FTC ACCUSES WARNER, VIVENDI OF PRICE FIXING

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(July 31, 2001) -- Three tenors may be OK, but the Federal Trade Commission is taking issue with the two music companies promoting the sale of music from a televised Paris 1998 concert by Luciano Pavarotti, Placido Domingo and Jose Carreras.

The FTC today accused AOL Time Warner's Warner Communications and several subsidiaries of Vivendi Universal S.A. of price fixing.

The FTC said Warner and PolyGram (Vivendi's predecessor) formed a joint venture in 1997 to distribute music from the concert by the "Three Tenors," with Warner handling U.S. sales and PolyGram overseas sales. The two companies agreed to split profits and also issue a "best of" box set that combined music from the Paris concert with earlier recordings.

The FTC said Warner and PolyGram, concerned that the Paris concert would be as commercially viable as recordings already on the market, had illegally agreed to a 10-week moratorium on discounting or advertising other Three Tenor products. The FTC said the action was illegal.

Warner has agreed to settle the case by stipulating that it would not take such actions again, but Vivendi hasn't and faces an administrative trial. -- Ira Teinowitz

Copyright July 2001, Crain Communications Inc.

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