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Former Micron exec to plead guilty for obstruction

A recently departed regional sales manager for memory chip maker Micron Technology agrees to plead guilty to trying to obstruct an investigation into price fixing, the DOJ says.

A recently departed regional sales manager for memory chip maker Micron Technology has agreed to plead guilty to trying to obstruct an investigation into price fixing, the U.S. Department of Justice said Wednesday.

Alfred Censullo, who until the plea bargain served as Micron's regional sales manager for upstate New York, was charged in U.S. District Court in San Francisco with obstructing justice by altering and concealing documents containing competitor pricing information. The documents had been requested in a federal grand jury subpoena. IBM was a customer in Censullo's territory.

The plea bargain comes out of an investigation that began in 2002 and focused on whether the large memory manufacturers moved prices in concert. A number of memory manufacturers had struggled with profitability for several years. Then, in late 2001, memory prices began to climb--a rarity.

While some attributed the price hike to shortages, others, such as Michael Dell, speculated that some companies were engaged in "cartel-like" behavior.

Micron is one of the two largest memory manufacturers in the world and is the only major memory maker left in the United States. The company's rise to prominence has been fueled in part by acquisitions of memory-making facilities from Texas Instruments and Toshiba. It also tried to buy Hynix Semiconductor, the weakened memory division of Hyundai. Micron's main rival is Samsung.

In June 2002, a federal grand jury in Northern California issued a subpoena to Micron. After the subpoena was served, Censullo allegedly altered his handwritten notes relating to telephone conversations among Micron sales managers discussing price recommendations for dynanic RAM, the most common type of memory used in servers and PCs at the time. The notes also contained reference to what competitors were selling DRAM for, according to the charges in the plea bargain.

Additionally, the charges state that Censullo removed and initially concealed 14 pages from notebooks that contained competitor pricing information. The Justice Department alleges that these changes were done to disguise the nature, source and accuracy of the information.

The maximum penalty involved is 10 years and a $250,000 fine. The Justice Department said Censullo agreed to plea-bargain to the charges, but it is not clear when the final deal will be put in writing.

Micron spokesman David Parker said that in light of the plea bargain, the company has accepted Censullo's resignation. Parker emphasized that the plea bargain relates to obstruction of justice and not to any alleged violation of antitrust law and that the conduct outlined in the charges against Censullo runs contrary to specific instructions from Micron, which is cooperating in the industrywide investigation.

Censullo is also not part of management, Parker added. Micron has about 50 regional sales managers.

It is unclear which companies the Justice Department believes may have coordinated pricing. Historically, Micron has been at odds with foreign manufacturers and accused them of dumping products in the United States at below manufacturing costs. Micron executives at conferences have even joked about the company's litigious strategies.

"The Antitrust Division will proceed aggressively against those who obstruct grand-jury investigations and attempt to prevent the division from detecting and prosecuting price-fixing conspiracies," R. Hewitt Pate, assistant attorney general in charge of the Antitrust Division, said in a statement.