Slashdot Mirror

← Back to Stories (view on slashdot.org)

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."

29 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 thelasttemptation · · Score: 5, Informative

      myself and my compeptitors agree to keep the price of widgets artificially high.

      That is where you cross the line

    2. 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).

    3. Re:I need some clarification... by JayBlalock · · Score: 4, Informative
      Basically, at the point it could be shown that you all sat down together and decided, "Screw competition, we'll all sell the widget at price X."

      If you all independently arrived at price X as being the point you can reasonably profit when taken against manufacturing costs, it's legal.

      --
      Bush: He's Liberal in all the wrong ways.
    4. Re:I need some clarification... by hc00jw · · Score: 5, Informative

      When you agree with another company to both keep the prices high. This stops one of the companies in the agreement from undercutting the other to achieve more sells, and keeps the profit margins for both in the agreement (artificially) high.

      What you choose to do within your own company (razors, cartridges) is entirely up to you...

    5. Re:I need some clarification... by thelasttemptation · · Score: 5, Insightful

      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?

    6. Re:I need some clarification... by Pope · · Score: 5, Informative

      No, because in both cases, the company supplies both the product (razor, printer) and the refill (blades, ink cratridges). There's no collusion, since it's one company doing it to their own product, and therefore not illegal since there's no cartel or monopoly abuse, since there are plenty of razor and printer manufacturers to choose from.

      --
      It doesn't mean much now, it's built for the future.
    7. Re:I need some clarification... by Shakrai · · Score: 4, Insightful
      What you choose to do within your own company (razors, cartridges) is entirely up to you...

      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.
    8. Re:I need some clarification... by nelsonal · · Score: 5, Informative

      IANAL, I am an economist who enjoyed industrial organization a bit too much for my own good. It is only when you have meetings or evidence of collusion that you begin breaking the price fixing portions of anti-trust law in such a way as to invite prosecution. As long as your monopoly arises as a result of a competitive market (for handles and printers) you are not violating the law.
      The justice department generally tries to avoid procecutions for anti-trust violations, which are very expensive and prefers to regulate the market by barring mergers which would reduce competition. However there was a ton of case law generated on these subjects from the turn of the century through the 1970s when suits were more common.

      --
      Degaussing scares the bad magnetism out of the monitor and fills it with good karma.
    9. Re:I need some clarification... by hc00jw · · Score: 5, Insightful
      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.

      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!

    10. Re:I need some clarification... by tsunamifirestorm · · Score: 5, Informative

      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.

    11. Re:I need some clarification... by LostCluster · · Score: 4, Insightful

      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.

  2. Whee! Here comes another check... by Anonymous Coward · · Score: 5, Funny

    ...for ~$5.48, from some RAM manufacturer. In 2007.

    Man, I just deposited my $13.86 RIAA check yesterday.

    If the money keeps rolling in like this from Big Greedy/Evil Organizations, I may quit my day job.

  3. Cheaper memory? by Anonymous Coward · · Score: 4, Funny

    Will this lead to cheaper RAM? I hope so, because I really need more... um, what's it called?

  4. 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)
  5. 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 PalmerEldritch42 · · Score: 5, Informative
      it never made sense why Micron would sell of a business line that was the only good alternative to Dell.
      Um, maybe because they were not a good alternative. My company used to use all Microns for a few years. They all sucked when we bought them, and very few of them are still in use now because they have crashed, and it was cheaper to replace them then it would be to repair.

      We have since gone to Dell, which are admittedly more expensive, but they work properly and have good support (though lately G'nesh Singh Bhudanaramading keeps answering the phone when we call- we never know what he is talking about, but when a new network card appears the next day, it usually fixes the problem...)

      --
      Ceci n'est pas une sig.

      :wq!

  6. 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
  7. Anti-trust can bite my ass... by stevens · · Score: 4, Insightful

    I've read cases where the same laws have been used to prosecute companies no matter what they do:

    • If you set a price lower than your competitor, you can be accused of "predatory pricing"
    • If you set a price higer than a competitor, it is used as evidence of an "abusive monopoly position"
    • If you set the same price as a competitor, it is evidence of "price fixing"

    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.

    1. Re:Anti-trust can bite my ass... by JayBlalock · · Score: 5, Informative
      If you set a price lower than your competitor, you can be accused of "predatory pricing"

      If you price your product BELOW COST, you can be accused of predatory pricing. Without this rule, no small manufacturer could ever reasonable compete against an established one. The one with the large market share would simply undercut the competition by selling at a loss and ride on its existing resources until the competition went under. If you set a price higer than a competitor, it is used as evidence of an "abusive monopoly position" Only if coupled with other factors, such as anti-competitive \ exclusive contracts with related parties. Case in point, Microsoft's contracts with computer OEMs preventing them from bundling other OSes on the same computer as Windows. BeOS - overall, a superior product - went under because of precisely this. They had no chance to compete and prove themselves on an open market because of Microsoft's restrictive contracts. (which, in turn, no OEM would break because of Microsoft's ownership of the home market)

      If you set the same price as a competitor, it is evidence of "price fixing"

      CAN be, but only very rarely. As was pointed out in another post above, price-fixing \ cartel cases are spectacularly difficult to prove and usually require a "smoking gun" as evidence. The government even launching such a case is itself evidence that they have a load of proof on their side. Otherwise, it's assumed to be the result of normal market pressures. (why, for example, all the major computer brands cost about the same - prices have trended downwards since the 80s until it's hit a point that it's extremely difficult to get any cheaper and still profit. That's not price-fixing, it's the Free Market actually working as it's supposed to.)

      --
      Bush: He's Liberal in all the wrong ways.
  8. 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.
  9. Prices in 2002 weren't bad by DangerSteel · · Score: 4, Funny

    Compared to say about 1994-1995 I believe. I clearly remember paying $308.00 for an 8 meg simm. That was 8 times more memory than my first pc had so it was worth it !

  10. 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
  11. 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?

  12. Re:I remember when 64MB of RAM was $1000 by grub · · Score: 5, Funny


    I realized this was happening years ago. My solution? Run with just 16 MB of RAM and a 4 GB swap partition. Sure, my machine gets a bit pokey but it keeps the cartel from stealing my money.

    Ahh, my 'ls' from December just finished!

    --
    Trolling is a art,
  13. My dad talks about.... by ForestGrump · · Score: 4, Funny

    Back in the day when ram was little doughnuts, and it cost its weight in gold...

    Back in the day when punch cards were book marks...

    Back in the day when minimum wage actually kept you alive...

    Back in the day...

    -Grump

    --
    Is it true that more people vote for the winner of American Idol, than vote for the president? -Ali G.
  14. price of memory stuck for two years by peter303 · · Score: 5, Informative

    Commodity DRAM memory has been around $0.10 / megabyte since 2002. I remember slashdot stories about $100 gigabytes at that time. Until Wintel breaks the 2GB/32-bit limit the core memory cost is not a major factor in personal computing. in contrast, flash memory has fallen from $1.00 to $0.25 that time period.

    The price plateaus when a chip generation matures. The next 4x generation seems a bit delayed.

  15. Racing to the bottom by Anonymous Coward · · Score: 5, Insightful

    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.

  16. The law applies, but not the intent of the law by microbox · · Score: 4, Insightful

    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