US major labels have been slammed with a class action suit claiming price fixing for downloads and CDs.
The suit has been filed by San Diego lawyer William Lerach. He accuses Sony BMG, Universal, Warner, Bertelsmann and EMI of deliberately attempting to prevent the development of legitimate online music service.
The labels then "conspired to fix and maintain" prices once legitimate service appeared, the suit claims, according to Red Herring.
The class action emerges as the US Department of Justice and the New York Attorney's office have both launched separate investigations to determine if the majors have been colluding over download prices.
Lerach alleges that the majors "use their market power to coerce online music retailers to sign most-favoured nation" agreements that specify that the retailers must pay each label the same amount.
"By setting a wholesale price floor at $0.70 per song, defendants have fixed and maintained the price of online music at supracompetitive levels," Red herring reports.
Meanwhile litigation-crazy labels with large legal budgets continue to pursue the alleged file-sharers among their customers through the courts, forcing the accused to pay for costly legal action or to settle out of court in order to clear their name.