U.S. Reportedly Opens New Music Probe

The Federal Trade Commission, which has a long history of monitoring the music business, has launched another probe of the pricing policies of the six major record labels, industry sources said. “All six labels got an FTC notice last month saying it was opening a preliminary inquiry into minimum advertising price policies,” said one executive with a major label. The FTC declined to comment, but record industry sources said the agency is investigating the policies under which labels allocate cooperative advertising dollars and free goods to retailers and whether record companies were creating an artificial floor on prices. Spokespersons at the major labels, including Time Warner Inc., Sony Corp., Seagram Co.’s Universal Music Group, PolyGram, Bertelsmann and EMI Music were either unavailable or declined to comment. The inquiry comes at a time when the $12-billion recording industry is facing lagging sales amid overcapacity at the retail level and cut-throat price wars. Industry sources said the FTC’s latest inquiry comes just seven months after it ended a similar three-year inquiry that resulted in no agency action. Before the latest inquiry, the industry had faced several lawsuits alleging CD prices were inflated.