NEW YORK (AP) - The five top U.S. distributors of compact discs and three large music retailers have agreed to pay $143 million in cash and CDs to settle charges they cheated consumers by fixing prices, authorities announced Monday.

The settlement brings to a close accusations made by attorneys general of 41 states and commonwealths who accused record companies of conspiring with music distributors to boost the prices of CDs between 1995 and 2000.

The companies broke state and federal antitrust laws, costing consumers millions of dollars, the attorneys general had charged in a lawsuit filed in August 2000 in U.S. District Court in Manhattan and later moved to Portland, Maine. A judge there must approve the deal.

The settlement calls for $67.3 million cash to be distributed to the settling states to compensate consumers who overpaid for CDs during the period and to pay settlement administration costs and attorneys' fees.


Consumers who bought CDs between 1995 and 2000 can file claims for part of the fund, prosecutors said. Public announcements will be made later to inform consumers how to participate in the payout.

The settlement also requires 5.5 million CDs valued at $75.7 million to be distributed to public entities and nonprofit organizations in each state to promote music programs.

The settlement will be distributed according to state population, although attorneys in the case are still working to determine a formula. New York, for example, will receive about 6 percent of the settlement.

Consumers in all 50 states will benefit under terms of the settlement, New York State Attorney General Eliot Spitzer said in a statement.

"This is a landmark settlement to address years of illegal price-fixing," Spitzer said. "Our agreement will provide consumers with substantial refunds and result in the distribution of a wide variety of recordings for use in our schools and communities."

The music distributors participating in the deal are Bertelsmann Music Group, EMI Music Distribution, Warner-Elektra-Atlantic Corporation, Sony Music Entertainment and Universal Music Group.

"We deny any wrongdoing," Warner-Elektra-Atlantic said in a statement. "We have made a business decision to settle these matters and avoid continuing with expensive and protracted litigation. The settlement made sense to us from a business perspective, and enables WEA to put this matter behind us."

Nathaniel Brown, a Bertelsmann Music Group spokesman, noted that the settlement does not state that there was any wrongdoing. He said the company maintains that its pricing practices were "appropriate and lawful" throughout the period.

Sony declined to comment. EMI and Universal did not immediately return telephone messages for comment.

Also included in the deal were three national retail chains: Trans World Entertainment, Tower Records, and Musicland Stores, a division of Best Buy Co. Inc.

Dawn Bryant, a spokeswoman for Musicland, said the company had no immediate comment. Trans World Entertainment spokesman John Sullivan said, "We were wrongly accused and nobody admitted any wrongdoing." Tower Records did not immediately return messages.

The lawsuit alleged that the companies - upset with low prices charged by some stores - conspired with retailers to set music prices at a minimum level, effectively raising the retail prices consumers paid for CDs.

The conspiracy caused the elimination of price discounting and significantly reduced price competition among music retailers, Spitzer said.



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This is absurd...its not like people are forced to buy CD's. There's no need for a lawsuit here.

But indeed, that is why people download songs.

teller said:

People aren't forced to buy gas or travel by airplane, either, yet antitrust laws exist for these products/services as well. Plus many more. When the big guys get together are eliminate competitive pricing, the little guy gets screwed. They're taking away all the benefits of capitalism.

oh, 4LOVE, where did you get this article?

Funny how they say it was from 1995 to 2000 while i'm still going to Sam Goody and the prices are up to $19.99 for a single CD...??

BTW, $143 million to the big 5 co's are hardly a hit they're worried about. They basically won that decision, esp as prices have continued to skyrocket.

tommyalma said:

Just because anti-trust laws exist does not make them right. Competition can come from anywhere, even from outside the country, and strike down the arrogant. Anti-trust law if simply awful...Microsoft is under attack from Apple, Sun, and Linux and then here comes Uncle Sam screaming "monopoly!" Meanwhile, Sun comes under attack for pricing too high, then for pricing too low (or was it vice versa?)!!!

Telecom companies weren't allowed to merge for fear of monopoly, and now they're bankrupt because there were too many competitors laying too much fiber in the ground, destroying pricing power. Some monopolies!

You let uncle sam decide what's fair and you're gauranteed that all parties involved will get screwed, especially the poor taxpayer who now forks over nearly half his/her income for all this "help."

(stepping down off soapbox now...)

Asswipes.

There is a big difference between Microsoft being successful and corporations banding together to increase profits.

teller said:

erm... there is no competition when there are trusts. that's why we have anti-trust laws

AaronForever said:

So once a company eliminates the competition, that's it? No further competition will ever emerge from anywhere? What is this, magic?

Tell that to the phone companies after totally losing out to satellite, cable, and wireless. Tell that to IBM in the 80's, when it totally lost control of the PC market.

But don't tell that to the postal service, or amtrak, or the public school systems, monopolies all--these are protected by law. Where are the anti-trust suits in these areas?

Anti-trust law...phffft!!!

teller said:

public schools? that's not a business. treating it as such will only throw them further into turmoil.

as for competition arising... hey, guess what? that telecomm bill in 1996 which actually promotes trusts, mergers, and whatnot, is what's brought about this "competition" you speak of. and it's not competition. because they're all inter-owned. you might say that they're trusts...

AaronForever said:

They are a TRUE monopoly, invulnerable to attack, unlike TRUE businesses. I was trying to paint the distinction.

Inter-owned?! You can't just make shit up.

As for the telecomm bill, it forced the big guys to give bandwidth away for far less than cost, which created bunches of artificial competitors...not all what the free market would have produced, and not at all germaine to the subject at hand, which is whether or not the market winner is automatically given magical powers just by being successful as posted above by others.

So long as economic ignorance reigns, so shall we drift toward destruction...

tommyalma said:

I got the article from iwon.com.
Btw.I think it's up to the public to control all this price gouging.Supply and demand.If they are willing to pay it then comp[anies are more than willing to charge it.

teller said:

it's the technology that's competing. not the companies. it's the same companies dominating everything.

the 96 telecom bill should be thrown out