The Commission vote to accept the proposed consent agreements was 5-0. The five Commissioners issued a statement in which they said: "The Commission has unanimously found reason to believe that the arrangements entered into by the five largest distributors of prerecorded music violate the antitrust laws in two respects. First, when considered together, the arrangements constitute practices that facilitate horizontal collusion among the distributors, in violation of Section 5 of the Federal Trade Commission Act. Second, when viewed individually, each distributor's arrangement constitutes an unreasonable vertical restraint of trade under the rule of reason.
"In the future, the Commission will view with great skepticism cooperative advertising programs that effectively eliminate the ability of dealers to sell product at a discount. The Commission will, of course, consider per se unlawful(1) any arrangement between a manufacturer and its dealers that includes an explicit or implied agreement on minimum price or price levels, and it will henceforth consider unlawful arrangements that have the same practical effect of such an agreement without a detailed market analysis, even if adopted by a manufacturer that lacks substantial market power."
An announcement regarding the proposed consent agreements will be published in the Federal Register shortly. These agreements will be subject to public comment for 30 days, until June 9, after which the Commission will decide whether to make them final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commissioners statement referenced above states:
- Statement of Chairman Robert Pitofsky and Commissioners Sheila F. Anthony, Mozelle W. Thompson, Orson Swindle, and Thomas B. Leary
In the Matter of Time Warner Inc.;
In the Matter of Sony Music Entertainment Inc.;
In the Matter of Capitol Records, Inc., d.b.a. "EMI Music Distribution";
In the Matter of Universal Music & Video Distribution Corp.
and UMG Recordings, Inc.; and
In the Matter of BMG Music, d.b.a. "BMG Entertainment"
File No. 971-0070
Article comments
1 - Corey Fleischer
Great article! How does one go about filing for any reimbursement as a result of this development?
Corey Fleischer
Public Safety Commissioner
Redondo Beach, CA
2 - Eric Olsen
HI Corey, thanks! I lived in Redondo for several years in the '80s. Unfortunately, the period for participating in this settlement was up last year and I believe the money has been disbursed, although I could be wrong about the latter.