"...In an action that could lower music CD prices, the five major music distributors on Wednesday settled federal charges they inflated the prices Americans pay for their favorite compact discs. Under the agreement, the five companies will discontinue minimum advertised price programs that forced retailers to sell music CDs at or above a set level in return for getting substantial funding to underwrite their advertising. The programs cost consumers $480 million over the last three years, the Federal Trade Commission estimated. Under the consent agreement, Universal, Sony, Time-Warner, EMI Music and Bertelsmann Music Group will be barred from using minimum price programs for the next seven years.
In return, the government agreed not to seek damages for past prices and did not require the companies to make any admissions of wrongdoing, officials said. Violations of the FTC order formalizing the consent agreement could result in a fine of $11,000 each.
The government contended the distributors and retailers wanted to keep CD prices high to avoid a repeat of the price wars of the early 1990s when consumers paid as little as $9.99 for some popular CDs. The average CD now costs $14 to $17. That's as much as 30 percent to 50 percent more than a cassette tape with identical content..."