Millions of U.S. music fans will soon begin receiving refund checks as part of a $143 million settlement of a price-fixing lawsuit against five distributors and three retailers.
Checks for $13.86 each were mailed out Friday to about 3.5 million consumers who bought CDs, vinyl records or cassettes between 1995 and 2000 and filed refund claims by last March.
Attorneys general for 43 states and territories filed the antitrust lawsuit in 2000, alleging the companies conspired to illegally raise the prices of their products by imposing minimum pricing policies. All the companies denied any wrongdoing.
"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 California Attorney General Bill Lockyer, adding that 385,637 Californians were slated to receive checks.
About $47.4 million was being paid in consumer refunds. The companies were also giving 5.6 million music CDs, worth about $77 million, to libraries and schools across the country. About $20 million of the final settlement was used to pay for attorneys' fees and other administrative costs, said Tom Dressler, Lockyer's spokesman.
Starting in May, California's public schools and libraries are to receive about 665,000 CDs valued at about $9 million, Lockyer said.
A federal judge in Portland, Maine, approved the settlement in December. Defendants included Sony Music Entertainment, EMI Music Distribution, Warner-Elektra-Atlantic Corp., Universal Music Group and Bertelsmann Music Group, as well as retailers Tower Records, Musicland Stores and Transworld Entertainment.
The settlement barred the companies from entering into any agreements to control the price retailers sell their CDs. The companies also can't refuse to deal with retailers who opt to sell their CDs below their suggested price.
The states and territories that were a party to the settlement are: Alabama, Alaska, Arizona, Arkansas, California, 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.
