The Federal Trade Commission has begun an investigation
into the pricing policies of the six major record companies,
Reuters reports. According to unnamed industry sources, the FTC last
month commenced a preliminary probe into the rules by which record companies
provide retailers with advertising cash and free products, as well as into
whether the corporations have created an artificial price floor.
industry's six major labels include Time Warner Inc., Polygram NV, Sony Corp.,
Universal Music Group (owned by Seagram Co. Ltd.), Bertelsmann AG, and EMI
Music. Collectively these companies have seen sales drop in recent years, a
result of both overstocked retailers and vicious price wars.
investigation follows by only seven months a similar inquest into the $12
billion industry, which was terminated without FTC action after three
The Federal Trade Commission is the same agency that brought the
"payola" scandal to light during the 1950s. Payola involved labels trading cash
and gifts to radio DJs in return for station airtime.