Friday, January 02, 2004

Antitrust News: Pleading in the New Year

If you think the Bush administration cares first and foremost about preventing terrorist attacks, consider how the Justice Department’s been spending its time lately:
Micron Technology, as part of an agreement to win amnesty from prosecution by the Justice Department, may admit it conspired with competitors to manipulate computer-chip prices, people familiar with the probe said.

Boise, Idaho-based Micron, the world's No. 2 maker of memory chips, is in talks to provide information to bolster a possible U.S. case against three other companies in the $16 billion market for dynamic random access memory, or DRAM, chips, the people said.

The U.S. is probing whether Micron conspired with Infineon Technologies, Samsung Electronics and Hynix Semiconductor.

Cooperating with the agency could allow Micron executives to avoid prosecution.
The DRAM antitrust investigation centers around an alleged short-term price increase that happened two years ago. There is no fraud, coercion, or other criminal act at the center of this investigation, only the DOJ’s insistence that businesses not take any action to affect prices in their markets.

If the DOJ was capable of putting things in context—and they are not—they would see memory chips have never been cheaper or more plentiful. Even if there were some private agreements among competitors, the market as a whole has not suffered. But the Justice Department employs hundreds of lawyers and has empanelled more than 70 grand juries just to investigate antitrust matters. They will find something even where nothing exists.

To be sure, Micron didn’t help itself when one its executives pled guilty to obstruction of justice related to the antitrust investigation. The executive apparently altered notes about chip prices after they were subpoenaed by the grand jury investigating Micron. While I don’t condone this, the truth is Micron would be in trouble either way. The truth does not matter to the DOJ, only altering facts to meet their pre-determined subjective reality.

And I’m not sure I can condemn Micron for seeking a deal. Really, what choice do they have? If they don’t settle, they’ll almost certainly be indicted on criminal antitrust charges. Executives will be sent to jail. I have no trust in a jury’s ability to see the inherent irrationality of antitrust. Most people will simply assume Micron is just another corrupt corporation like Enron or WorldCom, and Micron will be punished for those firms’ sins.

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