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Brussels inquiry into price of CDs

Music companies are suspected by the European Commission of keeping prices deliberately high  

LONDON, England (CNN) -- The European Commission is to launch an investigation into suspected price fixing of CDs in the European Union.

An EC spokeswoman confirmed on Friday that an inquiry would begin into the world's leading music companies suspected of fixing artificially high prices in the EU.

The British Consumers' Association welcomed the news and said it was a sign regulators were putting the interests of consumers ahead of those of major companies.

The Commission has sent letters to the five biggest companies, EMI Group, Bertelsmann, Time Warner, Sony, and Vivendi Universal in relation to the inquiry, spokeswoman Amelia Torres said.

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The investigation follows an agreement last year between the U.S. Federal Trade Commission (FTC) and the major music companies to end policies which the commission claimed had led to higher CD prices.

"We welcome the Commission's move as a clear signal that European regulators are finally putting the interests of Europe's consumers ahead of global companies," the Consumers' Association's Principal Policy Adviser Phil Evans said.

"The Consumers' Association, like many of its sister organisations in Europe, have complained about price discrimination in the CD market for years."

"Labels have divided up the world market and priced to whatever level each market bears. Unfortunately it appears they have also been able to discourage parallel trade in their goods which means that they effectively decide what the market bears," Evans said.

He added that the Consumers' Association expected that companies found guilty of a price fixing policy would be forced to pay heavy fines.

"If the Commission does find evidence of cartel behaviour we would expect severe fines to be levied."

Torres said the investigation, which still has no evidence against the companies, was triggered by the similar probe into the same companies last year by the U.S. Federal Trade Commission. The FTC estimated during the inquiry that the policies had forced U.S. consumers to pay as much as $480 million more than they should have for CDs and other music.

The agreement placed a seven-year ban on permitting the recording companies from offering "minimum advertising price" (MAP) programmes to retail record stores.

Under the programmes, music producers pay some or all of the costs for retail music stores to advertise particular albums. In return, the record stores agree to advertise the albums for a set price and no lower.

U.S. States charge Big Music with price-fixing
Aug. 9, 2000
FTC forces music CD pricing reform
May 10, 2000

The European Commission

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