COMPACT DISC SETTLEMENT YIELDS CHECKS FOR CONSUMERS, CDs FOR LIBRARIES AND SCHOOLS

Attorney General J. Joseph Curran, Jr. announced today that beginning tomorrow, checks in the amount of $13.86 will be sent to approximately 59,000 Maryland residents who filed claims under the settlement of an antitrust suit concerning alleged price-fixing by distributors and retailers of music compact discs.

Maryland and more than 40 other states and territories sued the distributors Bertlesmann Music Group, Inc., EMI Music Distribution, Warner-Elektra-Atlantic Corporation, Sony Music Entertainment, Inc., and Universal Music Group, and the retailers Transworld Entertainment Corporation, Tower Records and Musicland Stores Corporation for violating antitrust laws.

The settlement has three major components. The defendants are making cash payments totaling $67,375,000 nationwide, to be used primarily to compensate consumers who purchased pre-recorded music CDs from January 1995 to December 2000, and who filed valid and timely claims. The defendants are also providing approximately five and one-half million music CDs nationwide for distribution by State Attorneys General to charities, schools and public libraries. In addition, the defendants have agreed to an injunction which prevents them from making advertising funds to retailers conditional on advertising products for sale at a minimum price.

The suit, which was filed in federal court in New York in August 2000, alleged that the defendant distributors and retailers illegally conspired with one another to fix prices at which CDs could be sold to consumers. The illegal conspiracies allegedly grew out of the practice in the recorded music industry known as Minimum Advertised Price, or M.A.P., in which the distributors would pay for retailers’ advertising in local media, provided the retailers did not advertise CDs at a sale price below a minimum established by the distributor. The defendants denied the allegations in the suit.

“ I am pleased to be able to return value to Maryland consumers who paid higher prices for CDs as the result of the defendants’ wrongful Minimum Advertised Price policies,” Attorney General Curran said.

Although the court approved the settlement agreement in July 2003, distribution under the settlement agreement could not begin until the favorable resolution of a number of appeals. Preparations are being made to distribute more than 100,000 CD’s to public libraries, public schools, public colleges and universities, and community colleges throughout Maryland as early as April 2004.

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