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Nine Chip Makers Fined $400M In EU For Price Fixing

samzenpus posted more than 4 years ago | from the collective-swindling dept.

Businesses 215

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."

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Disturbing? (1)

lemur3 (997863) | more than 4 years ago | (#32274932)

Is it the fine that is disturbing?

Re:Disturbing? (5, Insightful)

eldavojohn (898314) | more than 4 years ago | (#32274986)

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.

Re:Disturbing? (4, Funny)

davester666 (731373) | more than 4 years ago | (#32275014)

Of course, the gov't will reduce our taxes by the $400 million...

Hahaha, I knew I couldn't write that with a straight face!

Re:Disturbing? (1, Insightful)

Anonymous Coward | more than 4 years ago | (#32275062)

Certainly everyone in Europe was looking forward to their tax reduction of less than one dollar per person.

Re:Disturbing? (0)

Anonymous Coward | more than 4 years ago | (#32275822)

it's true. $400M is a pittance compared to the amount that government spends on things, and they have lots of different settlements going on all the time, so you're not going to see any impact. I mean, there are 500 million people in the European Union, though not all of them pay taxes. The net effect will be to reducing your taxes relative to the services you get from the government by a small amount. It means they won't have to cut something, or they won't have to raise taxes on something, somewhere.

It's easier than tracking down who exactly bought those chips and issuing them partial refunds. Memory chips just aren't expensive enough to warrant that. If they costed $10,000, you might see individual refunds.

Re:Disturbing? (4, Insightful)

Sensible Clod (771142) | more than 4 years ago | (#32275076)

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.

Re:Disturbing? (5, Insightful)

eldavojohn (898314) | more than 4 years ago | (#32275276)

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.

Re:Disturbing? (1, Insightful)

DigiShaman (671371) | more than 4 years ago | (#32275592)

I'm going to put on my cynical hat and just say this. Nations like the US and EU don't want to punish companies too harshly. It's sorta like killing the golden goose. Gotta keep that tax revenue flowing after all.

Corporations are like gangs, and the Government acts like the mob. They work for and against each other in much the same way.

Re:Disturbing? (1)

trenien (974611) | more than 4 years ago | (#32275968)

Nations like the US and EU

One mistake, there. The EU is not a nation.

Contrary to what may happen in the US, their rulings in such cases are completely driven by ideology (or personnal benefit which doesn't appear to the case here).

You can see this mix of the two driving forces: "competition must be upheld at all cost", and "private property is the most sacred right there is"

End result? The guilty companies are slammed with a penalty which probably amounts to less than what breaking the law allowed to rake in, and the only one who will really be hurt are the one who were screwed in the first place: the final consumer.

Backwards (4, Insightful)

andersh (229403) | more than 4 years ago | (#32276048)

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.

Re:Disturbing? (1)

chrb (1083577) | more than 4 years ago | (#32276106)

Nations like the US and EU don't want to punish companies too harshly.

The stated aim [europa.eu] of fines due to EU competition policy is to "deter companies from setting up or continuing cartels". Think of it in the same regards as the FSF and GPL enforcement - the aim is to bring companies into compliance, not to generate funds by way of punishment. Obviously a fine will also act as a form of punishment - the difference is that the policy is to bring companies into compliance with the law, rather than bring companies to the edge of bankruptcy.

Re:Disturbing? (1)

Bert64 (520050) | more than 4 years ago | (#32276222)

The trouble with fines is that they just become another cost of doing business, and will get weighed up against the expected profits from actually doing the illegal activity in the first place. In other words, breaking the law is just business as usual only with a relatively low risk.

Punishments need to be far more damaging so that companies become unwilling to risk breaking the law, possibly even hold the owners personally responsible and throw them in jail.

Re:Disturbing? (1)

antifoidulus (807088) | more than 4 years ago | (#32275378)

Well Micron made even more since they benefited but didn't have to pay the fine. Kind of an interesting cross of chicken and prisoners dilemma.

Re:Disturbing? (1)

nacturation (646836) | more than 4 years ago | (#32275726)

Kind of an interesting cross of chicken and prisoners dilemma.

Could you elaborate? I'm not familiar with the chicken dilemma.

Re:Disturbing? (1)

LoverOfJoy (820058) | more than 4 years ago | (#32275784)

The version I'm familiar with is of two cars racing toward each other. The first to swerve is the loser (the chicken).

