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Friday, February 9, 2001
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UK launches competition inquiry into CD market
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"...Britain launched a competition inquiry on Friday into the country's compact disc market, joining European regulators in raising suspicions that major record companies overcharge music lovers. The Office of Fair Trading will investigate Universal Music UK , EMI Records UK & Ireland, BMG International UK & Ireland , Warner Music UK, Virgin Records, independent distributor Pinnacle Records and Sony. It said there were reasonable grounds to suspect the companies had acted together to stifle competition by restricting CD imports into Britain from other EU states, where prices generally undercut Britain.
The world's five biggest music companies - EMI, BMG, Warner Music, Sony and Universal - already face scrutiny from the European Commission which said last month it was investigating whether they colluded with retailers over CD prices. German music fans generally pay about 35 marks ($16.49) for a newly-released top 10 CD, compared to a UK average of about 15 pounds ($21.67). Parisians, meanwhile, can expect to pay around 120 French francs ($16.86).
The investigations come at a sensitive time for EMI and Bertelsmann, who are trying to merge their music businesses after EU opposition sank earlier EMI plans to link up with Warner Music.
"The inquiry will consider whether the way in which the record companies have responded to imports of cheaper CDs from elsewhere in Europe into the UK amounts to a breach of the Competition Act 1998" the OFT said in a statement. It can penalise companies found guilty of breaching the act by imposing penalties of up to 10 percent of UK turnover for every year of the infringement for a maximum of three years.
The Consumers' Association, which represents consumers' interests, welcomed the inquiry and accused the music industry of having "blatantly and abusively overcharged UK consumers. UK consumers have paid far too much for far too long for CDs and we have never accepted that there is a good reason for this"''. The OFT has asked the companies, along with retailers and wholesalers, to hand over information to investigators by February 23. The inquiry is expected to last six months..."
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