Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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Attorney General Announces $142 Million CD Antitrust Settlement

September 30, 2002

Attorney General Hardy Myers today announced that five of the largest U.S. distributors of prerecorded music compact discs (CDs) and three large retailers have agreed to pay millions of dollars in cash and music CDs and change their misleading sales and advertising practices that led to artificially high retail prices for music CDs.

Named in an antitrust lawsuit filed in federal court in August 2000 and in today's settlement are music distributors Bertelsmann Music Group, Inc., EMI Music Distribution, Warner-Elektra-Atlantic Corporation, Sony Music Entertainment, Inc., Universal Music Group and national retail chains Transworld Entertainment Corporation, Tower Records, and Musicland Stores Corporation. The defendants deny these allegations.

"Corporate misconduct causes Oregon consumers to pay higher prices at the check-out counters and creates an uneven playing field on which our businesses have to compete," Myers said. "The economy is rocky enough without our citizens and business owners having to put up with unlawfulness."

The defendants agreed to pay $67,375,000 in cash, provide $75,700,000 worth of music CDs, and not engage in sales and advertising practices that allegedly violated antitrust laws. Oregon will receive approximately 60,000 CDs with an estimated value of more than $700,000. In August 2000, the Federal Trade Commission (FTC) resolved a similar case involving the same distributor defendants' alleged minimum advertising policies but did not include monetary relief.

Oregon, along with 39 other states and three territories, filed an antitrust lawsuit in federal court that same month. The remaining jurisdictions were represented in the case by class counsel. The lawsuit alleged that the defendants entered into illegal conspiracies to raise the price of prerecorded music to consumers. The plaintiffs also alleged that price competition among music CD retailers was reduced as a direct result of the conspiracy.

Today's settlement has three major components:

  • Sales Practice Changes. Defendants have agreed to an injunction preventing them from forcing retailers to increase CD prices and ensuring strong price competition between defendants.
  • Consumer Compensation. The $67,375,000 will be used for consumer compensation, charitable purposes, or some combination of both. Notice of how to file a claim will be provided to the public at a later date.
  • CDs for Charitable Groups. Defendants will provide approximately 5,500,000 music CDs (valued at more than $75 million) for distribution by the state attorneys general to not-for-profit corporations, charitable groups and governmental entities such as schools and libraries for the benefit of all consumers in each state.

Consumers wanting information on consumer protection in Oregon may call the Attorney General's consumer hotline at (503) 378-4320 (Salem area only), (503) 229-5576 (Portland area only) and toll-free at 1-877-877-9392. Justice is online at www.doj.state.or.us.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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