Music groups settle on CD price-fixing

Leading music groups have been accused of CD price fixing

The world's five largest music companies and three biggest music retailers have agreed to pay $143m (£91m) to settle a two year CD price-fixing case, although they would not admit any wrong-doing.

The case was launched in the US in August 2000 as a lawsuit supported by most US states alleging that the music industry had artificially inflated CD prices between 1995 and 2000.

The music groups - Vivendi Music Group, Sony Music, BMG Music, Warner Music and EMI Group - along with the three retailers - Musicland Stores, Trans World Entertainment and Tower Records - were accused of using a practice known as "Minimum Advertised Pricing" (MAP).

MAP involved the music companies subsidising advertising for retailers to ensure they did not sell the CDs below a certain price.

" A landmark settlement"

The companies have not admitted they committed the offences, but said it was cheaper to settle the case than continue the costly litigation.

We believe our policies were pro-competitive and geared towards keeping more retailers, large and small, in business

Universal Music Group

They have agreed to pay $67m to compensate customers who bought the potentially overpriced CDs between 1995 and 2000.

The music groups and retailers will also donate $75m-worth of CDs to US public groups and non-profit organisations.

New York attorney general Eliot Spitzer described the case as "a landmark settlement to address years of illegal price fixing".

A ban on MAP

The companies involved issued statements saying they believed the MAP policies were legal.

The music groups argue that MAP made it possible for smaller retailers to compete on the same level as bigger groups who could otherwise use vast promotional price cuts to attract shoppers.

Universal Music, the world's largest music group, said: "We believe our policies were pro-competitive and geared towards keeping more retailers, large and small, in business."

Nonetheless, the music groups agreed to ban the MAP pricing policy in 2000 for seven years.