Wiki description

Re:Disturbing? (1)

T Murphy (1054674) | more than 4 years ago | (#32275540)

Making the fines big enough to wipe out profits might not deter companies if the execs making the decision have plenty of time to hit the road before the antitrust case comes through. I don't know antitrust law well enough, so maybe there are penalties on the EU books that can be thrown at individuals- given they were complicit in a crime, I should hope so.

Re:Disturbing? (2, Interesting)

purpledinoz (573045) | more than 4 years ago | (#32275954)

Last time I checked, all companies except Samsung are losing money on each DRAM chip they sell. These companies are competing themselves to death. Qimonda already went bankrupt last year because of such a competitive environment. In fact, I can't think of many other products where companies compete so hard to make.

Re:Disturbing? (4, Funny)

sk11 (1815674) | more than 4 years ago | (#32276042)

Agree - I think price-fixing is acceptable to me if it saves this over-competitive industry.

Re:Disturbing? (3, Insightful)

purpledinoz (573045) | more than 4 years ago | (#32276296)

I don't agree with price fixing, but in this case, it was a winner for consumers. If I remember correctly, they agreed on fixing a price LOWER, to destroy Rambus, which was really bad for consumers.

Re:Disturbing? (1)

mwvdlee (775178) | more than 4 years ago | (#32275184)

It's not like you had to pay extra taxes yourself, like salex tax and... oh... right.

Re:Disturbing? (1)

YeeHaW_Jelte (451855) | more than 4 years ago | (#32275426)

So? What do you suggest for punishing these companies?

It's all nice and fine to bitch and whine but I don't hear you proposing a decent solution.

I, for one, at least am happy that someone is doing someone about breaking these kind of price-fixing sceme's. But please, keep on enjoying you 'free market' over there on the other side of the pond.

Re:Disturbing? (1)

timmarhy (659436) | more than 4 years ago | (#32275580)

price fixing is not free market, nub.

Re:Disturbing? (5, Insightful)

drsmithy (35869) | more than 4 years ago | (#32275734)

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.

Re:Disturbing? (1)

clarkkent09 (1104833) | more than 4 years ago | (#32275758)

And what evidence do you base that on? How would your big monopoly stop competitors from emerging? Care to provide any examples of where such huge monopolies did happen and survived for any length of time? http://www.youtube.com/watch?v=tdLBzfFGFQU [youtube.com]

Re:Disturbing? (2, Insightful)

drsmithy (35869) | more than 4 years ago | (#32275808)

And what evidence do you base that on?

How much it already happens even with regulation in place, plus a reasonable helping of rational thought.

How would your big monopoly stop competitors from emerging?

Often they wouldn't need to - the simple costs of market entry would be sufficient. If that was not, then some loss-leader products would hammer the last few nails into the coffin.

Care to provide any examples of where such huge monopolies did happen and survived for any length of time?

Monopolies are typically broken up by government intervention. I'm not sure I can think of any examples of them being broken up any other way.

What would _stop_ a cartel or monopoly from forming ? Once a few companies have gotten together, or a single one has gotten large enough, how is a new competitor going to enter the market when the established ones can either buy it out, or just undercut it until it runs out of cash ?

Re:Disturbing? (3, Insightful)

clarkkent09 (1104833) | more than 4 years ago | (#32275882)

Your rational thought is failing you. The reason you can't come up with any examples of natural monopolies is that there aren't any. It's a mostly a theoretical problem because it simply does not happen in practice.

What would _stop_ a cartel or monopoly from forming ?

Cartels are inherently unstable and rarely form at all. What is the advantage to the most efficient company in a particular market in joining a cartel with less efficient ones when it can beat them in the competition and take their market share? Even when a cartel does form (say to fix the price to a higher level) a strong incentive is always there for each of its members to undercut the others and take their market share.

Once a few companies have gotten together, or a single one has gotten large enough, how is a new competitor going to enter the market when the established ones can either buy it out, or just undercut it until it runs out of cash ?

If the monopoly is setting the price to high (say 30% profit margin) then it is presenting an incentive for every investor, every company in a similar industry which might already have infrastructure in place, and every foreign company in the same industry to enter into the market and set its margin to 20% and steal much it the monopoly's market share while still raking in a large profit. At some point pretty soon the monopoly will not be able to buy them all out. If the monopoly is setting the price very low in order to discourage competition then where is the problem? The free market is working through the possibility of competition if not actual competition.

