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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?
The thing that was disturbing to me is that the consumer lost out here and the government is pulling in $400 million. When will the actual victim (people who made DRAM purchases) receive restitution? Never.
My work here is dung.
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.
Fines are supposed to be a punishment so that companies avoid anti-competitive behavior in the future. You're right, however: the companies either have already made enough money from their unethical behavior, or they will roll it into the cost of future products. The punishment is not nearly severe enough.
Repeat offenders should be fined in the billions of dollars as a warning to other companies. The only thing that will keep shareholders interested in executives who obey the law are a few cases where companies are fined into bankruptcy and then broken up and sold off.
What I found interesting was the amount: an average of about $44 million per corporation ($400M / 9). Contrast that with the profits each one made on this scheme.
What annoys me is that a lot of this stuff is so pervasive that I cannot in anyway knowingly boycott any purchases of DRAM from these companies. There's probably DRAM in any piece of electronics you buy whether it be Sony, Nintendo or an actual Samsung product.
And then what happens to the companies who take a $44 million hit? You think their CEOs just sit down and eat that? They don't take their medicine, they slightly markup their product and again the consumer loses! This sort of price fixing fixed by fining model is just not working.
What I think should happen is that all the products that were price fixed should be entered into the public domain in the country where the price fixing was conducted and the company was found guilty. Meaning all patents and designs of those products are now owned by the public. The public overpaid for them so force the companies to give something back to the public. The manufacturing processes and techniques can be kept secret but all the chip design and patents should be open for competitors to step in and make a better cheaper product. I know a lot of people will think that's overly harsh but frankly the DRAM manufacturers should have thought of that before they started price fixing. You think times were tough when you tried to turn some illegal profit? Try now when everyone knows everything about your product. Really, that's the only way to 1) make them think twice about price fixing and 2) actually give something valuable to the victim that has a positive result instead of a negative result.
If that's the way business works in Korea, Taiwan and China then I don't care. But they need to learn that price fixing is not acceptable when they do business in the US and the EU. It blows my mind but it seems to happen everywhere in the world of circuitry and electronics. Since the companies just seem to be taking these fines in step and repeating or continuing with their practices, you have only one option: up the stakes.
My work here is dung.
price fixing is not free market, nub.
Say what ? Price fixing is *absolutely* "free market". Huge cartels (if not just one big monopoly) is exactly where the "free market" would end up without this sort of regulation.
That's how they catch them. It creates a nice Prisioner's Dilema where the first to break ranks get's away with it.
Countries that have laws for this experience much higher rates of catching price-fixing cartels than those who don't.
After they have proven themselves as snitches, who exactly would trust them and get in a price fixing cartel with them?