DoJ investigates music companies for price fixing

[Ace Pace]

WSJ subscription required, thanks to Rthourmont for article

U.S. Opens Probe of Pricing
Of Online Music by Four Firms
By ETHAN SMITH
March 3, 2006; Page A12


Adding further scrutiny of the music industry's business practices, the U.S. Justice Department has opened an investigation into possible collusion in the ways the four global music companies set prices for online music, according to people familiar with the matter.

A Justice Department spokeswoman, Gina Talamona, said that antitrust enforcers are "looking into the possibility of anticompetitve practices in the music-download industry."

As part of the inquiry, which doesn't appear to be a criminal investigation, all four companies have either received so-called civil investigative demands, similar to subpoenas, or have been notified they will be receiving them soon. The investigative demands were sent out Monday.

People with knowledge of the investigation have said that it is similar in important respects to an inquiry already under way by the office of New York Attorney General Eliot Spitzer, which has issued two rounds of subpoenas since December. The companies involved are Vivendi Universal's Universal Music Group; Sony BMG, a joint venture of Sony Corp. and Bertelsmann AG; EMI Group PLC; and Warner Music Group Corp.

Depositions of music-industry executives have already been taken in the Spitzer investigation, people close to the inquiry said.

The investigations come at a delicate time for the music companies, which have only recently begun to come to grips with the need to embrace digital-music sales as CD sales dwindle. They consider the transition critical to their long-term survival.

The more recent set of subpoenas issued by Mr. Spitzer's office in February focused on so-called most-favored-nation clauses used by music companies in contracts with certain kinds of online music services, according to people in the industry. Online music retailers have complained that these clauses allow a music company to receive terms as favorable as any of its competitors, without actually having to negotiate the better terms itself.

Another area of possible interest is the notion of "vertical collusion" between retailers, like Apple Computer Inc., which sells songs online for 99 cents, and any given recorded-music company.

Whats suprising is that it's actully happening.

[Lord Zentei]

Excellent. What remains to be seen is how much will come of it.

[Rogue 9]

GLORY HALLELUJAH!

Sorry, that was just my first reaction.

[Darth Wong]

A few payoffs and this probe will quietly conclude that nothing took place.

[theski]

A few payoffs and this probe will quietly conclude that nothing took place.

You forgot the Hand waving in front of their faces..