Re:Disturbing? (1)

icebraining (1313345) | more than 4 years ago | (#32275876)

And what evidence do you base that on?

It fucking happened! The market was in effect, they fixed the prices. Only afterwords regulation corrected it. Or are you saying the cause and effect are reversed and it was the fine that cause the price fixing?

About Friedman: "Oh, let's reduce import tariffs and let external companies to compete and finish those national monopolies"

That's all nice and dandy, but those monopolies aren't national. In this case, they affect the whole Europe. What do you do when we have a global monopoly?
"Reducing import tariffs", for what, if these companies are already foreign?

Re:Disturbing? (1)

clarkkent09 (1104833) | more than 4 years ago | (#32275956)

The evidence I was asking for is to back up his claim that "Huge cartels (if not just one big monopoly) is exactly where the "free market" would end up without this sort of regulation." I think price fixing is a natural property of a free market in that it will inevitably happen and cannot be generally caught without, as in this case, somebody snitching. However, I don't think that it is nearly as big a problem as he suggested as cartels as inherently unstable and tend to break down quickly. Each of the companies involved is looking out for its own interest and for the best company in the cartel it is advantageous to break from the cartel and undercut the others.

Definition (0)

Anonymous Coward | more than 4 years ago | (#32275832)

I'm sorry, but you are mistaken.

The meaning of "free market" is defined by economists, not by what big bussiness wants it to mean.

To be precise, it means a market with so many buyers and sellers that none of them are able to influence the price -- they must all accept market price (determined by supply and demand).

To answer the rest of your post, only some markets are natural monopolies. That includes such things as electricity generation, or anything else where there are huge scale benefits, including markets with severe patent restrictions.

Re:Definition (1)

Bert64 (520050) | more than 4 years ago | (#32276260)

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.

Re:Disturbing? (1)

hairyfeet (841228) | more than 4 years ago | (#32276230)

You know, as much as I hate cartels and price fixing, in this case I kinda understand it. The prices with competition simply got so low they were basically killing each other. I mean, I remember when "maxing out" a board was a sign you had some serious cash and weren't afraid to spend it. Now my latest PC has 8Gb of DDR2 800 which after rebate I paid a whole $60 for!

While this is all candy and ice cream for me, when the margins get so damned slim all it takes is a slight dip in sales to slaughter a company I can understand them wanting to do something about it. So while I hate those that try to rig the game I can understand one of the manufacturers calling the others and saying "look, this is stupid. How about we set a minimum of...say cost plus 10%?" or something like that.

So maybe the way to fix this is to set up some sort of rule, maybe like we have with regards to dumping? Maybe something like nobody shall sell below price plus 3%? Because from the way it looks now if they get into another price war the company with the biggest war chest could simply drive others out of the market by selling at or below cost, then reap the rewards when there is little to no competition left.

Of course this is why we need regulations in the first place, as it always seems with uncontrolled capitalism you end up with one player crushing the others and becoming a monopoly, ala MSFT crushing the competition in the late 80s/early 90s, or Walmart coming into a town and selling below cost until the competition is crushed.

Re:Disturbing? (2, Informative)

mjwx (966435) | more than 4 years ago | (#32275574)

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.

Perhaps because you are looking at it the wrong way. The government isn't fishing for money, the EU is punishing a company for anti-competitive actions. The EU has two acceptable choices to punish a company, 1. put some directors in jail, this is a long drawn out process that will take time whilst the rich fly off to exotic locales with no extradition treaties whilst setting up scapegoats from lower down the corporate food chain to do their time for them 2. Impose a fine, making the company pay the justice department which the company cant weasel out of. If they did it on a case by case basis they wouldnt even give $2 million away as half the people wouldn't claim and half of those who did wouldn't have receipts and they'd only have to pay out to the people in the EU jurisdiction.

In other words, giving the money back to individual "victims" would result in no punishment at all as most "victims" will never be reached. Without punishment what disincentive is there for a company not to be anti-competitive?

Further more, this makes it back to the EU citizens in a surplus (or less deficit) which reduces the amount the EU citizens need to pay the EU to keep running. If you ask me, the companies got off light. The fine should have been at least US$800 Million, heck 1.2 billion would even have been appropriate for this level of collusion.

Re:Disturbing? (0)

Anonymous Coward | more than 4 years ago | (#32275656)

Now if only cell providers would get outed somehow...

