Class Action Lawsuit Alleges Price-Fixing Scheme Carried Out By DRAM Manufacturers

Class Action Lawsuit Alleges Price-Fixing Scheme Carried Out By DRAM Manufacturers

A class action lawsuit filed Friday alleges that Samsung, Hynix, and Micron — three of the largest DRAM manufacturers in the world — colluded to limit supplies of the memory type and drive up the prices of their products, according to 9to5Mac.

Photo: Getty

The suit, filed in the US District Court for the Northern District of California by the Hagens Berman law firm, claims that the scheme resulted in “illegally inflated prices” for devices that employ DRAM. The suit seeks to secure a settlement for anyone in the United States who purchased a device using DRAM between July 1, 2016 and February 1, 2018.

The primary evidence cited in the case is an independent investigation conducted by Hagens Berman, which claims to have discovered an agreement between the tech manufacturers designed to raise the price of DRAM, an increasingly common memory type found in millions of devices.

Throw a stone in your local electronics store (don’t, you’ll break something and they will make you pay for it) and you’ll hit a device that uses DRAM. It’s used in Android smartphones, Windows laptops, MacBooks, iPhones, gaming consoles, you name it.

According to the law firm, there was a 47 per cent spike in the price of DRAM in 2017 — the largest such increase in nearly 30 years. Prior to last year, the price of DRAM actually dropped year after year, by about three per cent between 2012 and 2017 and by an average annual rate of 33 per cent between 1978 and 2012, according to IC Insights.

The vast majority of the DRAM market is controlled by Samsung, Micron, and Hynix. The three companies combined to ate up 96 per cent of the market share for the memory type in 2017.

The demand for DRAM skyrocketed by 77 per cent last year, after having dropped by eight per cent in 2016. That at least in part plays into the suggestion that the three companies colluded to create a limited supply in the market in order to increase demand and crank up their prices.

“What we’ve uncovered in the DRAM market is a classic antitrust, price-fixing scheme in which a small number of kingpin corporations hold the lion’s share of the market,” Berman, managing partner of Hagens Berman, said in a statement. “Instead of playing by the rules, Samsung, Micron and Hynix chose to put consumers in a chokehold, wringing the market for more profit.”

The law firm of Hagens Berman is no stranger to taking on DRAM manufacturers. The attorneys pursued a similar lawsuit in 2006 and won more than $US300 ($396) million.

Class action suits are the Hagens Berman specialty, and the law firm isn’t afraid to embrace that. The Hagens Berman Twitter handle is @ClassActionLaw, and the law firm claims to have secured more than $US260 ($343) billion in settlements for consumers.

Scrolling through the litigation pursued by the law firm is an exhausting exercise. Just since the start of the new year, Hagens Berman has been behind suits filed against Apple, Facebook, Tesla, six major hotel chains, BMW, and Harvey Weinstein.

It’s worth noting that while class action lawsuits can be a valuable way to hold accountable companies that try to cheat consumers, it’s not a great way to actually compensate the victims. A 2013 study conducted by the law firm Mayer Brown found the majority of payouts from class action suits don’t go to the class. In two cases studied by the firm, less than one per cent of the winnings went to consumers.

Most class action suits don’t even go to trial, either getting dismissed or settled before reaching that point.

No one is going to shed tears for Samsung, Micron, or Hynix if the companies have to empty some change from their pockets to pay for the alleged price fixing. Just don’t expect to get the cost of your smartphone covered by the case.

[9to5Mac, Forbes]

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