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Record biz rips off UK – a history lesson

In the past, don't do it again

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Punters steal when they swap music over P2P services, right? So what is the music industry doing when it sends in the goons to stop retailers from importing CDs?

That's what happened in the UK, where the Office of Fair Trading has uncovered evidence of anti-competitive behaviour in the UK CD market.

It's a history lesson, the events took place two years ago: CDs were cheaper in mainland Europe than in the UK, maybe - the OFT has not nailed down the proof - because the music companies were charging higher wholesale prices in the UK than on the Continent.

The obvious thing then for retailers was to import CDs from Europe, enabling them to sell to the UK general public for up to £2 a pop less than UK-sourced product.

And what did the record companies do? Here is a list of practices, itemised by the OFT.

  • agreements with some retailers not to import - some offered retailers discounts and/or marketing and promotional support

  • favourable terms being given to retailers who didn't import - such as volume discounts set at such a level that they could not be achieved if significant numbers of CDs were imported

  • threats to retailers who did import that they would lose their discounts and marketing and promotional support.

The practices were in the past, there's no evidence that they are still happening and, besides, prices are more aligned with mainland Europe so there's little pressure for parallel importing, anyhow. The upshot is that the music majors, accounting for 75 per cent of the UK's annual £2bn CD sales, have escaped fines and referral to the Competition Commission.

But the OFT warns: "The major record companies - an international showcase for British talent - must not create barriers to international competition that harm British consumers. Free competition is the way forward, and the industry is on notice that the OFT will act if anti-competitive agreements are found in the future."

But they did create barriers, didn't they? Each CD that they successfully prevented being imported was £2 stolen from their paying customers in the UK. ®

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