[FoRK] Dirty Rotten Scoundrels

Geege geege4 at bellsouth.net
Sat Feb 28 07:02:07 PST 2004

failed attempt to gang up on rambus.

Ruling May Aid Inquiry on Chip Pricing

Published: February 27, 2004

A judge's decision last week dismissing a Federal Trade Commission antitrust
case against Rambus, a designer of computer memory chips, is proving to be
bad news for memory chip makers on two fronts.

The decision by Stephen McGuire, the F.T.C.'s chief administrative law
judge, gave Rambus a major victory in a long-running effort to collect
billions of dollars in patent fees from companies that make chips.

In addition, the judge's written opinion, released Tuesday and reported on
yesterday by The Wall Street Journal, included evidence that could be used
against memory chip makers in an apparently unrelated criminal antitrust
investigation by the Justice Department.

The F.T.C. case involved accusations that Rambus, based in Palo Alto,
Calif., engaged in anticompetitive behavior when it helped an industry group
develop standards for new chips. Rambus was accused of acting improperly
because it did not reveal that it had applied for patents that would be more
valuable if suggestions it backed were adopted.

The Justice Department investigation, which was made public in June 2002, is
thought to concern price fixing or other forms of market manipulation during
late 2001 and early 2002, when prices for a new generation of memory chips

Samsung Electronics of Korea, the market leader; Micron Technology of the
United States; Infineon Technologies of Germany; and Hynix Semiconductor of
Korea - the largest suppliers of memory chips in the $16 billion global
market - have all acknowledged being contacted by the Justice Department.
All have said they are cooperating.

Among the evidence cited by Judge McGuire in his ruling dismissing the
F.T.C. complaint are documents and testimony suggesting that the chip makers
shared potentially sensitive information with each other about pricing,
supplies and product development plans during the 1990's and into 2001.

The evidence that appeared most relevant to the Justice Department's
concerns was an e-mail message sent Nov. 26, 2001, by Kathy Radford, a
Micron sales manager in Asia, to unidentified Micron colleagues.

That message described efforts by Infineon and Samsung to raise prices on
what was then the newest form of memory chip, known as a double data rate.
It also described Micron's intention to impose a similar price increase.
And, the ruling said, Ms. Radford wrote that "the consensus from all the
suppliers is that if Micron makes the move, all of them will do the same and
make it stick."

The ruling provided no suggestion of how Ms. Radford had reached that
conclusion, but any advance agreement by competitors on price moves would
violate antitrust laws and could, some analysts say, help explain the sharp
rise in the prices of the new chips at the time.

Other analysts disagree, saying that volatile prices and spot shortages are
typical when chip makers are moving to a newer design.

"These guys have frequently tried to raise prices over the years, and it
doesn't stick if the market's not there," said Sherry Garber, who follows
the industry for Semico Research in Phoenix. "It's a commodity market."

The Justice Department declined to comment on any aspect of the
investigation. So far, the only public development in the case has been a
guilty plea to charges of obstruction of justice made last month in federal
court in San Francisco by Alfred Censullo, a regional sales manager for

The government accused Mr. Censullo in December of altering handwritten
notes about prices and market conditions and hiding other evidence
accumulated in weekly teleconferences with Micron sales executives.

"What they did,'' one lawyer in the case said, "is send a message to
everyone involved in the investigation that they are investigating
aggressively and that they are moving forward.''

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