MAP-PING A COURSE
FOR CIVIL ACTION
According to its annual report, filed with the SEC Thursday (8/3), Sony Music was hit with about 80 class-action complaints, some seeking damages as high as $1.5 billion, following the MAP (minimum advertised price) settlement with the federal government (hitsdailydouble.com, 5/11, 5/17, 5/18). In addition, sources said, other members of the Big Five—WEA, BMG, EMI and UMG—were either named in or were familiar with the suits.
In order to ease combat with the plethora of litigants, the majors would like to corral all of the actions in an attempt to hasten talks among parties involved and bang out a settlement, label sources said late Thursday.
The civil suits against the majors were initiated by James John Retzlaff and David Jenkins "on behalf of California indirect purchasers of prerecorded music" in May, shortly after MAP policies were abandoned.
When FTC Chairman Robert Pitofsky made the agency's findings on MAP policies public, the major record groups braced themselves for what they felt was the inevitable—class action suits. And Pitofsky helped pave the way for such actions with a broad statement that said MAP policies had cost consumers $480 million since 1997.
The FTC's findings revealed and made public that the Big Five record groups had all signed some form of a consent decree saying that they would be dropping their MAP policies. The settlement in the antitrust case should result in significant price cuts for CDs, the FTC offered at that time.
Officials said the federal settlement completed a two-year investigation that found the companies used illegal marketing agreements to end a price war, inflate the prices of CDs and sharply restrict the ability of retailers to offer discounts. Included in the decision, officials estimated that consumers were overcharged more than $500 million over the last four years.
