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Nine Chip Makers Fined $400M In EU For Price Fixing
eldavojohn writes "In a disturbing case for average consumers, nine DRAM chip manufacturers have been fined more than $400 million for price fixing. The named companies are Samsung, Hynix, Infineon, NEC, Hitachi, Mitsubishi, Toshiba, Elpida, and Nanya. A tenth company, Micron, avoided fines by reporting the other nine to the authorities. Since all companies cooperated with the probe, they received a 10% reduction in fines, so it could have been worse. The US DoJ has had its own history with chip makers and LCD makers in price fixing scandals."
Is it the fine that is disturbing?
This sounds familiar. Didn't this exact same thing happen with the DRAM chip makers like 10 or 15 years ago?
There are many other cases where pricing appears to be fixed, but it's a deliberate lack of competition (eg in Australia, the weekly fuel price cycles where everyone drops prices at the same time). At least this occurrence will be punished, and yes it will eventually come from the consumer wallet ... but I don't see much else that can be done other than fining (and imprisoning the human culprits if possible).
Ya, price fixing sucks. But let's be real honest shall we? Who ends up paying the 400M and where does that money go? Consumers around the world will be paying for it.
When you think about it, it's like a global tax to feed the coffers of a nation, or a union of them in this case. I'm just saying...
Life is not for the lazy.
Looks like those fine capitalist companies don't like the competition part of capitalism either. They want protected profits too and screw the free market if that's what it takes.
So they were all fined a combined 402 million.
They made that, and then some so it's a cost of doing business.
Corporate fines are laughable... they factor it in these days.
I say rather than fines, we ban one of those companies from the US market forever. We repeat this process ever time there is price fixing incident. Shareholders of those companies will not tolerate the risk and management will be too scared to pull this shit again.
All the fines were reduced by 10% because the companies co-operated with the probe.
The crime was done in the name of money, profits. But the punishment, monetary, was reduced for cooperation. So basically what companies can learn from this is: price fix as much as possible, once caught cooperate as much as possible, then keep more of the profits from the price fixed products.
A 10th chip maker, Micron, was also part of the price-fixing cartel but escaped a fine in return for alerting the competition authorities.
And if you blow in the competition you get to keep ALL of your price fixed profits. What kind of a system is this? Am I missing something here? How exactly are these companies being punished so that they won't do this again? Hell they are probably already learning from their mistakes and looking to secure another price fixing scam for the immediate future.
That damn Marxist, communist, fascist EU fines perfectly good companies for no reason.
Luckily good ole US of A well let companies do their business without intervention. The market will sort out the price fixing.
Since all companies cooperated with the probe, they received a 10% reduction in fines, so it could have been worse.
Surely you mean, it could have been better. Reducing the fines is a negative from where I am sitting.
If the pattern goes 9am, 10am, 11am, why isn't noon 12am?
You know what the most disturbing thing is?
Most DRAM companies have operated at a net loss when taking into account the accumulated earnings of the last decade. There is incredibly fierce price competition within the industry.
Do you really feel ripped off when you buy a product that is composed of billions of transistors, has tens of billions of R&D costs behind at at a price of $1 ? (That was the price of a 1Gbit chip not long ago) I don't want to sound like an industry advocate here, but I find this pretty staggering.
Is the consumer really ripped off if he has to buy a product that is priced a few months behind Moores law?
Although nobody likes a rat (nobody who is ratted-out, in any case), Micron should actually get some respect for being the whistle-blower in this situation. A little honesty can really go a long way - especially if that is the way toward 400 million in, e.g. deficit-reductions.
...but when are they gonna fine the various cell phone carriers who are so obviously price fixing that it's laughable. 30c SMS in most of Europe _unless_ you pay an extra 15E a month, etc... They are all the same crooks with an already paid infrastructure of antenna most always financed directly by the states.
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Ummm.... You do know that consumers around the world have already paid for it don't you. Now it's the colluding companies turn.
/. (which I'll put good money on the fact you're not paying Geeknet.inc for).
Unless you are proposing we let them get away with Collusion, because that will lower prices for sure. You're clearly OK with spamming your crappy business on
Prices will actually lower out of this and the paltry US $400 million will come out of the companies bottom line because they have to compete with Micron, the company who wasn't fined so Micron can charge lower prices while having a higher profit margin. If RAM prices were to rise out of this mess then it could only happen if the companies got together and decided they would all raise prices at once. Hang on, isn't that what got them into trouble in the first place.
This is not a zero sum game, if they raise prices they will either lose business to competitors who didn't raise prices or lower demand. That's how the free market works.
