Between 1995 and 2000 music companies were found to have used illegal marketing agreements such as
minimum advertised pricing to artificially inflate prices of
compact disc
The compact disc (CD) is a Digital media, digital optical disc data storage format that was co-developed by Philips and Sony to store and play digital audio recordings. In August 1982, the first compact disc was manufactured. It was then rele ...
s in order to end price wars by discounters such as
Best Buy
Best Buy Co. Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. Originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music, it was rebra ...
and
Target
Target may refer to:
Physical items
* Shooting target, used in marksmanship training and various shooting sports
** Bullseye (target), the goal one for which one aims in many of these sports
** Aiming point, in field artillery, fi ...
in the early 1990s. It is estimated customers were overcharged by nearly $500 million and up to $5 per album.
In August 2000, the
Federal Trade Commission
The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...
opened an investigation into
price fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
leading to decreased competition and reduction of discounting among music distributors and retailers.
This was followed by Florida and New York under Attorney General
Eliot Spitzer
Eliot Laurence Spitzer (born June 10, 1959) is an American politician and attorney. A member of the Democratic Party (United States), Democratic Party, he was the 54th governor of New York from 2007 until his resignation in 2008.
Spitzer was b ...
leading a lawsuit by 41 states against the music industry. A settlement in 2002 included the music publishers and distributors;
Sony Music
Sony Music Entertainment (SME), also known as simply Sony Music, is an American multinational music company. Being owned by the parent conglomerate Sony Group Corporation, it is part of the Sony Music Group, which is owned by Sony Entertainment ...
,
Warner Music
Warner Music Group Corp. ( d.b.a. Warner Music Group, commonly abbreviated as WMG) is an American multinational entertainment and record label conglomerate headquartered in New York City. It is one of the " big three" recording companies and t ...
,
Bertelsmann Music Group
Bertelsmann Music Group (BMG) was a division of a German media company Bertelsmann before its completion of sale of the majority of its assets to Sony Corporation of America on 1 October 2008. Although it was established in 1987, the music com ...
,
EMI Music
EMI Group Limited (originally an initialism for Electric and Musical Industries, also referred to as EMI Records Ltd. or simply EMI) was a British transnational conglomerate founded in March 1931 in London. At the time of its break-up in 201 ...
,
Universal Music
Universal Music Group N.V. (often abbreviated as UMG and referred to as just Universal Music) is a Netherlands, Dutch–United States, American multinational Music industry, music corporation under Law of the Netherlands, Dutch law. UMG's cor ...
as well as retailers
Musicland
The Musicland Group, Inc. was an entertainment company that ran Musicland, Sam Goody, Discount Records, Suncoast Motion Picture Company, On Cue, and the Media Play Superstore Chains. The Musicland Group was purchased by Best Buy in 2001 at the he ...
,
Trans World Entertainment
Kaspien Holdings, Inc. (formerly Trans World Entertainment) is an American company that provides software and services for ecommerce. Kaspien Holdings operates on Amazon in the United States, Canada, United Kingdom, Spain, France, Italy, Germany ...
and
Tower Records
Tower Records is an international retail franchise and online music store that was formerly based in Sacramento, California, United States. From 1960 until 2006, Tower operated retail stores in the United States, which closed when Tower Records ...
. In restitution, for
price fixing
Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...
they agreed to pay a $67.4 million fine and distribute $75.7 million in CDs to public and non-profit groups but admitted no wrongdoing.
See also
*
Price fixing cases
This is a partial list of notable price fixing and bid rigging cases.
Australia
Airlines
The Australian Competition & Consumer Commission (ACCC) has taken several airlines to the Federal Court of Australia seeking penalties for alleged price fi ...
References
{{reflist
Anti-competitive practices
Corporate scandals