August 10, 2000 10:45

US STATES TAKE COMPANIES TO COURT OVER CD PRICES

[b]Warner Bros[/b], [a]Sony[/a], [b]Universal[/b], [b]BMG[/b] and [b]Capitol[/b] are in the dock...

Twenty-eight US states are suing the five biggest record companies in the country, alleging they have illegally set CD prices too high.

New York State Attorney General Eliot Spitzer filed the suit in Manhattan Federal Court on Tuesday (August 8), naming Warner Bros, Sony Music, Universal, BMG and EMI/Capitol in the action.

The claim alleges that since 1995 the companies have conspired to keep prices artificially high. In return for retailers agreeing to maintain a pre-determined minimum price they helped subsidise advertising costs. The labels are said to have introduced the practice to combat the prices of discount retailers like Wal-Mart and Kmart, who helped prices plunge from $15 to $10 in the early '90s.

Spitzer claimed that the record label's practice had cost fans almost $500 million. He added that they hadn't decided yet on the level of damages that will be sought.

www.mtv.com reports Sony and Universal offering "no comment," while EMI/Capitol say "the claims are without merit".

In May this year, the five major label groups agreed to end all M.A.P. (Minimum Acceptable Pricing) programmes in which stores were required to advertise CDs at or above a set price in return for promotional funding.