Re:Disturbing? (3, Interesting)

purpledinoz (573045) | more than 4 years ago | (#32275926)

Is this the same price fixing that occurred when Intel tried to shove Rambus, a crappy, expensive, proprietary RAM technology down our throats? And they colluded to LOWER their prices to kill Rambus? In my opinion, they did us all a favour. If Rambus became the "standard", we would be paying a lot more money for memory now.

Re:Disturbing? (1)

BikeHelmet (1437881) | more than 4 years ago | (#32276058)

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.

This slap on the wrist is supposed to discourage them from doing it again.

Keep in mind if this was a class action lawsuit, you'd have a chance at winning... $0.10? :P

Re:Disturbing? (0)

Anonymous Coward | more than 4 years ago | (#32276094)

You pay taxes, right ? Well, then consider that the .0001% of taxes you don't pay are thanks to this.

Re:Disturbing? (1)

symbolset (646467) | more than 4 years ago | (#32275696)

No, it's that it took this long to resolve the issue. Memory prices had been following Moore's law for a long time (since the last antitrust action) and then for four years they were fairly flat because of prix fixe. The companies made more money in higher prices than they're paying in fines, so for them it's a net win and that's disturbing too.

Now can we get some 8GB DDR3 RDIMMS that cost less than my car? I've got a few high volume VDI deployments that are stalled for economic feasibility and that's not good for the platform vendor, the network hardware vendor, the server processor vendor, the thin client vendor, the software vendor, or me - the integrator/services vendor.

And while we're at it, would somebody please slap the shit out of the enterprise flash SSD vendors for me? I could beat their price and performance and capacity metrics all at once if I cared to design/build an add-in card with a lot of these [newegg.com] that would fit and some linux-based os onboard to RAID them in a fault-tolerant way. Maybe I should, just to show that there's nothing magical about multiplexing storage for performance, capacity and reliability yet again. How many times must this simple concept be proved?

again? (1)

deisama (1745478) | more than 4 years ago | (#32274942)

This sounds familiar. Didn't this exact same thing happen with the DRAM chip makers like 10 or 15 years ago?

Re:again? (3, Funny)

Pence128 (1389345) | more than 4 years ago | (#32274962)

RingTFA now. This seems to be the same one, they just finished up the investigation.

Not really that disturbing (2, Interesting)

DavidRawling (864446) | more than 4 years ago | (#32274950)

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).

Re:Not really that disturbing (4, Insightful)

Pence128 (1389345) | more than 4 years ago | (#32275070)

Fine the shareholders. They'd find the people responsible.

Re:Not really that disturbing (1)

gnud (934243) | more than 4 years ago | (#32275688)

Actually, a more interesting way of fining publically traded companies might be to disallow and/or heavily tax payouts to shareholders for the next few years.
That would create a _real_ incentive to follow the law.

400M goes to who? (3, Insightful)

DigiShaman (671371) | more than 4 years ago | (#32274960)

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...

Re:400M goes to who? (3, Funny)

Anonymous Coward | more than 4 years ago | (#32275016)

Consumers around the world will be paying more for their DRAM chips, but EU citizens will be getting more services or paying less in taxes because the coffers of a nation are fed, so it kinda cancels out for consumers (non-EU nations of course should fine these companies too if they haven't already to be in the same situation).

Re:400M goes to who? (-1, Offtopic)

wmbetts (1306001) | more than 4 years ago | (#32275084)

+1 funny!

Re:400M goes to who? (0, Troll)

bloodhawk (813939) | more than 4 years ago | (#32275108)

ummm you honestly believe that the EU would reduce its taxing simply because they got some juicy fines in there coffers?

I have a bridge I would like to offer you at a very competitive price.

Re:400M goes to who? (1)

value_added (719364) | more than 4 years ago | (#32275142)

I have a bridge I would like to offer you at a very competitive price.

I, too, have a bridge.

Note to the OP: my bridge is nicer, despite the price similarity.

Re:400M goes to who? (0)

Anonymous Coward | more than 4 years ago | (#32275972)

Payments from EU members towards the EU are reduced by the amount of the fine.
Given their huge deficits they most probably will not reduce taxes by that amount, but in theory they could.

Re:400M goes to who? (5, Insightful)

copponex (13876) | more than 4 years ago | (#32275100)

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.

Re:400M goes to who? (1)

TheLink (130905) | more than 4 years ago | (#32275842)

> Repeat offenders should be fined in the billions of dollars as a warning to other companies

That's silly. As the various financial blow ups show: losing other people's money when you gamble with other people's money is not a big deal. Especially when you get big bonuses if you win big. It does not discourage risky/improper behaviour at all.