Calling someone a "hater" only means you can not rationally rebut their argument.
Call me cynical, but semiconductor is one of the few industries where heavy competition happens and prices fall down quickly. I dont mind price-fixing if it saves an industry (and I am talking as someone currently unemployed and having difficulties making a semiconductor start-up mainly due to the current state of the industry). Compared to other professions, when will Lawyers be fined for price fixing??? When will hospitals and medical insurance companies be?? This is mainly the case because it's easier to get into Engineering than it is to get into Law or Medicine. People at the top in Law and Medicine make sure to limit the number of professionals getting into their ecosystem each year so they can justify their high salaries. Then you keep hearing (at least here in the UK) from all of these people/government official the old cliche of: "We need more doctors to solve the health issue!" - and all I see around me is an abundance of people wanting to be medical doctors but not being able to become one.
You have it backwards. The European markets are "golden geese" to the chip makers! There will always be yet another competitor that would happily sell and profit in the European market(s) should the competition die off. This is basic economics, but I don't expect more on Slashdot.
And what tax revenue are you referring to? These companies sell their products in Europe, but the profits are sent back home. The majority of the companies mentioned are not European. The only tax revenue Europe sees in this case is sales tax on the items and a limited tax on the profits, after deductions, of the European branches.
The real issue is abusing the markets you operate in, if you want do business in Europe or the US you have to follow the local rules. I really hate the way ignorant Slashdotters rant when they talk about the EU and fines! Never mind that the US does exactly the same thing, however when Europe and the EU decides to act according to our identical laws "you" dare criticize and pass judgment on matters you have no understanding of!
The EU is acting to regulate markets in accordance with law, the motive is clearly to keep markets healthy for producers and buyers alike. The guilty parties are the chip makers!
I don't think most Americans understand how fervently nationalist they sound on the web.
This is where "free markets" are supposed to regulate the prices keeping any one company from raising their prices above the rest. If you raise your prices, you become uncompetitive.
This fine is not going to raise prices at all, they know perfectly well that the buyers won't accept any increases. I'm not talking about consumers here, the biggest purchasers are likely the PC makers.
There will be a dip in their profits for this or last financial year.
Do you consider the US fines to be a tax to fill your empty American coffers? Or are you just attacking European actions?
In case you didn't notice the chip makers committed the crime, the EU is acting to punish them in accordance with law. What's your excuse? I'm just saying... [that you're wrong]
Patent restrictions are an artificial construct that is inherently incompatible with a free market. They are a form of government regulation which takes away freedom from the market.
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Companies are always going to try to collude and/or corner markets. It's been happening since the beginning of the mercantile age. But I would like to give credit to the EU for making companies play fair. Companies are changing their business practices in exchange for entry into the European market.
Since when is 8gb of DDR2 maxed out these days? Sorry mate, but maxed out at the moment is something like 32gb of ddr3. And that would cost you more then a thousand still.
And if you can't compete on price, then compete on quality or go bust.
THAT is the free market. Companies SURE love the free market, except when it bites them in the ass. Understandable perhaps, but it is also understandable that since I am poor and you are rich and I cut your throat and take your cash. There is always an excuse to break the law but you can't run a country with excuses.
And I wouldn't put to much stock in those claimed small margins. Margins are what is between sale price and costs, but what makes up the costs? Huge bonusses? Well, then if small margins are the problem, cut the bonusses. odd that all these struggling chip makers don't seem to go bankrupt eh? Deal with farmers sometime. "it rained: we are in trouble". "the sun is shining: we are in trouble". "The wind is blowing: we are in trouble". Farmers are always in trouble and always need tax relieve. Odd that, no matter what the weather, farmers are in trouble and need lower taxes. It must be hard to be a farmer. Or MAYBE just MAYBE, they are lying scum bags who are rolling in cash. Here is a hint, next time you claim to be on the edge of bankruptcy, park your mercs OUT of view of the camera!
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do{ Punish the corporation? Fine them a pittance. {until hell_freezes_over} The people making the decisions should be the target. Giving a Corporation a small fine that is passed on to stockholders and consumers does not take the incentive away from the CEO/CIO.
Please mod me 1 or troll. It's where the truth is these days, even on Slashdot. Beware the power of moderators everywh
Actually this same group of companies has conspired in the same way to keep prices for superior technologies higher than would naturally be the case in a free market in order to keep a competitor OUT of the business and to try to put a small company out of buisiness. I am referring to Mr Farmwald and Mr Horowitz who created RDRAM and tried to patent it. Intel licensed their patent and used it in some server systems. But the memory maker Cartel conspired to keep its production costs high in order to ensure that Rambus would be unsuccessful in the marketplace whilst at the same time using the patented technical advances without royalty in their products.
