KFTC has decided to exonerate Hynix from US$18.3 million fine

On April 25, 2007, the Korea Fair Trade Commission (KFTC) has decided to close the case of a price fixing by four global DRAM manufacturers, citing insufficient evidence. The decision has exonerated Hynix Semiconductor Inc. (“Hynix”) from an approximately US$18.3 million fine that it had been ordered to pay.

* 4 global DRAM manufactures : Micron Technology, Inc., Infineon Technologies AG, Samsung, Hynix

1. Background of Investigation of KFTC

The four global DRAM manufacturers were faced with heavy criminal charges by the US Department of Justice(“DOJ”) for their roles in price fixing scheme.

To be specific, Samsung electronics Co., Ltd. (“Samsung”) was charged with US$300 million criminal fine and Hynix a US$180 million and their executives (five and four, respectively) were sentenced to jail.

In the wake of this, Samsung pleaded guilty at the KFTC to fixing DRAM prices and applied for leniency program, handing over all related documents.

2. Process of Investigation

Involved in the case as the counsel of Hynix, Shin & Kim determined, after a review of the relevant materials, that it was difficult for the KFTC Examiner to prove Hynix’s violation of Korea Monopoly Regulation and Fair Trade Act (“MRFTA”) due to the lack of effect in the Korean market. However, Samsung’ s application for leniency did not leave Hynix any other choice but to apply for
leniency following Samsung. However, unlike Samsung, Hynix did not plead guilty while cooperating with the KFTC investigation by submitting all related documents, leaving the judgment at the hand of KFTC Commissioners.

Consequently, the KFTC Examiner, on April 3, brought the case to the Committee, based on applications for leniency by Samsung and Hynix and the U.S. DOJ’s decision.

In relation to this, Samsung was expected to be exempted from all fines for being the first applicant for leniency while Hynix was getting 50 % reduction and to be faced with KRW 9.2 billion in fines.

3. Response from Hynix

In the process of reviewing the case, Shin & Kim became more suspicious whether this case amounted to a violation of MRFTA.

Against this backdrop, though Hynix had applied for leniency, Shin & Kim took up an aggressive approach, highlighting an erroneous decision by the KFTC Examiner.

In the process, the KFTC Examiner tried to pressure us into giving up, citing revocation of 50 % reduction to be given as part of leniency program.

However, we could not trade our conscience in exchange for immediate interests, and were determined to fight to the end.

Soon after, the KFTC Examiner, as they had warned, deprived Hynix of leniency benefit and the amount of fine doubled to KRW 18.3 billion.

In the meantime, Samsung agreed to offer the KFTC Examiner the confirmation that it had participated in price fixing in all markets both domestic and abroad.

we were startled to find how subservient they could become in their desperate effort to avoid fines. They even distorted facts in the process.

Though the KFTC Examiner appeared to be in the upper hand, we stick with our position and never gave up.

And we have been awarded with aforesaid result

4. Meaning of the case

This case was the first one wherein the KFTC stringly determined to punish, under the MRFTA , even the collaborative activities made against the US. companies in US. market, and led a fierce fight over an issue in relation to the scope of extraterritorial application of anti-trust law.

we note that it was very unusual for the KFTC to close the case without imposing any punitive action, citing lack of evidence in spite of acknowledgment of wrongdoings by Samsung.

Meanwhile, defying all tribulations that had arisen from giving up leniency benefits, Shin & Kim practiced its philosophy and fought for justice and command of conscience.

Finally, we do show our respect for KFTC Commissioners for their uneasy, but extremely rational decision.