Record companies warned on CD imports
No current pressure on retailers says OFT
September 19 2002
The Office of Fair Trading has warned record companies against putting pressure on UK retailers over cheap CD imports.
The warning follows an OFT investigation into the price of CDs, which can be considerably more expensive in the UK than in Europe, the USA and eleswhere.
An investigation into the CD market found some evidence of past anti-competitive behaviour, but the OFT has concluded that there is no current evidence that the law is being broken.
It warns “it will keep a close watch on developments and may take action if evidence is found of unlawful anti-competitive behaviour in the future.”
The investigation examined allegations that the major record companies were trying to stop parallel imports of CDs from other
European countries into the UK, to keep prices higher. The OFT found that certain record companies had engaged in practices designed to slow down imports from mainland Europe.
Combined with a reduction in value of the pound against the Euro, UK wholesale CD prices are now more in line with those elsewhere in Europe, “and firm evidence has not been produced to show that retail prices for CDs are now systematically higher in the UK,” said the OFT.
The UK CD market has also been changed by increased competition from retailers such as Tesco, which said this week it has grown its share of chart music sales to 13 per cent.
Past record company practices identified by the OFT included agreements with some retailers not to import in retunr for retailers discounts or marketing and promotional support, favourable terms being given to retailers who didn’t import, and threats to retailers who did import that they would lose discounts and other support.
“The OFT does not have evidence that these agreements or practices are continuing,” said the report. The OFT has concluded that there is not a strong case for a reference if the majors are no longer putting pressure on retailers not to import. John Vickers, Director General of Fair Trading, said: “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.”
