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Attorney General Lockyer Announces Mailing of Refund Checks for CD Buyers
(SACRAMENTO) – Attorney General Bill Lockyer today announced 385,637 California consumers soon will receive refund checks of $13.86 from the settlement of a multi-state price-fixing lawsuit against five of the country's largest music compact disc (CD) distributors and three national retail chains.
"The refunds provide a measure of much-deserved justice to consumers in California and across the nation who were gouged because of the defendants' deals to stifle competition and artificially inflate music CD prices," said Lockyer. "Just as important, the settlement reforms the companies' business practices to ensure they do not similarly victimize consumers and harm the marketplace in the future."
Lockyer said the refund checks to Californians, and more than 3 million other consumers nationwide, will be mailed starting tomorrow. The refunds will go to consumers who filed a claim under the settlement, and who bought CDs from retailers from January 1, 1995 through December 22, 2000. Nationwide, the consumer refunds total $67.4 million.
The settlement also requires the defendants to provide free of charge 5.6 million CDs, with an estimated value of $77 million, to support music programs. In California, roughly 665,000 CDs valued at approximately $9 million will be distributed to public schools, colleges and libraries, starting in May.
The antitrust lawsuit was brought by Lockyer, and the Attorneys General of 39 other states and three territories. The defendant-companies include: music distributors Bertelsmann Music Group, Inc., Capitol Records, Inc. (EMI Music Distribution, Virgin Records America, Inc., and Priority Records, LLC), Warner-Elektra-Atlantic Corporation, Sony Music Entertainment, Inc., Universal Music Group; and national retail chains Transworld Entertainment Corporation, Tower Records, and Musicland Stores Corporation.
The complaint alleged the defendants entered illegal conspiracies to set minimum prices for CDs. Under the alleged scheme, the music distributors subsidized the promotional costs of selling CDs for retailers who agreed to charge minimum advertised prices, which were dictated by the distributors. To prevent similar misconduct in the future, the settlement requires the defendants to reform their business practices.
Among other provisions, the settlement bars the defendants from entering agreements designed to maintain or control the price at which retailers can sell music CDs. Additionally, the settlement prohibits the distributors from terminating business with dealers or retailers who fail to sell music CDs only at suggested retail prices.
Besides California, other states and territories that entered the settlement include: Alabama, Alaska, Arizona, Arkansas, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, Northern Mariana Islands, Puerto Rico and the Virgin Islands. Private class counsel represented consumers in other states, who also will receive refunds.
Distribution of the refund checks will be handled by a national claims administrator. Claimants can obtain information about their claims at http://www.musiccdsettlement.com.