price fixing on toner cartriges?

      You see what I'm getting at? When is it illegal?

      --

      Karma: Chameleon (mostly due to the fact that you come and go).

    2. Re:I need some clarification... by haystor · · Score: 3, Interesting

      Clearly it's your use of gas that causes the fluctuations. Bastard.

      Seriously though, for the in town prices being higher there are a couple reasons. The cost of operating on more expensive land works its way into the price. There may also be city taxes involved as well.

      As far as why it fluctuates from week to week, you should view the gas station as a very small futures market. They don't price the gas they have now based upon how much they paid for it. They price it based upon how much it will cost to replace what you buy. This means they are pricing your current purchases on how much it will cost them to buy gas a couple weeks from now.

      This means that if the political climate in the mideast flares up they may raise prices. If some nation bucks OPEC and produces more, prices may go down.

      I heard of a study that observed the prices moved up much more efficiently than they moved down.

      There are also seasonal differences in the composition of gasoline which is actually a mixture of lots of chemicals. This, along with a greater demand makes gas in the summer more expensive.

      --
      t
    3. Re:I need some clarification... by Anonymous Coward · · Score: 1, Interesting

      The semiconductor industry functioned without the heavy usage of patents for a fairly long time. It wasn't until recently that companies like BB-TI started pushing patents. Even now I suspect that that is a move to protect themselves from companies like Rambus or SCO than to protect some of their IP--mostly because EE's end up taking knowledge with them when they go working somewhere else, creating an environment were companies push employees to create NEW AND IMPROVED PRODUCTS instead of copying a competitor's OLD part.

    4. Re:I need some clarification... by 4of12 · · Score: 2, Interesting

      companies are given patents or copyrights for products that involve huge costs to develop. If it wasn't for copyrights, these companies would not make the initial investment because it would be significantly harder to earn back the cost if everyone could just copy your product.

      And yet it is still not clear from a quantative standpoint exactly how much of a term of exclusivity is optimal for patent protection and for copyright.

      You're right: if the term is too short or non-existent, you'll get less new products than now.

      But the opposite may be true, too.

      Companies may be getting lengthier protection times than they need based on their internal estimates of return on investment. In that case, customers are simply paying what is tantamount to an unneeded special tax to those companies.

      Society overall and technical progress might be better served in a system that grants companies exclusive rights until they recoup, say, twice as much revenue as they invested (or pick your favorite reasonable number).

      Granted, there are devils in the accounting details, but you get my drift.

      --
      "Provided by the management for your protection."
    5. Re:I need some clarification... by gfxguy · · Score: 2, Interesting

      It's not price fixing because Nintendo, Sony, and MS didn't get together and agree on set prices for their consoles or games.

      This is a protectionism scheme between a manufacturer and resellers. If the reseller wants to carry the product, they agree not to sell it below the manufacturer sets. This protects smaller companies, like EB or Game Stop, from a place like Walmart who might be tempted to sell the units at or below cost to get people into the store.

      Is it legal? I don't know. I don't like it, but I don't see where it's illegal. "If you want to sell my stuff, you need to sell it at the price I dictate, otherwise I won't sell it to you at all." Sucks, but not illegal.

      --
      Stupid sexy Flanders.
  2. Uhh...no by Pingular · · Score: 5, Interesting

    If you thought you paid too much for RAM in 2002
    I paid 70 for a stick of 512mb in 2002. That may be expensive compared to now, but with my first 486 I paid the same price for a 4mb stick. Unless you own a server farm, what's 10 per half a gig or ram?

    --

    When anger rises, think of the consequences.
    Confucius (551 BC - 479 BC)
    1. Re:Uhh...no by Fjord · · Score: 2, Interesting

      I paid $54 for a 512MB 400Mhz DDR stick last year. The weird thing is that two months later, the same stick from the same retailer was up to $80 (I was going to get antoehr one) and it was the same elsewhere. I thought a fatory had blown up or something because all the RAM had gone up.

      --
      -no broken link
  3. Price fixing lawsuits are hard to try..... by ghettoboy22 · · Score: 5, Interesting

    Saving my mod points....

    While I'm willing to give any company the benefit of the doubt, it does seem rather suspicious that Micron chose to sell off their PC arm and focus instead on, the implied, more lucrative memory manufacturing business line. Circumstantial yes, but it never made sense why Micron would sell of a business line that was the only good alternative to Dell.

    That being said, it's really hard for the DoJ to prove a conspiracy existed to fix prices of memory between manufactures. IANAL, however from my understanding basically a "smoking gun" would be the only way a conviction could be had - some emails between companies discussing price or marketing strategies perhaps. Other than that, it's almost impossible to get a price-fixing case with a favorable outcome for the prosecution.

