CD distribs sued

Complaint alleges price-fixing by firms

The six major distributors of compact discs have been hit with yet another class-action suit claiming they have conspired to fix prices.

The suit mirrors previous claims filed in other jurisdictions, including Tennessee and Illinois, but nothing has yet come of any of the suits.

This time, Third Street Jazz and Rock Holding Corp., a Philadelphia company, claimed in a complaint filed in U.S. District Court in Los Angeles that the record companies dominate the industry and “collectively function as a highly concentrated, tightly knit oligopoly.”

According to the suit, the defendants — EMI Music Distribution, Sony Music Entertainment Inc., Warner Elektra Atlantic Corp., Universal Music and Video Distribution, Bertelsmann Music Group Inc. and Polygram Group Distribution Inc. — account for more than 80% of CD sales to retailers and other direct purchasers. This suit, like the others, said the companies have conspired since at least June 1991 to maintain CD prices at artificially high levels.

News of the suit being filed came too late Tuesday to reach any of the companies for comment.

The complaint noted that the costs of manufacturing CDs has gone down during that period while prices have risen, and that Italian affiliates of five of the defendants were found guilty of price-fixing in Italy last October.

The suit asks for treble damages and an injunction against continuation of the conspiracy. The complaint seeks class-action status on behalf of all U.S. purchasers of CDs from the defendants (excluding government agencies and affiliates of the defendants).

The Federal Trade Commission has been investigating record company pricing practices off and on for several years.

In April of this year, the FTC’s Dallas office sent letters informing the companies it was conducting a preliminary inquiry into pricing policies.

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