Samsung's DRAM Price Fixing Fine is a Whiff of Protectionism

by: The Stalwart

The Stalwart submits: While the markets nervously reacted to data showing inflation, last week, the markets missed the more ominous development, the Samsung price-fixing settlement, another sign of creeping protectionism. As Stephen Roach has reminded us several times, protectionism often precedes recession.

Is it obvious that Samsung's fine of $300 million dollars had not-so-subtle protectionist overtones? The charge was that Samsung, along with Hynix (also from Korea), and Infineon (from Germany) conspired to fix the prices of DRAM supplied to American PC makers. We're talking the memory business here, one of the most difficult areas of tech to make money, and these companies get charged for trying to avoid the always-brutal price wars?

The airlines get away with this all the time, only they don't "conspire". They just come out and say "we're raising prices, we hope the other will follow suit". And what about GM & Ford? Their incentives programs are always identical, and they both introduced the same employee discounts this summer, lifting them at around the same time. Come on. As a thought experiment, imagine if Toyota, Honda, and Nissan publicly co-ordinated price increases and cuts at the same time...do you think politicians would scream bloody-murder.

Although protectionism may satisfy some voters and politicians constituents, it is the wrong path to take. This investigation and subsequent settlement was a red-flag for the economy going forward.

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