WASHINGTON - Three Korean Hitachi-LG Data Storage Inc. (HLDS)
executives have agreed to plead guilty and to serve prison time in
the United States for their participation in a series of
conspiracies to rig bids and fix prices for the sale of optical
disk drives, the Department of Justice announced today.
According to the felony charges filed today in U.S. District
Court in San Francisco, Young Keun Park, Sang Hun Kim and Sik Hur,
aka Daniel Hur, 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 three
HLDS executives participated in the conspiracies at various times
between approximately November 2005 and September 2009. Under the
plea agreement, 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. HLDS is a joint
venture between Hitachi Ltd., a Japanese corporation, and LG
Electronics Inc., a Republic of Korea corporation.
"Today's plea agreements demonstrate the Antitrust Division's
continued commitment to protect competition in the high tech
industry," said Sharis A. Pozen, Acting Assistant Attorney General
in charge of the Department of Justice's Antitrust Division. "The
division will continue to pursue and prosecute those who
participate in bid-rigging and price-fixing conspiracies that harm
businesses and consumers in the optical disk drive industry."
Optical disk drives are devices such as CD-ROM, CD-RW
(ReWritable), DVD-ROM and DVD-RW (ReWritable) that use laser light
or electromagnetic waves to read and/or write data and are often
incorporated into personal computers and gaming consoles.
Under the plea agreements, which are subject to court approval,
Park, Kim and Hur have also agreed to assist the government in its
ongoing investigation into the optical disk drive industry.
According to the charges, from approximately November 2005 until
September 2009, Park participated in the conspiracies as HLDS's
vice president and chief marketing officer in charge of optical
disk drive sales. The department said that Park had supervisory
responsibility for HLDS's Dell, Microsoft and HP accounts. The
department said that Kim participated in the conspiracies at
various times as HLDS's team leader in charge of the HP and Dell
accounts and deputy chief marketing officer from approximately
November 2005 until September 2009. According to the charges, Hur
participated in HP-related conspiracies at various times as HLDS's
team leader, account leader and account manager in charge of the HP
account from approximately November 2005 until June 2009.
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. From approximately February 2009 to September 2009,
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.
The department said that from approximately June 2007 to March
2008, Park and co-conspirators participated in a conspiracy
involving meetings and conversations in Taiwan and the Republic of
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.
According to the court documents, HP also hosted optical disk
drive procurement events in which participants would be awarded
varying amounts of optical disk drive supply depending on where
their pricing ranked. From approximately November 2005 to June
2009, Kim, Park, Hur and co-conspirators participated in a series
of conspiracies involving meetings and discussions to predetermine
bidding strategies and prices of optical disk drives, resulting in
the submission of collusive and noncompetitive bids for HP's
procurement events. Kim, Par, Hur and co-conspirators also
exchanged information on sales, market share and the pricing of
optical disk drives to monitor and enforce adherence to the
agreements
This is the department's second round of charges resulting from
its ongoing investigation into the optical disk drive industry. On
Nov. 8, 2011, HLDS pleaded guilty in U.S. District Court in San
Francisco to 14 counts of violating the federal antitrust laws
between approximately June 2004 and September 2009. HLDS also
pleaded guilty to one count of participating in a scheme to defraud
in connection with an April 2009 procurement event. On the same
day, HLDS was sentenced to pay a $21.1 million criminal fine and
has agreed to assist the department in its ongoing investigation
into the optical disk drive industry.
Park, Kim and Hur are charged with multiple violations of the
Sherman Act. Each count carries a maximum fine of $1 million and up
to 10 years in prison. The maximum fine may be increased to twice
the gain derived from the crime or twice the loss suffered by the
victims of the crime, if either of those amounts is greater than
the statutory maximum fine.
This case is part of an ongoing joint investigation of the
Department of Justice Antitrust Division's San Francisco Office and
the FBI in San Francisco and Houston. Anyone with information
concerning illegal or anticompetitive conduct in the optical disk
drive industry is urged to call the Antitrust Division's San
Francisco Field Office at 415-436-6660 or visit
www.justice.gov/atr/contact/newcase.htm.
