Bulcao, et al v Sony BMG, Universal Music, Time Warner, Bertelsmann, and EMI
Class Action Lawyer Claims Record Companies Fix Prices for Online Music
San Diego class action 'heavyweight' lawyers filed a complaint in federal court accusing major music labels of fixing prices for Internet music downloads and CDs. Lawyers that filed the suit claim that record labels Sony BMG, Universal Music, Time Warner, Bertelsmann, and EMI conspired from the 1990s to 2001 to block the growth of online music downloads to protect their high-profit CD sales.
The suit filed on behalf of Dennis Bulcao and 10 other consumers and 'every other person who has paid inflated prices for online music and CDs' says the labels fought online music distribution because it eliminates many of costs that inflate CD prices. Filed in a federal court in San Francisco, the suit follows a U.S. Department of Justice investigation into the pricing of online music and collusion among the major labels on how songs are sold over the Internet. The suit alleges that the record labels "use their market power to coerce online music retailers to sign "most favored nation" agreements that specify that the retailers must pay each of the defendant labels the same amount. By setting a wholesale price floor at $0.70 per song, defendants have fixed and maintained the price of online music at supracompetitive levels," the suit says.
The suit does not name the Recording Industry Association of America as a defendant, but does call the industry organization a co-conspirator for allegedly providing the labels with a forum to coordinate the alleged scheme to curb the development of online music, recent reports claim.
The suit also alleges that the record labels sought to shut down online music pioneer Napster at the same time they were introducing their own joint ventures to sell online music. MusicNet and pressplay "were not serious commercial ventures, but rather attempts to occupy the market with frustrating and ineffectual services in order to head off viable Online Music competitors from forming and gaining popularity after Napster's demise," according to the suit.