If you want to discourage them, send them to prison.

If a multimillionaire gets sacked because the company got huge fines, what's that to him? Though a multimillionaire may have 10-20 years more of life expectancy, but 5 years in jail would still hurt him about as much as it would hurt me. In fact it probably would be a bigger drop in lifestyle for him than for me. A multimillionaire would likely be more aware of the term "opportunity cost" than some beggar on the street.

Re:400M goes to who? (1)

mirix (1649853) | more than 4 years ago | (#32275126)

I can kind of see your point, but what do you suggest? That we don't punish companies for collusion?

Any of the manufacturers that weren't in on the price fixing should be able to undercut the cheats that have to recoup their $400M fine. - Not that I can think of a RAM manufacturer that isn't in this list, off the top of my head... I suppose collusion works best when everyone is in on it, eh?

Re:400M goes to who? (1)

el chief (1768752) | more than 4 years ago | (#32275314)

don't be such a fucking austrian. hm, if they can collude and price fix, maybe they aren't perfectly competitive. therefore they take rents. therefore a fine will reduce their rents. go read some econ.

Re:400M goes to who? (4, Insightful)

mjwx (966435) | more than 4 years ago | (#32275648)

Ya, price fixing sucks. But let's be real honest shall we?

Lets

Who ends up paying the 400M

The nine companies mentioned in the fine summary.

where does that money go?

Towards the services provided by the EU.

Consumers around the world will be paying for it.

CORRECTION: Consumers around the world have already paid for it.

When you think about it, it's like a global tax to feed the coffers of a nation

No it isn't, it's a punishment for a group of corporations for breaking the law. You clearly haven't thought about it very much and have just been scared by the "T" word, the alternative to fines is to permit them to get away with collusion, and that will just raise prices, no. BTW I like paying the T word as it provides me with many services, not the least of which is a cheap world class medical system (Shamelessly borrowed from Shutdown -p and slightly altered).

I'm just saying...

I'm just saying you're an idiot, OK, that's a bit harsh. Perhaps you are a really intelligent person but you've just had a brain failure during that post.

Please think a bit more critically. This isn't a "tax" (gasp, shock horror) it's punishment for something they've already done. First this will end up coming out of the companies bottom line because 1. after being convicted of collusion they will be watched like a hawk and 2. now their cartel is being broken up actual competition will ensue (with all the price cutting benefits therein). I'm sick of people assuming this is a zero sum game, that prices will rise because it costs them more in fines. This thinking ignores the fact that the market will only pay for what it will bare and ultimately raising prices to cover a loss from a fine will attract more attention from the authorities as well as reduce the amount of product they can sell. The market will not automatically accept the rise of all RAM prices unless they all raise the price at once and well that's collusion, which what got them into trouble in the first place.

Re:400M goes to who? (0)

Anonymous Coward | more than 4 years ago | (#32276308)

Am I the only one who finds this way of parsing someone's message by one line at a time offending?

Re:400M goes to who? (1)

matt4077 (581118) | more than 4 years ago | (#32276086)

The costs of production (in which this fine will be a factor) only set a lower bound on prices. No company just takes costs+10% or something. They try to maximize profits by finding the sweet spot on the demand curve.

And before the anti-EU argument comes up again, I'd like to point out that Infineon is European. The US does the same btw, i. e. when they fined Daimler $500 million for corruption.

Free Markets (1)

andersh (229403) | more than 4 years ago | (#32276088)

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]

Re:400M goes to who? (1)

sulimma (796805) | more than 4 years ago | (#32276140)

Assuming a state with a fixed budget. Which is the better system to finance that budget? A system where everybody pays the same, or a system where the bad guys pay more then the good guys?

The EU can use this money to either:
- spend more (which benefits their citicens in one way or the other)
- collect less taxes now
- reduce dept, which means less taxes in the future

The correct behaviour on the spending side of the budget is very controversial, but it is a problem complete unrelated to the income side of the budget where fines clearly benefical.

Re:400M goes to who? (1)

zoney_ie (740061) | more than 4 years ago | (#32276282)

The 400 million indirectly goes to us taxpayers in the EU in some form or another. Even net contributors to the EU are also recipients of EU money (e.g. third level research).

