Universal Music Group and Warner Music Group are more than friendly competitors, in the view of the Federal Trade Commission. They are also partners in crime, according to charges filed against the two on July 31 in New York.The FTC has charged that the two partners in the 1998 joint-venture release of The Three Tenors Live In Paris conspired to fix prices on the disc. The agency determined that Warner Music, a subsidiary of AOL Time Warner, and Vivendi Universal's UMG agreed to suspend promotion and discounting of previous Three Tenors releases to maximize the profits on the latest release.The Three Tenors series features Luciano Pavarotti, Placido Domingo, and Jose Carreras singing together in World Cup soccer championship venues. By classical music standards, the project has been a successful one, with the first release, The Three Tenors in Concert (Rome, 1990), having sold more than three million copies to date in the US alone. The second release, recorded in Los Angeles in 1994, has sold 1.5 million copies. The most recent, The Three Tenors Live in Paris (July, 1998), has sold 300,000 so far, according to figures published in the Wall Street Journal. (To put these numbers in perspective, "boy band" 'N Sync's new album Celebrity sold 1.9 million copies during its first week.)
The first Tenors disc was released by Polygram, now owned by Universal Vivendi; the second, by Warner. The two companies agreed to a joint release for the Paris recording, and apparently decided that any marketing or discounting efforts for its predecessors could hinder sales of the new release. The decision was based on the fact that the first album was substantially discounted at the time the second one was released, likely cutting into its sales.The agreement (a "moratorium on competition," in the FTC's words) violated federal antitrust law, the FTC believes, citing memos wherein Polygram agreed not to discount the 1990 album from August 1 to October 15, 1998 (the release period for the Paris recording) and Warner agreed to do the same for the 1994 version. The incriminating documents were found during an FTC probe of Warner Music's aborted merger with EMI, according to FTC investigators. Warner Music has agreed to a settlement with the federal agency, but Universal will contest the charges, according to reports appearing late in the first week of August. "We are very disappointed that the FTC is pursuing this issue," said a Universal spokesman. "We disagree that any unlawful activity occurred and we intend to defend our position."