    1. Re:Price fixing lawsuits are hard to try..... by Bob(TM) · · Score: 2, Interesting

      I'd agree with that. But. you'd have to admit - an internal email by a Micron executive saying:

      "The consensus from all suppliers is that if Micron makes the move all of them will do the same and make it stick."

      smells of gunpowder.

      --

      The little guy just ain't getting it, is he?
    2. Re:Price fixing lawsuits are hard to try..... by pizzaman100 · · Score: 2, Interesting
      If Micron has been price fixing, they havent done a very good job of it.

      They lost $521 million in 2001
      They lost $1025 Million in 2002
      They lost $1273 million in 2003

    3. Re:Price fixing lawsuits are hard to try..... by HardCase · · Score: 3, Interesting
      While I'm willing to give any company the benefit of the doubt, it does seem rather suspicious that Micron chose to sell off their PC arm and focus instead on, the implied, more lucrative memory manufacturing business line. Circumstantial yes, but it never made sense why Micron would sell of a business line that was the only good alternative to Dell.


      Micron owned ~60% of MicronPC. The business was losing money at a fantastic rate and shareholder pressure was on Micron to divest itself of businesses that were not part of its core competency. MicronPC itself was straying well out of its own core business by operating a rather poorly-run Internet services company, as well as making a huge departure from its niche of being a no-compromise performance PC company. MicronPC was a terribly mismanaged company.


      Micron either sold or closed a number of other businesses as well. The company used to be in the construction management business, RFID business, flat panel display business and property management business. They even manufactured semiconductor processing equipment. The problem was, though, that the company was a semiconductor manufacturer. During the dot bomb days, that was well and good, but, like many other companies that strayed from what they did best, when the bubble burst, Micron was stretched a little thin.


      But, to the point, Micron did not sell MicronPC. They donated their entire holdings to the Micron Foundation. MicronPC "sold" (and by "sell" I mean that they paid Gores to take the business) the computer business to a turnaround company and merged with Interland to further its ISP business.


      It's possible that 6 or 7 years ago MicronPC was a good alternative to Dell, but, up until a year or so ago, that certainly wasn't the case. As soon as MicronPC started trying to directly compete with Dell, the company began tanking. The product quality suffered tremendously and the company simply didn't have the management quality necessary to make the jump from a niche manufacturer to an industry giant. It's interesting that in the past year, MPC is now making a profit and building a focused range of no-compromise systems...much as it did in the early days.


      Micron Technology recognized what was happening at MicronPC years ago and pretty much turned its back on MicronPC quite a while before the company split up.


      -h-

  4. Toner and Ink by nycsubway · · Score: 5, Interesting

    I'd like to see the price of toner and ink cartridges go down. Those things seem so simple, I wonder why they are so expensive. A memory chip seems slightly more expensive to produce than an ink cartridge. Yet the prices are very similar.

    --
    http://github.com/gbook/nidb
    1. Re:Toner and Ink by Dark+Lord+Seth · · Score: 2, Interesting

      Sod the cartridges. They are cheap and easy to manufacture. The ink itself though, is expensive. A while ago I had to undergo so HP presentations for retailers ( Think of a peptalk... I did leave with a rocking HP mug btw :) ) and part of the whole talk included as to why the prices on all equipment is to be considered decent, despite the public's idea of ink being ridiculously expensive. The reasons given were vague, partly marketing speak, partly due to the fact we had a shipment arriving at the same time as the presentation so I couldn't be there all the time, but it basically boiled down to the following:

      • Ink prices are relatively high because printer prices are relatively low.
      • Ink technology is more advanced then you'd believe.
      • Newer HP printers are said to be more efficient with ink. ( PhotoRET IV )
      • Ink cartridges ( from HP themselves, at least ) are new, no refills at all.
      • Continuous research into higher grade ink also adds up to the price.

      Still though, fact remains that inkjet printers are hideously expensive. But then again, last time I worked in the store the new Laserjets ( 1100 and 1110 ) from HP were rolling in. Compact, fast, efficient, relatively cheap... They seem to become a very good alternative to people interested in volume printing.

      --
      Hate me!
    2. Re:Toner and Ink by Pizzop · · Score: 1, Interesting

      Kinda O.T. but what's really scary is that the ink in a printer cartridge is more exspensive than the equivalent amount of 1984 Don Peringon Champagne, by like 10 times.

      --
      How to Speak Leet
  5. Re:I remember when 64MB of RAM was $1000 by WinDOOR · · Score: 3, Interesting

    Yeah and paying $250 for a 16mb Toshiba laptop dimm from CompUsa because it was the only place I could find it. Memory should still be going down in price, but it isn't. I bought 50 sticks of 128meg PC-133 for about $16.00 a stick in '02. Can't buy it for that now.