Also it means companies even if they continue these kinds of behaviour, are more likely to pursue it outside the EU (we don't have to be sufficiently tough to stop the behaviour, just tougher than elsewhere, e.g. US).

Finally, even if these fines don't stop this behaviour in the EU, the fines make for headlines that increase public awareness of such business practices, keeping up the pressure for proper regulation and oversight of business, as well as keeping customers wary and vigilent.

Re:400M goes to who? (1)

Hurricane78 (562437) | more than 4 years ago | (#32276288)

Consumers around the world who are stupid enough to buy stuff from known criminals will be paying for it, and will deserve it.

There, fixed that for ya.

You know, natural selection, survival of the fittest, and stuff...

Position is everything (0)

Anonymous Coward | more than 4 years ago | (#32274994)

It must have been nice to be the last one contacted about this:

"Hey, all 9 of us are gonna fix prices on our chips."

"lol"

Capitalism (4, Insightful)

Anonymous Coward | more than 4 years ago | (#32274996)

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.

Re:Capitalism (1)

Alwin Henseler (640539) | more than 4 years ago | (#32275322)

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.

Perhaps (sometimes) a company may not so much want 'their share of the pie', but rather a more predictable, constant production flow. Keep initial estimates modest & design a hit product, and your production can't keep up (=you're missing profit opportunities). Scale up too early, and you have big / expensive / unused production capacity. It's probably a fine art to walk that line, and I can't help to feel at least some sympathy if a company X tries to smooth out those fluctuations.

Competition increases the risk factor here, and price fixing could be seen as a way to spread that risk over all the competitors in a market. Which isn't that bad by itself, IMHO. It's just that it hurts consumers long-term by enabling weaker competitors to survive, slow innovation (because the incentive to be first-to-market is reduced), and artificially raising prices.

The free market is good for a lot of things, but providing a constant operating environment for the businesses in it, isn't one of them.

Re:Capitalism (0)

Anonymous Coward | more than 4 years ago | (#32275396)

well said, and what's more, micron weren't charging as much. Did the consumer even notice enough to shop around? How many times in the last few years have you said "Man, memory is soooo expensive". It's not. It's cheap... as chips (ba doom tish!).

A company may charge what they like under capitalism, and a smart competitor will come along and undercut them if they're gouging consumers. If micron had been smart they'd have used this as an opportunity to gain market share.

Re:Capitalism (1)

mjwx (966435) | more than 4 years ago | (#32275582)

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.

Where is competition mandated in capitalism?

In true, unrestricted laissez faire capitalism there is no requirement for competition, one company may become ruler of all if they choose to squash all competition and fix prices?

Yo Micron! (0, Insightful)

Anonymous Coward | more than 4 years ago | (#32275032)

Snitches git stitches!

So what? (5, Insightful)

Mark19960 (539856) | more than 4 years ago | (#32275052)

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.

Re:So what? (5, Insightful)

Pence128 (1389345) | more than 4 years ago | (#32275122)

This. The fine should be their profits from the affected products from the time they started price fixing to the time they stopped.

Re:So what? (1)

red_blue_yellow (1353825) | more than 4 years ago | (#32275340)

This. The fine should be their profits from the affected products from the time they started price fixing to the time they stopped.

Even that is not enough. Even if they are caught 50% of the time, that's still a good deal for them. You have to make the expected profit (in probability terms) negative for price-fixing. In other words, (fine * probability_of_being_caught) > profits.

Re:So what? (1)

Hurricane78 (562437) | more than 4 years ago | (#32276298)

And then some...

No, actually, there is just one morally valid punishment: Separation.
Or in other words: Hey you, chip maker! We don’t allow price fixers in this country! You have one week to leave. If you or any sub-part of you are seen here again, you will be personally assassinated! Now GTFO!
Of course, as we are nice people, we will forgive them after a couple of years. If they still exist by then. (Considering how pretty much every other country would also throw them out.) But they will definitely never ever try that again. Ever.

Re:So what? (1)

Tapewolf (1639955) | more than 4 years ago | (#32275754)

I seem to recall from the Microsoft case that the EU is not generally amused if they check later and find it's still happening. That is, they cartel will start to get a series of considerably larger fines unless they actually stop.

Re:So what? (1)

hankwang (413283) | more than 4 years ago | (#32276158)

So they were all fined a combined 402 million.

