Mar 13, 2006 • 1 min read

Labels face lawsuit over digital price fixing allegations

San Diego lawyer William Lerach has filed a civil suit accusing major labels and parent companies of conspiring to fix digital music prices, alongside ongoing investigations.

Talking of the Recording Industry Association Of America, no comment from them as yet on all this, though it might be that their lawyers (and certainly the lawyers of their key members) have got something bigger to worry about than file sharing kids in the coming months.

With both New York Attorney General and the US Department Of Justice investigating the major record companies over allegations of uncompetitive practices in the digital music domain, now San Diego based lawyer William Lerach has launched a civil lawsuit against the major labels and some of their parent companies accusing them of price fixing.

According to a report in Red Herring magazine, Lerach's lawsuit says that SonyBMG, Universal Music, Time Warner, Bertelsmann and EMI worked together to try and stop the online music market from emerging and, once the market did in fact start to grow, "conspired to fix and maintain" prices.

Lerach's suit also accuses the majors of using its market power to force 'most favoured nation' clauses onto the download companies. These clauses - which mean that record companies are guaranteed to share any benefits negotiated by their rivals - are said to be at the heart of Spitzer's investigation. The Attorney General is reportedly of the opinion that such clauses in this context violate American competition laws.

Of course all this talk of price fixing is interesting given that many execs in the major record companies reckon that the '99 cents / 79 pence for any track' pricing model that was essentially launched by Apple is actually not sustainable for the music business in the long term which means that, if the major record companies are guilty of price fixing, they fixed the price too low. Which is a bit odd.

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