Hitachi-LG Data Storage execs plead guilty to price fixing

Three executives at Hitachi-LG Data Storage (HLDS) have agreed to plead guilty and serve prison time in the U.S. for their participation in a series of conspiracies to rig bids and fix the prices of optical disk drives sold to large computer makers, the U.S. Department of Justice announced Tuesday.

Young Keun Park, Sang Hun Kim and Sik "Daniel" Hur conspired with others to suppress competition by rigging bids for optical disk drives sold to Dell and Hewlett-Packard and to fix prices for optical disk drives sold to Microsoft, the DOJ said. The conspiracies happened at various times between November 2005 and September 2009, the DOJ said.

Under a plea agreement in U.S. District Court for the Northern District of California, 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 US$25,000 fine.

HLDS, based in South Korea, is a joint venture between Hitachi, a Japanese corporation, and LG Electronics, a South Korean corporation.

An HLDS spokesman wasn't available for comment on the plea agreements.

The DOJ 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," said Sharis Pozen, acting assistant attorney general in charge of the DOJ's Antitrust Division, in a statement.

Optical disk drives are devices such as CD-ROMs, CD-RWs, DVD-ROMs and DVD-RWs that use laser light or electromagnetic waves to read or write data. They are often part of PCs and gaming consoles.

Park participated in the conspiracies as HLDS's vice president and chief marketing officer in charge of optical disk sales, the DOJ said. Park had responsibility for the company's Dell, Microsoft and HP accounts. Kim served as the company's team leader in charge of the HP and Dell accounts and as deputy chief marketing officer, and Hur served as a team leader, account leader and account manager for HLDS's HP account.

Dell hosted optical disk drive procurement events in which bidders would compete for Dell's business, the DOJ said. From about February to September 2009, Park and Kim participated in a series of meetings and conversations with co-conspirators to discuss bidding strategies and prices, the DOJ said.

From November 2005 to June 2009, Kim, Park, Hur and their co-conspirators met to determine bidding strategies and prices for disk drives at similar HP events.

And from about June 2007 to March 2008, Park and co-conspirators had meetings and conversations in Taiwan and South Korea to fix prices of optical disk drives sold to Microsoft. They also exchanged sales and pricing information to ensure they adhered to their agreement.

This is the DOJ's second round of charges from its ongoing investigation into the disk drive industry. In November, HLDS pleaded guilty in District Court in San Francisco to 14 counts of violating federal antitrust laws between 2004 and 2009. It also pleaded guilty to participating in a scheme to defraud in connection with an April 2009 procurement event. HLDS was sentenced to pay a $21.1 million fine.

Park, Kim and Hur were charged with multiple violations of the U.S. Sherman Act, which covers antitrust and anticompetitive activities.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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