The United States of America and the defendant, Elpida Memory, Inc. ("Elpida"), file this Joint Sentencing Memorandum in support of their recommendation that the Court sentence the Defendant to pay a fine of $84 million. The parties also request that sentence be imposed as soon as possible, but no later than March 22, 2006, based on the current record, without need of an evidentiary sentencing hearing or a presentence report.
On January 30, 2006, the United States filed an Information charging Elpida with one count of participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of DRAMto be sold to certain Original Equipment Manufacturer ("OEM") customers from on or about April 1, 1999, to on or about June 15, 2002, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1, and one count of participating in a conspiracy to submit collusive, non-competitive, and rigged bids to Sun Microsystems, Inc. on or about March 26, 2002, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. Elpida is scheduled to be arraigned on March 8, 2006. Elpida will waive indictment and plead guilty under Fed. R. Crim. P. 11(c)(1)(C).
The United States and Elpida jointly submit this Joint Sentencing Memorandum to request that the Court sentence Elpida on an expedited basis pursuant to Crim. L.R. 32-1(b). This memorandum also outlines the material terms of the Plea Agreement between the United States and Elpida, in the event the Court grants the parties' request to impose a sentence immediately on March 22, 2006, after accepting Elpida's guilty plea. In conjunction with this Joint Sentencing Memorandum, the United States and Elpida have filed a Stipulation and Proposed Order for Expedited Sentencing Under L.R. 32-1(b).
The United States and Elpida respectfully submit that this Memorandum and the Plea Agreement provide sufficient information for the Court to impose a sentence immediately without a presentence report. In addition, an expedited sentencing would accommodate Elpida's corporate representative. If the Court finds that the Plea Agreement and this memorandum do not provide sufficient information to allow for the imposition of sentence on the scheduled date of the plea hearing, the parties are prepared to submit additional information requested by the Court. A copy of the Elpida 11(c)(1)(C) Plea Agreement is attached as Exhibit A.
In conjunction with entry of the Elpida Plea Agreement and Joint Sentencing Memorandum, Hitachi, Ltd., and NEC Corporation have entered into Cooperation and Non-Prosecution Agreements with the Antitrust Division of the Department of Justice, which are attached as Exhibits B and C.
The material terms of the Elpida Plea Agreement include:
1. Elpida will waive indictment, waive all rights as enumerated in the Plea Agreement, and plead guilty under Fed. R. Crim. P. 11(c)(1) to a two-count Information charging it with participating in a conspiracy in the United States and elsewhere to suppress and eliminate competition by fixing the prices of DRAMto be sold to certain OEM customers from on or about April 1, 1999, to on or about June 15, 2002, (the "Relevant Period") in violation of the Sherman Antitrust Act, 15 U.S.C. § 1, and participating in a conspiracy to submit collusive, non-competitive, and rigged bids to Sun Microsystems, Inc. on or about March 26, 2002, in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. For purposes of the Plea Agreement, "DRAM" means dynamic random access memory semiconductor devices and modules, including synchronous dynamic random access memory ("SDRAM"), Rambus dynamic random access memory ("RDRAM"), and double data rate dynamic random access memory ("DDR") semiconductor devices and modules. The conspiracy in Count One of the Informationdirectly affected these OEMs in the United States: Dell Inc., Hewlett-Packard Company, Compaq Computer Corporation, International Business Machines Corporation, Apple Computer Inc., and Gateway, Inc. From April 1, 1999 until on or about March 1, 2001, Hitachi, Ltd. ("Hitachi") and NEC Corporation ("NEC"), corporations organized and existing under the laws of Japan, sold DRAM products into various markets, including the U.S. market. On December 20, 1999, Hitachi and NEC (collectively, "Corporate Founders") formed Defendant Elpida, a corporation organized and existing under the laws of Japan. The Defendant has its headquarters and principal place of business in Tokyo, Japan. Beginning on or about March 1, 2001, the Defendant sold DRAM products into various markets, including the U.S. market. During the Relevant Period, the sales of DRAM products directly affected by the conspiracy were as follows: NEC and Hitachi respectively sold $209 million and $113 million from April 1, 1999 through February 28, 2001; and Elpida sold $103 million from on or about March 1, 2001 through June 15, 2002; sales by Elpida and its Corporate Founders directly affected by the conspiracy aggregated $425 million.
2. The United States and Elpida agree that the appropriate sentence in this case is a fine of $84 million and a special assessment of $800. The fine is to be paid in full within 15 days of the imposition of sentence. Elpida agrees to have its sentence determined under the United States Sentencing Guidelines ("U.S.S.G." or "Guidelines"), although Elpida understands the Guidelines are advisory, not mandatory. The United States contends that had this case gone to trial, the United States would have presented evidence to prove that the gain derived from or the loss resulting from the charged offense is sufficient to justify a fine of $84 million, pursuant to 18 U.S.C. § 3571(d). For purposes of this plea and sentencing, the Defendant waives its right to contest this calculation.
3. The United States will not seek restitution in this case in light of the civil cases filed against Elpida, including In re DRAM Antitrust Litigation, No. M-02-1486-PJH, MDL No. 1486, in the United States District Court, Northern District of California, and DRAM Cases, No. CJC-03-004265, in the Superior Court, San Francisco, California, which potentially provide for a recovery of a multiple of actual damages.
4. The United States agrees that it will not bring further criminal charges against Elpida and its officers, directors, and employees (except for Choei Matsushima, Osamu Fujiwara, Akihiko Furusawa, Hiroshi Higuchi, and Dimitrios James ("Jim") Sogas who have been specifically excluded from the Plea Agreement) for their participation in the DRAM conspiracy. In return, Elpida and its executives agree to cooperate fully in the ongoing DRAM investigation. Elpida has already produced documents and made available some of its executives, in the United States and overseas, for extensive interviews by Division attorneys and agents. Moreover, Elpida has agreed to make many additional executives available to the United States for interviews and to produce documents located outside the country, which are beyond the jurisdictional reach of the government's grand jury subpoenas. The documents produced and interviews conducted, as well as additional proffered cooperation, have substantially assisted the Division in furthering its investigation.
UNITED STATES SENTENCING GUIDELINES CALCULATIONS
The parties agree to the following Sentencing Guidelines calculations, which are based on the DRAM sales in the United States to certain OEMs by Elpida and its Corporate Founders, which aggregate to $425 million:
The United States will move, pursuant to § 8C4.1 of the Sentencing Guidelines, for a downward departure from the minimum Guidelines fine to a fine of $84 million due to Elpida's substantial assistance in the United States' DRAM investigation. Additionally, Elpida has produced relevant documents from the United States and abroad, and has made available several employees for extensive interviews as a condition to the government entering into the Plea Agreement. The Elpida witnesses have advanced the government's investigation, and the Defendant has agreed to continue to assist in the government's investigation.
DATED: March 8, 2006