As far as I understand, the EU sets fines proportional to the sales over the duration of the sales, with a proportionality constant dependent on how much the infringement hurt the market. Although not many details are published on the EU website so far (EU case on DRAM [europa.eu] ), the EU has published the guidelines for the fine calculation (Guidelines on the method of setting fines [europa.eu] ). More details on the settlement decision will follow.

Unless there are clear indications of the opposite, I would assume that the 330m euro was in proportion with the amount of extra profit that the companies made thanks to the cartel; without the cartel, the profits or losses of the companies would probably have been similar.

Re:So what? (1)

Xelios (822510) | more than 4 years ago | (#32276204)

But that's not really a fine then, is it? If I steal $100 out of someone's wallet and then get "fined" $100 then I really wasn't fined anything, I just gave back the money I stole. If that's the only punishment I receive then why not steal money all the time? If I get caught I'm out something I shouldn't have had in the first place, if I don't get caught I get free money.

They should have to give back the extra profit that they made illegally and then be fined an extra amount for doing something illegal in the first place.

Not that it really matters, either way the expense will just be factored into pricing and the consumer ends up paying for it.

Re:So what? (1)

chrb (1083577) | more than 4 years ago | (#32276228)

So they were all fined a combined 402 million. They made that,

Did they? What were the profits of the respective DRAM divisions of these companies in the period that the cartel operated (1998-2002)?

I'm not disputing your claim - just asking for evidence. Hynix lost $4 billion in 2008; the DRAM market has traditionally been highly competitive and not the huge source of profits that some people think it is.

Italians again (0, Flamebait)

For a Free Internet (1594621) | more than 4 years ago | (#32275058)

They are stealing my pies and thummbing their Italian looking noses at me while whispering to each otherin Mexican code language about the destruction of AMERICA. The are a bunch of islamic communixst no goodinicks. One is hiding in my bushes now, I will hit him with a pot of boyling water and see what he thingsks of that, sneacky Italian bastart! GOD BLESS AMERICA THE FREE!!!!!

Mixed feelings (0)

Anonymous Coward | more than 4 years ago | (#32275088)

I am somewhat conflicted with these sort of things, on one hand it completely sucks that the end consumer is being screwed over in order for large businesses to maintain there profit margins. On the other hand with so much competition in the market and relatively low margins on the goods I think we will see some serious consolidation in the manufacturing of these things as the industry just can't support that many players and that in turn will end up pushing prices back up naturally anyway.

ban one company at random (3, Interesting)

Anonymous Coward | more than 4 years ago | (#32275132)

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.

Re:ban one company at random (1)

mirix (1649853) | more than 4 years ago | (#32275198)

How would you plan on enforcing that? Customs officials opening every stick of RAM, prebuilt computer, cell phone, router, set top box, et al, and determining if the device in question has Brand X DRAM?

Seems entirely impossible to me, with the majority of electronics being manufactured outside the US.

Re:ban one company at random (1)

NNKK (218503) | more than 4 years ago | (#32275388)

Informants and random inspections. When violations are found, nail the purchasers to the wall. Soon enough there won't be many US businesses buying their chips.

Re:ban one company at random (0)

Anonymous Coward | more than 4 years ago | (#32275902)

It'd give us all a warm feeling, but it would only make things worse. The problem is that lack of competition is precisely what leads to these sorts of things.

My personal idea would be to start confiscating shares, especially those that the board get as part of their pay. That'll (probably) scare them straight in short order.

Re:ban one company at random (1)

DrScotsman (857078) | more than 4 years ago | (#32276382)

I say rather than fines, we ban one of those companies from the US market forever.

That would be a very interesting punishment for the European Union to give.

Wut about Price breaking? (0)

Anonymous Coward | more than 4 years ago | (#32275182)

Would price breaking be better?

They even got a discount on the fines... (3, Insightful)

VinylRecords (1292374) | more than 4 years ago | (#32275190)

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.

Re:They even got a discount on the fines... (2, Insightful)

Arker (91948) | more than 4 years ago | (#32275274)

It actually does make sense to reduce fines if they cooperate. If they didnt it would take more money to convict them. But if the fines, after cooperation discount, are not more than the profit raised by the crime, multiplied by a factor based on a good estimate of the percentage of the time companies do this and get away with it, then it is no deterrent. Sadly, in the western world today, this is exactly the situation with pretty much all regulation of industry. No deterrent. Just a cost of doing business, paying off the state occasionally when you get caught.

Re:They even got a discount on the fines... (1)

Renraku (518261) | more than 4 years ago | (#32276104)

Kind of like game theory.

