34 States Sue Memory Manufacturers

New York Attorney General Eliot Spitzer on Thursday sued the world's top memory chip manufacturers, accusing them of colluding in order to artificially raise prices. California and 33 other states will follow with a separate lawsuit on Friday.

Named in the New York case are Micron, Samsung, Infineon, Elpida, Hynix, Mosel-Vitelic, Nanya Technology and NEC. The lawsuit alleges the companies violated state and federal antitrust laws by making secret deals to fix prices of DRAM between 1998 and 2002.

During this time, supply of DRAM far exceeded demand, and memory companies deliberately restrained supply and rigged bidding for memory contracts. In turn, the prices computer makers paid for the RAM chips were higher, and those higher costs were passed along to consumers.

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The United States Department of Justice launched an investigation into the matter in 2002, and has fined Samsung, Infineon, Elpida and Hynix over $730 million. Micron received immunity in the case by testifying against its competitors.

California Attorney General Bill Lockyer is being joined by 33 other states in a suit that will be filed in San Francisco Friday. Samsung is not named as a defendant Lockyer said, as the company has indicated its intention to settle the matter out of court. Similar agreements were made with Toshiba, Hitachi and other chip makers.

Both suits will demand compensation for consumers that overpaid for DRAM, and bar the companies from colluding in the future. Spitzer says the conspiracy artificially added at least $1 billion to the cost of memory chips.

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