SAN FRANCISCO (AFX) - Sun Microsystems Inc. and Unisys Corp. have filed a combined lawsuit against Hynix Semiconductor Inc. and six other technology companies as part of an ongoing federal investigation into a worldwide price-fixing scheme.
Sun and Unisys say the companies bilked them of millions of dollars by keeping prices artificially high for computer memory chips. The chips are used in an array of gadgets, including personal computers, printers, digital cameras, video recorders, video game equipment and cellular phones.
Apart from South Korean memory chip maker Hynix, the lawsuit filed Friday in the U.S. District Court for the Northern District of California targets Taiwanese manufacturers Mosel Vitelic Inc., Nanya Technology Corp. and Winbond Electronics Corp.; Japanese manufacturers Elpida Memory Inc. and Mitsubishi Electric Corp.; and Germany's Infineon Technologies AG.
Sun and Unisys also named Micron Technology Inc. and Samsung Electronics Co. Ltd. as coconspirators in the lawsuit, similar to the one Sun filed by itself in March.
"The global conspiracy ... had a direct, substantial and reasonably foreseeable effect on United States commerce," the newest lawsuit alleges.
The case hinges on findings by the U.S. Department of Justice, which said in June 2002 that it uncovered a "long-standing conspiracy" among the world's suppliers of dynamic random access memory, or DRAM.
DRAM chips are the most common form of memory, with annual sales exceeding $20 billion. The six largest DRAM manufacturers control 96 percent of the global market.
Collusion appeared to begin in 1996, when DRAM manufacturing plants around the world greatly increased production and buyers expected prices to drop. Instead, prosecutors alleged, DRAM executives hatched a covert plan to keep prices artificially high.
Executives hosted a conference with a special lecture called "Manage Price Competition, Profitability," and they used special software to keep their related e-mail chains confidential, according to the lawsuit.
Lawyers for Santa Clara-based Sun and Blue Bell, Pa.-based Unisys say DRAM executives colluded and curtailed chip production in February 1997, and DRAM prices immediately surged. Over the next several years, whenever prices drifted downward, prosecutors said, executives collectively limited production.
After a grand jury investigation, five of the world's largest DRAM suppliers admitted involvement in a cartel: Hynix, Infineon, Elpida, Micron, and Samsung. Micron was spared criminal prosecution because its executives were the first to admit they participated; others agreed to enter guilty pleas.
Last year, Samsung Electronics was ordered to pay a $300 million criminal fine, and Hynix agreed to pay $185 million. Infineon paid $160 million, and Japan's Elpida agreed to pay $84 million.
Sun and Unisys would not comment on the consolidated suit. In court documents, they said they'd seek triple damages on artificially high prices from January 1997 to 2002 and beyond.
Luke M. Froeb, associated professor of business at Vanderbilt University, said the Justice Department's investigation greatly strengthens Sun's and Unisys' case.
"Given that it's a follow-on case, you take the liability issue off the table," said Froeb, former director of the Bureau of Economics at the Federal Trade Commission. "The question is how to figure out damages. You have to figure out what would the price have been absent the conspiracy."
Park Hyun, a spokesman for Hynix, said the South Korean company would seek an out-of-court settlement. Last year, Hynix agreed to pay a $185 million fine and pleaded guilty to felony price-fixing charges.
Phone calls and e-mails to the other companies named in the suit were not immediately returned Tuesday.
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