September 30, 2002

BIG NEWS ON THE RECORD-COMPANY PRICE-FIXING FRONT: Here’s a press release I just got by email from the Tennessee Attorney General. It’s not on their website yet, (UPDATE: Now it is) as far as I can tell:


Tennessee Attorney General Paul G. Summers announced today that five of the largest U.S. distributors of pre-recorded music CDs and three large retailers agreed to pay millions of dollars in cash and free CDs as part of an agreement on price-fixing allegations.

The companies will pay $67,375,000 in cash, provide $75,500,000 worth of music CDs, and not engage in sales practices that allegedly led to artificially high retail prices for music CDs and reduced retail competition as part of the agreement. Tennessee’s share is an estimated $993,948 in cash and $1,507,852 in CDs.

“The lawsuit and settlement demonstrate our commitment to halting corporate misconduct,” Attorney General Summers said. “Such illegal activity causes our citizens to pay higher prices and distorts our free market economy.”

Tennessee, along with 41 other states and three territories filed an antitrust lawsuit in federal court in August, 2000. The lawsuit alleged the five music distributors (including their affiliated labels) and three large music retailers entered into illegal conspiracies to raise the price of pre-recorded music to consumers. The defendants in the lawsuit are music distributors Bertelsmann Music Group, Inc., EMI Music Distribution, Warner-Elektra-Atlantic Corporation, Sony Music Entertainment, Inc., Universal Music Group and national retail chains Transworld Entertainment Corporation, Tower Records, and Musicland Stores Corporation. The defendants deny these allegations.

You bet they do. I suspect that this is just scratching the surface. Can you say RICO? And where’s the United States Department of Justice on this issue?

UPDATE: Well, this makes being wrong worth it: The Tennessee Attorney General’s office emails me to note that actually the feds were on the case first — and, get this, refers me to this post on Blogcritics for more information on the subject. Is that cool, or what?

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