BBC News Online: Business

CD price fix probe launched

The EC fears that companies - including EMI, Time Warner, Sony, Bertlesmann and Universal - are sharing information in order to set prices artificially high.

This would mean that European shoppers are forced to pay higher prices while the CD sellers collect increased profits.

Suspicions about the alleged cartel were raised when the EC was examining the proposed merger between Time Warner and EMI.

Data collection

The merger plans were abandoned when the competition commissioner Mario Monti expressed his view that too few companies would have too much control over prices.

Mr. Monti's staff are now collecting data and taking statements to determine whether the companies from the blocked merger, and others, are colluding to ensure that European CD prices stay high.

Letters have been sent not only to record companies, but also to five Internet and 13 conventional retailers.

Global problem

A similar scandal has already been dealt with in the US.

The US competition body, the Federal Trade Commission, found five companies guilty of price-fixing last May, at an estimated cost to shoppers of $480m since 1997.

The EC has the power to fine companies found guilty of price-fixing up to 10 percent of their turnover.

A timeframe for the investigation has yet to be announced since the enquiry is still occurring at an informal level.