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California and the West

N.Y. Sues Chip Makers Over Pricing

Dozens of other states, including California, are expected to file a separate lawsuit today that alleges collusion.

July 14, 2006|From the Associated Press

New York's attorney general sued leading makers of memory chips Thursday, claiming that they made secret price-fixing arrangements that inflated the cost of personal computers and other electronic devices.

More than 30 other states were expected to file a separate lawsuit today in U.S. District Court in San Francisco, California Atty. Gen. Bill Lockyer said.

"Price fixing strikes at the heart of free competition and fair play, which underpin our economic system and protect the interests of businesses and consumers alike," Lockyer said in announcing the pending lawsuit.

The lawsuits follow a long-running U.S. Justice Department investigation that has resulted in more than $730 million in fines and guilty pleas from four companies -- Elpida Memory Inc. of Japan, Hynix Semiconductor Inc. and Samsung Electronics Co. of South Korea and Infineon Technologies of Germany.

The companies together control about 70% of the American market.

Boise, Idaho-based Micron Technology Inc. was granted immunity from criminal charges in the federal case in exchange for its cooperation.

"I have never seen a pricefixing case where there is so widespread, so continuous an exchange of confidential price information among competitors, or over so long a time period," Assistant New York Atty. Gen. Richard Schwartz said.

The New York lawsuit, filed in federal court in Manhattan, claims that the companies colluded to fix prices on dynamic random access memory, or DRAM, chips from 1998 to 2002.

The defendants are Elpida, Hynix, Infineon, Micron and Samsung, as well as Mosel-Vitelic Corp. and Nanya Technology Corp. of Taiwan and NEC Electronics America Inc. of Santa Clara, Calif.

Micron spokesman Daniel Francisco said that he had not yet seen the lawsuit Thursday and that it was inappropriate for him to comment on it. Other companies also declined to comment or did not immediately return phone calls.

Francisco said that state attorneys general had been investigating the matter for several months and that the company was discussing "possible resolutions."

The lawsuit to be filed today in San Francisco names Hynix, Infineon, Micron, Mosel-Vitelic, Nanya and NEC Electronics America.

Lockyer said the suit would ask the companies to compensate consumers who paid higher prices and demand that the companies not collude in the future. The complaint will ask a judge to order the companies to pay three times the amount of actual damages.

Samsung is not being sued in that case because the company has indicated a willingness to settle the allegations, Lockyer spokesman Tom Dresslar said. Similar agreements have been reached with Hitachi Ltd., Mitsubishi Electric Corp., Toshiba Corp., all of Japan, and Winbond Electronics Corp. of Taiwan, Dresslar said.

Computer makers such as Dell Inc., Hewlett-Packard Co., Apple Computer Inc., IBM Corp. and Gateway Inc. had to raise personal computer prices or reduce the amount of memory installed on their systems to compensate for the higher costs, prosecutors said.

Worldwide sales of DRAM chips alone totaled more than $24 billion in 2005, according to separate reports from the research companies ISuppli Corp. and Semico Research Corp.

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