Suppose there are several companies. They can either price fix or not price fix. If they're price fixing, they can alert the authorities and keep their 'winnings' while the other price fixers lose a certain amount of money. Whether or not they price fix will be determined by the fine they receive. If extra revenue > fine, then price fix. If extra revenue fine, don't price fix.

But all of the price fixers should rat each other out. In theory, they'd all get to keep their profits. In practice, they'd end up disgusting the investigators and get bitchslapped with an even bigger fine. Kind of like how criminals are often tripping over each other to point fingers as soon as they're behind bars.

Re:They even got a discount on the fines... (5, Insightful)

Aceticon (140883) | more than 4 years ago | (#32276166)

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?

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.

Hell they are probably already learning from their mistakes and looking to secure another price fixing scam for the immediate future.

After they have proven themselves as snitches, who exactly would trust them and get in a price fixing cartel with them?

EU (2, Funny)

Anonymous Coward | more than 4 years ago | (#32275256)

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.

Re:EU (1)

TouchAndGo (1799300) | more than 4 years ago | (#32275504)

Or the price fixing will sort out the market. Either way.

Re:EU (0)

Anonymous Coward | more than 4 years ago | (#32275678)

I'm sorry but I don't get tard/sperg humor. Is the joke supposed to be that the US already fined these companies hundreds of millions years ago?

Time to develop open source nanoassemblers (0)

Anonymous Coward | more than 4 years ago | (#32275386)

The development of nanoassemblers will make it possible to do away with most manufacturing and bring about a revolution in DIY computers (and everything)....plus the advantages of a really powerfull medical nanotech so we can eliminate aging and make it possible to customize ourselves etc. Goodby all these joker companies that dole out tiny, espensive "objects of expensive latest tech" to consumers at whatever exorbadent prices that are the norm of the day. The fact that this whole model of doing things is the ultimate open source application, just provide the raw materials...what could be better than that? Sure, if you want to buy something, go ahead, but the possibillities are pretty good.

Could have been worse? (1)

NewsWatcher (450241) | more than 4 years ago | (#32275390)

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.

There was hardly a loss for the consumer. (1)

Bender_ (179208) | more than 4 years ago | (#32275482)

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?

Re:There was hardly a loss for the consumer. (0)

Anonymous Coward | more than 4 years ago | (#32275570)

So this excuses collusion in the industry to rip off the consumer?

Re:There was hardly a loss for the consumer. (0)

Anonymous Coward | more than 4 years ago | (#32275598)

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.

That would be good, but it seems it wasn't that fierce if they were fixing prices...

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)

If the price has been arranged, yes, I feel ripped.

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?

Yes, that is why is called price fixing and is illegal.

parkerposey (-1, Flamebait)

parkerposey (1815568) | more than 4 years ago | (#32275496)

Who ends up paying the 400M and where does that money go? Consumers around the world will be paying for it. http://www.604cleaner.com/ [604cleaner.com]

Mod parent -1 SPAM (2, Insightful)

mjwx (966435) | more than 4 years ago | (#32275680)

Who ends up paying the 400M and where does that money go? Consumers around the world will be paying for it

Ummm.... You do know that consumers around the world have already paid for it don't you. Now it's the colluding companies turn.

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 /. (which I'll put good money on the fact you're not paying Geeknet.inc for).

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.

The whistle-blower (1)

cfriedt (1189527) | more than 4 years ago | (#32275610)

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.

That's a start... (2, Insightful)

dargaud (518470) | more than 4 years ago | (#32275636)

...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.

Re:That's a start... (0)

Anonymous Coward | more than 4 years ago | (#32275834)

Say what? 30c-ish/SMS is what I pay when roaming in Europe.
My normal SMS cost was (before I was on flat rate ~45 Euro) around 0.08c.

Re:That's a start... (0)

Anonymous Coward | more than 4 years ago | (#32276364)

The tariff indeed indicates price fixing.

By the EU. The EU set a maximum tariff. Guess what? That was equivalent to setting the actual tariff.

However, you're entirely wrong on the state-paid infrastructure. Reality is reversed; the EU member states made billions auctioning spectrum. In Germany, it almost topped DM 100 billion! (50 billion euro). So, the cost of SMS isn't really in the antennas but in the spectrum.

What's so wrong about it? Everyone does it. (4, Insightful)

sk11 (1815674) | more than 4 years ago | (#32276002)

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.
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