Government investigation of the six major record companies is continuing with the Federal Trade Commission and Justice Dept. conducting separate probes of pricing and overseas video distribution policies.
The FTC’s Dallas office last month sent letters informing the companies “that it was opening a preliminary inquiry into minimum advertising price (MAP) policies,” said one executive with a major label.
The FTC declined comment, but record industry sources said the agency was investigating the policies under which labels allocate cooperative advertising dollars and free goods to retailers and whether record companies were creating an artificial floor to prices.
Spokesmen at Time Warner Inc., Sony Corp., Seagram Co. Ltd.’s Universal Music Group, Polygram NV, Bertelsmann AG and EMI Music were either unavailable or declined comment.
In a separate inquiry, the Justice Dept. won a court order earlier this year requiring the six major recording companies to surrender documents on how programmers such as MTV are charged for music videos distributed overseas.
The ruling in January from U.S. District Judge Harold Greene in Washington gave new life to an investigation begun in 1994 into the industry’s use of overseas groups, called “performance rights societies,” to sell rights to music videos.
Investigators are trying to determine whether the societies have acted as “price-fixing cartels” and whether they have “impeded” the export of U.S. music videos, according to Justice Dept. records included in the court case.
The recording giants tried unsuccessfully to block the Justice Dept.’s probe, arguing it did not have authority to review overseas practices.