Transnational Antitrust—Executive Guilty Pleas

Over the past few months, a number of major corporate players in the DRAM market have pleaded guilty and been assessed with extremely heavy fines for antitrust violations. Samsung, Elpida, Infineon Technologies, and Hynix Semiconductor have all been targeted and agreed to cooperate in a massive antitrust probe which has yielded more than US$730 million in fines.

Yesterday, it was announced that four Korean executives “from a major manufacturer of [DRAM] have agreed to plead guilty and to serve jail time in the United States for participating in a global conspiracy to fix DRAM prices.”^[1] The four executives—D.S. Kim, C.K. Chung, K.C. Suh, and C.Y. Choi—all worked for Hynix Semiconductor or its subsidiaries in the United States and Europe.^[2] None of the executives will serve more than 8 months in jail, but the DOJ feels that the pleas send a message to “[i]individuals who defraud American businesses and consumers,” by prosecuting them and sending them to prison “no matter where they live or where they commit the crime.”^[3]

This is very expansive language, and such sentiment is backed by the United States’ efforts to have Ian Norris extradited from the United Kingdom to face antitrust charges.

In addition to the jail time, the four executives have each “agreed to pay a US$250,000 fine and to cooperate in the Antitrust Division’s ongoing investigation of the DRAM industry”; they have also consented to the jurisdiction of the United States, “so extradition will not be required.”^[4]

The one-count felony charges filed in federal court in San Francisco stated that between April 1, 1999 and June 15, 2002, the four executives “conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain computer and server manufacturers in the United States.”^[5]

The DRAM investigation is vast and determined; the Hynix executives “are the second wave of individuals to agree to prison sentences in the DRAM investigation. In December 2004, four Infineon executives—T. Rudd Corwin, Peter Schaefer, Gunter Hefner, and Heinrich Florian—pleaded guilty to the DRAM price-fixing conspiracy.”^[6] Those individuals received prison sentences ranging from four to six months and they were also assessed with a US$250,000.

There will almost certainly be a third wave of individuals who will be targeted, and probably even a fourth wave.

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[1] US DOJ Antitrust Division, Four Korean Executives Agree to Plead Guilty, Serve Jail Time In The U.S., For Participating In Dram Price-Fixing Conspiracy, Mar. 1, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.