Three Korean executives of Hitachi-LG Data Storage Inc. have agreed to plead guilty, pay a $25,000 criminal fine, and serve prison sentences from seven to eight months in the United States for participating in bid-rigging and price-fixing for the sale of optical disc drives. This the second round of antitrust charges. In the first round, Hitachi-LG agreed to pay a $21 million criminal fine for 14 counts of antitrust violations and one count of wire fraud.
According to the US Justice Department’s press release, Young Keun Park, Sang Hun Kim, and Sik Hur (aka Daniel Hur) conspired with others (yet to be specified) “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” between November 2005 and September 2009.
While Park, Kim, and Hur are charged with multiple counts of antitrust violations, the press release does not clarify which of Hitachi-LG’s 15 criminal counts apply to them; however, by analyzing the timeline of criminal offenses, at least 5 counts do not pertain to them. In the plea agreement to the case, Hur, Kim, and Park agreed to aid the Justice Department on further investigations into the CD, DVD, and Blu-ray disc drive industry.
This is a follow-up agreement to the plea agreement between the US Justice Department and Hitachi-LG made on November 8, 2011. In the previous agreement, Hitachi-LG agreed to cooperate in future investigations in exchange to not be prosecuted in future cases that involved offences that occurred prior to the plea agreement; however, the agreement explicitly excluded Park, Kim, Hur, and Woo Jin Yang (aka Eugene Yang).
Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division stated “Today’s plea agreements demonstrate the Antitrust Division’s continued commitment to protect competition in the high tech industry…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.”
Park worked from November 2005 to September 2009 as vice president and chief marketing officer of optical disk drive sales for Hitachi-LG Data Storage, supervising the Dell, Microsoft, and HP accounts. Kim was the deputy chief marketing officer and, at various times, team leader of the HP and Dell accounts from November 2005 to September 2009. Hur, at various times, worked the team leader, account leader, and account manager of the HP account from November 2005 to June 2009.
From November 2005 to June 2009, Kim, Park, and Hur met with co-conspirators to determine bidding strategies and prices for optical disk drives at HP procurement events where suppliers are awarded contracts. In these meetings, the exchanged information on sales, market share, and pricing. From June 2007 to March 2008, Park met with co-conspirators in Taiwan and the Republic of Korea to fix the prices of optical disk drives sold to Microsoft. From February 2009 to September 2009, Park and Kim met with co-conspirators to discuss bidding strategies and prices of optical drives at Dell procurement events.
These cases are 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.
Here is a timeline of criminal offenses stated in the Hitachi-LG plea agreement with just the approximate date, name of the victimized company, and the optical drive involved:
June 2004 – Dell, 48x Combo Drives
August 2004 – Dell, HH CD-RW
September 2004 – Dell, Slim 24x Combo Drive
November 2004 – Dell, HH DVD-ROM
March 2005 – Dell, Slim CD-ROM
November 2005 – HP, CD-ROM, CD-RW, DVD-ROM, and Combo Drives
August 2006 – HP, HH PATA and SATA DVD-ROM
June 2007 – Microsoft, DVD-RW
August 2007 – HP, Lightscribe DVD-RW
May, August, and November 2008 & February 2009 – HP, HH SATA DVD-RW
July & October 2008 – HP, 12.7mm SATA DVD-RW
Supplemental October 2008 – HP, 12.7mm SATA DVD-RW
February 2009 – Dell, HH SATA Tray DVD-RW
April 2009 – HP, Wire fraud offense
May 2009 – Dell, HH DVD-RW and 12.7mm Tray DVD-RW