The industry's three largest music retailers and five biggest record companies are paying $67.4 million in cash and $75.7 million in CDs to settle a two-year-old case that equates minimum-advertised-price (MAP) policies with price fixing.
The suit, led by New York and Florida and joined by 43 other states and U.S. territories, charged that MAP programs violated federal and state antitrust laws by artificially inflating the price of CDs between 1995 and 2000.
The record labels — BMG, EMI, Sony, Warner and Universal — and the merchants — Best Buy's Musicland chain, Tower Records, and Trans World Entertainment, which operates FYE, Coconuts and other stores — agreed to end MAPing under the settlement, but did not admit any wrongdoing.
But the states argued that labels would withhold lucrative advertising allowances from retailers that broke MAP, virtually assuring that they wouldn't.
"This is a landmark settlement to address years of illegal price fixing," said New York State Attorney General Eliot Spitzer.
The cash settlement will be divided among the states and commonwealths, while the CDs will be distributed to public entities and nonprofit groups in all 50 states.
The companies settled a similar case with the U.S. Federal Trade Commission in May 2000, in which they agreed to end MAP programs for seven years but paid no damages nor admitted any wrongdoing.