  6. Market fixes itself in this case by Brahmastra · · Score: 5, Interesting
    In April 2002, Michael Dell said that his company, PC maker Dell, began to buy memory from second-tier manufacturers to avoid cartel-like behavior of some memory makers. Why is price fixing by a few manufacturers a concern when alternate vendors are available? It's a problem only if the price fixers are the only vendors. The market is fixing itself. If Dell buys from the 2nd tier vendors, the price fixers have to ultimately lower their prices.
  7. I was just thinking about RAM prices... by WIAKywbfatw · · Score: 2, Interesting

    ...when I saw this. I paid 200 Pounds for 1MB of RAM (two 512KB SIMMs) in 1990. I just paid 105 Pounds for 1GB of RAM (two 512MB DIMMs) a couple of weeks ago.

    I'm not saying that price fixing shouldn't be punished but that comparison pretty much puts things in context. When it comes to putting together a PC, getting a decent amount of memory isn't as financially crippling as it once was.

    --

    "Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
  8. Too Bad About Rambus by stevesliva · · Score: 5, Interesting
    I thought the FTC complaint against Rambus would have set a great precident. Basically Rambus participated in standards development for DRAM technology and ensured that the standards would include technology infringing on Rambus patents without disclosing those patents. Rambus then withdrew and began suing every DRAM maker in sight.

    SCO is doing just about the same thing as Rambus, but with much less success. Participate in Linux/UNIX standards groups, but later claim to own those standards and begin suing everyone.

    --
    Who do you get to be an expert to tell you something's not obvious? The least insightful person you can find? -J Roberts
  9. so, class action lawsuit soon by fireduck · · Score: 4, Interesting

    Class action lawsuits are becoming my new favorite pasttime. Consider:

    In the past month, apparently I've been involved in at least 3 class action lawsuits. Both my wife and I got checks for $13.86 from connecticut's part in suing the record labels over overpriced CDs. Both of us have gotten paperwork regarding whatever claims are against Microsoft and software purchased in the late 90s (couple window versions, offices, etc.). I just submitted something for a company who were apparently inflating their stock value (or something) while I owned a number of their shares. And I can't even recall doing anything to get involved in the lawsuit to begin with. That's the best part. Christmas in March. I love it.

    So, when are the consumers going to sue and and how do I convince the authorities to go after Corsair, as that's the only memory I purchased in that timeframe?

  10. and.. by djupedal · · Score: 1, Interesting

    ...this was back in 2001, and RAM is dirt cheap today. Win some, lose some - big deal.

  11. Maybe big brother should investigate microsoft. by jason.mitchell · · Score: 3, Interesting

    If you think maybe 200 dollars for a peice of actual hardware is bad, they might want to start looking into software like windows trying to sell $1,000 for microsoft windows xp. Atleast you can actually hold the ram in your hand and be like "yeah! I have ram in my hand."

  12. Re:Anti-trust can bite my ass... by nolife · · Score: 2, Interesting

    For example, a software monopoly would be breaching this if they sold their office suite for next to nothing. Often, the key is whether the company has sold for below their cost.

    How is a "loss" for software calculted? If you sell 1 copy for $10 million or 10 copies for a $1 million, the result is the same (assuming the physical media and distribution price is zero). What if they sell it for $1 and sell 10 million copies? How can software really be sold for a loss? It is not a physical product that needs to be made over and over to meet demand. Once it is complete, the future costs are almost nothing with the exceptions of newer versions but that cost should be recouped when selling that new version.

    Just wondering as I've never thought about it from that angle.

    --
    Bad boys rape our young girls but Violet gives willingly.
  13. My answer by Lemmeoutada+Collecti · · Score: 2, Interesting

    I buy a new printer whenever I need ink again, and donate the old one to a school or charity as a tax write off. Thus far, it has been a much cheaper per page cost, not counting the tax value. Remember, many organizations let you say how much the item is worth on donation.

    --

    You can have it fast, accurate, or pretty. Pick any 2.
  14. Uh huh... by jridley · · Score: 2, Interesting

    Is that why to refill the cart Canon charges $10 for, I can buy ink from a 3rd party for about a buck a refill, and that's in small quantities? If I buy by the gallon it's even better; $85 per gallon, 15ml per cart, that's 252 refills, or 33 cents per refill. If I wanted to buy by the drum it'd probably get a little better.

    Similar economics exist for the HP and Epson printers I've owned.

    And, the ink is just as good, if not better. I've done both color comparisons and long-term (2 years in sunlight) fade comparisons. In fact the 3rd party stuff is better in many respects.

  15. What about DDR in early 2003? by brucmack · · Score: 2, Interesting

    I bought DDR333 RAM in Jan last year, when it was significantly higher than it was in 2002, and it was back down below half that a few months later. Did they do the same thing here, or was that just bad luck for me?