The five top United States distributors of compact
discs and three large music stores have agreed to pay $143 million in cash and
CD’s to settle charges of price fixing authorities announced yesterday (September
30.)
Bertelsmann Music Group, EMI Music Distribution,
Warner-Elektra-Atlantic Corporation, Sony Music Entertainment, Universal Music
Group, Trans World Entertainment, Tower Records, and Musicland Stores, a division
of Best Buy Co. Inc. each agreed to the terms of the settlement, which was filed
by Attorney General’s of 41 states in the U.S. who said that the record companies
conspired with distributors of music to boost prices of CD’s between 1995 and
2000.
The lawsuit claimed that the majors, who were
upset with the low prices charged by some retail stores, acted together with
major chain stores to set CD prices at a minimum level, thus raising the prices
consumers paid for CD’s.
The lawsuit said that the labels broke state
and federal antitrust laws, which cost consumers millions of dollars. Consumers
who bought CD’s between the time from of 1995 to 2000 can file claims to be
compensated prosecutors said. Public Service Announcements will be produced
to inform consumers on how to file the claims.
5.5 million CD’s valued at almost $80 million
dollars must also be distributed to public companies and nonprofit organizations
in each state to promote music programs.
"This is a landmark settlement to address
years of illegal price-fixing,” New York State Attorney General Eliot Spitzer
said. "Our agreement will provide consumers with substantial refunds and
result in the distribution of a wide variety of recordings for use in our schools
and communities.”
Despite settling, the major labels completely
denied any wrong doing. "We have made a business decision to settle these
matters and avoid continuing with expensive and protracted litigation,"
Warner-Elektra-Atlantic said. "The settlement made sense to us from a business
perspective, and enables WEA to put this matter behind us.”
Trans World Entertainment spokesman John Sullivan
added, "We were wrongly accused and nobody admitted any wrongdoing.”