MAP GETS RIPPED
Souces say the Universal Music Group was the last to sign on Friday (4/28). With all five music groups on board, the FTC will make the decree public within two weeks and take "public comment" on it for the next 30 days. About two weeks after that, the decree takes effect.
Warner Music Group made headlines a few weeks ago when they included in their annual 10K report (filed with the SEC) the fact that they had already signed such an agreement with the FTC back in January.
MAP policies were put in place in the mid-'90s to stop retailers from using CDs as a loss leader, withholding co-op advertising funds from any retailer advertising product under a set price. Although most retailers (not all) hailed the policies as a savior, the FTC viewed the practice as price-fixing.
What's next? Besides the fact that Britney Spears' new CD is bound to be offered by some retailer for below cost, also now expect a flurry of civil suits to begin. One insider tells us that the consent decree, by its very nature, can be construed as "an admission of guilt by the Big Five," i.e., that they were indeed involved in price fixing. The majors had to weigh the possible expense of a prolonged legal battle with the FTC (if they didn't sign the decree) against the threat of civil suits that are now bound to be brought against them by enterprising law firms looking to get in the middle of a possible settlement.
So it looks as though a price war is not the only battle that's about to be waged.
