A lawsuit that could involve millions of compact disc buyers accuses the nation's largest CD makers of scheming to keep prices artificially high over the past four years.
The lawsuit could result in tens of millions of dollars in damages against some of the biggest and most powerful music companies in the world.A law firm representing two CD buyers filed the lawsuit Monday and won immediate class-action status, which means other CD consumers can join. The suit does not specify how much it is seeking but limits each individual claim to $5,000.
CDs sell for maybe $11 to $15. The suit contends the companies propped up retail prices even though refinements in manufacturing and other improvements have cut the cost of making a CD from $3 in 1983 to less than $1 now.
The lawsuit was filed on behalf of anyone who bought CDs from any of the six companies after June 26, 1992.
The companies are: EMI Music Distribution; Sony Music Entertainment; Warner Elektra Atlantic Corp.; UNI Distribution Corp., a unit of MCA Music Entertainment Group; Bertelsmann Music Group; and Polygram Group Distributors.
"We believe that suit is wholly without merit, and beyond that we do not comment on matters involving litigation," said Dennis Petroskey, a spokesman for Bertelsmann.
Spokesmen for Sony, Polygram and Time Warner said their companies had not seen the lawsuit and couldn't comment.
Although people don't buy CDs directly from the manufacturers, the suit argues the manufacturers strong-armed stores into keeping prices high.
It contends the manufacturers kept stores in line by suspending some advertising assistance or cutting them off if they sold CDs below certain minimum prices.
The damage awards could be huge if the CD makers lose, said Michael Hausfeld, a Washington, D.C., lawyer representing the plaintiffs.