The companies also sued Rambus for a conspiracy to commit fraud on JEDEC which was using the design improvements patented by Rambus in DDR DDR2 DDR3 etc. without paying any royalty to Rambus and using their well established PR departments spread false information to besmirch Rambus in the media. All of this is only now coming to light several years after the original RDRAM has been overtaken by further improvements.
These companies are currently in a lawsuit in California to bring these issues to light.
Electricity generation is not a natural monopoly. Electricity distribution is the monopoly because each consumer only wants one set of wires to attach to their house. In Massachusetts the two are separate and I can choose who to but my electricity from.
The GOVERNMENT is the problem? Really?! This was free market capitalism at it's finest. Oh wait... collusion and price fixing never happen, at least if you believe the free market advocates. And it is the government haters who are usually the largest opponent of any regulations with teeth, so all they CAN do is fine companies. Meanwhile, you decry the government getting any money, yet you certainly enjoy the internet, roads, bridges, police, fire departments, clean tap water, disease-free food, the military's protection, etc... And you think it cost nothing to create and prosecute this case and others like it? If people put half the energy they spend complaining about the government into making the government better, (even if only educating themselves about the government) we would all be much better off.
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Big deal... they already probably made a hojillion in profit. Consumers already paid the price, now the govt gets it
Consumer: 0 - Big Business: 1987328783
This story doesn't add up. That one company that reported the other ones could simply have set its prices slightly below the competition's fixed prices and grabbed all market share, hence making huge profits and destroying the cartel.
The economig logic behind collusion laws is completely bogus, it's really just a simple political racket.
Most likely these 9 "guilty" companies didn't play the political game well enough. This game was won by Micron's political team and by european bureaucrats. Well played.
You are correct, because DDR uses the same patented techniques that RDRAM did, it was just as fast.
What? Are you insane? Same techniques? Just as fast?!
The only thing DDR and RDRAM have is that they transfer data on both edges of the clock signal like a thousand other technologies that already existed at the time, on chips and on PCBs. Rambus did not invent double pumping data busses; it was already a standard technique for reducing signal integrity issues on the clock signal. See a variety of FSBs that were out at the time.
Other than that, the two memories couldn't be more different. RDRAM is a serial, in-line, packet-based, wave-pipelined memory technology with differential signaling and resistor termination. DDR is a parallel, multi-drop, bus-mastering, logically pipelined, non-terminated and non-differential technology.
They two memories are nothing alike except in the most superficial way, and unsurprisingly to those with a clue have completely different performance characteristics. RDRAM had higher clock rates and higher sustained memory bandwidth despite having a much narrower interface, but had substantially higher latency especially as you increased capacity. DDR on the other had much better latency, but due to the multi-drop nature of the bus had issues with increasing the clock speed and so was bandwidth limited. Nevertheless, DDR outperformed RDRAM in most applications, even in architectures like the Pentium 4 which were designed around high latency and high bandwidth.
The PS3's use of RDRAM that you mention in another post is an interesting case. RDRAM works here because it gets relatively high performance for a small number of motherboard traces, and fewer traces translates into a cheaper motherboard, which is a good tradeoff for a home console.
Ask yourself why if these companies colluded to fix prices as they have admitted to doing why did they decide to fix prices so low?
That's obvious. They did it to ensure that despite the huge push by Intel, RDRAM would fail to become the dominant memory type. It wasn't enough that DDR performed better, it had to cost customers less otherwise they'd just go along with what Intel said. They did this to avoid having to pay Rambus royalties on RDRAM.
If you've actually been following the case, then you know that the patented technologies the DRAM makers have been accused of violating are not technologies implemented in RDRAM. They are patents that specifically cover DDR (and not RDRAM) filed by Rambus and specifically modified while JEDEC meetings were going on to cover what JEDEC was discussing for their new, supposedly patent-free memory standard. Rambus did not disclose these patents despite the JEDEC rules requiring it. Rambus deliberately created a patent minefield in the DDR spec that had nothing to do with RDRAM.
The courts have repeatedly found that this is what happened, that Rambus violated the JEDEC rules and operated in bad faith. The only question has been whether the JEDEC rules are legally binding, and whether their actions constituted legally actionable "bad faith", which the appeals court ruled they did not.
The DRAM makers price fixing, however, is certainly actionable, and I'm certainly glad they were fined for it. They're giant assholes too. But they did not steal Rambus technology. Rambus stole from JEDEC and manipulated the system so they came out with ownership of the technology that had nothing to do with what they had actually invented.
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