Samsung, Hynix Fined for Price Fixing

Samsung Electronics (SEC) and Hynix Semiconductor (HS) have been ordered to pay restitution in a class action suit filed by consumers, and criminal fines by the U.S. Ministry of Justice for illegally fixing DRAM (Dynamic Random Access Memory) prices.

It is the first time Korean companies have been subject to foreign consumer class actions for civil liabilities related to price collusion.

This is an example of the harshness of civil and criminal punishments for price collusion in foreign countries.

The SEC said yesterday that the companies would have to pay $67 million (around 67 billion won) in damages to settle a civil claim regarding DRAM price collusion by its U.S.-based affiliates last year.

This is in addition to the $300 million fine, payable in five-year installments, imposed last November by the U.S. Justice Department.

“Last year’s settlement was for the class-action suit in Federal court. We have not yet settled the action for damages filed in state court. We cannot anticipate how much they will be at the moment,” a SEC spokesperson said. The total amount of restitution could possibly be higher.

A HS spokesperson said that it was in the process of negotiating a settlement with the U.S. Justice Department regarding the DRAM class-action lawsuit. The talks are separate from HS’s agreement to pay a $182 million (about 182 billion won) fine for price collusion last May.

“In preparation for the U.S. Justice Department’s fine and additional damages, we have set aside 346.6 billion won in 2004 as a loss. We have also almost reached an agreement with the consumers who filed the suits,” the spokesperson said.

HS said that the total amount of the settlement would not exceed 160 billion won regardless of what happens in lawsuits that have not been settled yet.

Meanwhile, the Korean Fair Trade Commission is now reviewing whether DRAM price collusion by SEC and HS affected Korean markets as well.

Do-Young Kim Sang-Rok Lee nirvana1@donga.com myzodan@donga.com