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FTC voices disapproval of Viv U’s Tenor pricing

Commish orders cease, desist on price fixes

The Federal Trade Commission dealt Vivendi Universal a little chin music Monday, ruling that the French media giant’s music division unfairly fixed prices on an album by the Three Tenors released jointly with AOL Time Warner.

Ruling affirmed a decision last year by an administrative court judge that Warner Music and Polygram — the predecessor of Universal Music Group — erred in barring discounts and ads for prior Tenors albums to clear the field for the latest release.

The release in question captured a live concert by the Three Tenors — Luciano Pavarotti, Placido Domingo and Jose Carreras — at the 1998 World Cup soccer final in Paris.

The venture had split revs for the release between the two companies, and the FTC argued that the labels were concerned that recordings of similar World Cup Final perfs in 1990 and 1994 would eat into sales of the current disc.

The companies’ move to stop ads and discounts was “inherently suspect, because experience and economic learning consistently show that restraints of this sort dampen competition and harm consumers,” chairman Timothy Muris wrote in the FTC opinion.

The FTC ordered that Vivendi U cease and desist from planning or implementing any agreements that fix prices or constrain marketing and promotion of any audio or video products sold in the U.S.

AOL TW agreed to settle the matter after the administrative law decision in 2002.

But Vivendi U, reasoning that the infraction happened before U Music bought Polygram, disputed the ruling. And the company’s tune didn’t change after Monday’s FTC filing.

“We strongly disagree with the decision of the FTC and we intend to vigorously pursue this matter through appeal,” Universal Music said.

Ruling didn’t kick up too much of a fuss for Vivendi U on Wall Street on Monday — the company’s New York-listed shares edged up 0.5% on light trading volume to finish at $18.60.

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