3 Hitachi-LG Execs to Pay $25K Each for Fixing Optical Disk Drive Prices
In a December 13, 2011 press release, the Justice Department announced that three Korean Hitachi-LG Data Storage Inc. (HLDS) executives have agreed to plead guilty, serve prison time in the U.S., and pay a $25,000 criminal fine each for their participation in a series of conspiracies to rig bids and fix prices for the sale of optical disk drives.
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(HLDS is a joint venture between Hitachi Ltd., a Japanese corporation, and LG Electronics Inc., a Korean corporation. Optical disk drives are devices such as CD-ROM, CD-RW (ReWritable), DVD-ROM and DVD-RW that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.)
Execs Allegedly Conspired to Fix Prices for Microsoft and Rig Bids for Dell, HP
Young Keun Park, Sang Hun Kim, and Sik Hur, allegedly conspired with co-conspirators to suppress and eliminate competition by rigging bids for optical disk drives sold to Dell Inc. and Hewlett-Packard Company (HP) and/or fixing prices for optical disk drives sold to Microsoft Corporation. The executives participated in the conspiracies at various times between approximately November 2005 and September 2009.
Park allegedly participated in the conspiracies as HLDS’s vice president and chief marketing officer in charge of optical disk drive sales. According to DOJ, Park had supervisory responsibility for HLDS’s Dell, Microsoft and HP accounts. Kim allegedly participated in the conspiracies as HLDS’s team leader in charge of the HP and Dell accounts and deputy chief marketing officer. Hur allegedly participated in HP-related conspiracies as HLDS’s team leader, account leader, and account manager in charge of the HP account.
Conspirators Rigged Bids for Dell and HP Procurement of Disk Drive Supply
According to the court documents, Dell hosted optical disk drive procurement events in which bidders would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. Park and Kim participated in a series of conspiracies involving meetings and conversations with co-conspirators to discuss bidding strategies and prices of optical disk drives. As part of the conspiracies, Park, Kim and co-conspirators submitted bids at collusive and noncompetitive prices and exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.
HP also hosted optical disk drive procurement events in which Kim, Park, Hur and co-conspirators participated in a series of conspiracies to submit collusive and noncompetitive bids.
Also Met in Taiwan, Korea to Fix Prices for Disk Drives Sold to Microsoft
Park and co-conspirators also participated in the conspiracy involving meetings and conversations in Taiwan and Korea to discuss and to fix the prices of optical disk drives sold to Microsoft. As part of the conspiracy, Park and co-conspirators also exchanged information on the sales of optical disk drives to monitor and enforce adherence to the agreed-upon prices.
Execs Agreed to Serve 7-8 Months, Pay $25K Criminal Fine Each, Etc.
Under the plea agreements, which are subject to court approval, Park and Kim each have agreed to serve eight months in prison and Hur has agreed to serve seven months in prison. Each has also agreed to pay a $25,000 criminal fine. The three executives have also agreed to assist the government in its ongoing investigation into the optical disk drive industry.