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the issues > Record companies accused of anti-competitive behaviour
The issues Record companies accused of anti-competitive behaviour In September 1999, the Australian Competition and Consumer Commission (ACCC) began legal proceedings against Universal Music, Sony Music, Warner Music and Music Industry Piracy Investigation Pty Ltd (MIPI), alleging breaches of sections 45, 46 and 47 of the Trade Practices Act.Expected to be heard in early 2001, the case concerns alleged conduct involving attempts by the record companies and MIPI to deter or prevent Australian retailers and wholesalers from obtaining and selling parallel imports, which would provide competition for their own product in the Australian market. Parallel imports are sound recordings produced overseas with the permission of relevant copyright holders in the source country, but imported into Australia without the permission of the local copyright holders. Such imports have been legal since amendments to the Copyright Act came into force in July 1998. Before the 1998 amendments, music retailers in Australia could only source CDs and cassettes from the Australian copyright holders, principally the five major multinational record companies. Under the Copyright Act at that time, the record companies had a monopoly right to import. The amendments have opened the local market to competition from alternative sources of imported product. It is alleged that Sony, Warner and Universal engaged in exclusive dealing with the purpose or effect of substantially lessening competition (s.47) and took advantage of their market power to deter retailers from engaging in competitive conduct (s.46), by variously requiring retailers to obtain their sound recordings exclusively from them and not acquire parallel imports, either as a condition for receiving more favourable terms of trade and/or potentially or actually refusing to supply them. It is further alleged that Universal and Warner entered into agreements with their Indonesian counterparts to try to stem the supply of parallel imports to Australia; and that Sony and MIPI entered an agreement to work together to stop the supply of parallel imports to Australia. This case is an interesting and important one, both for the future competitive role of parallel imports in Australian markets (the Federal Government has proposed further opening Australian markets to parallel imports of books and computer software) and for the development of trade practices law in Australia. It is the latest of a number of recent cases brought both by the ACCC and private parties under section 46 of the Trade Practices Act. NECG is providing economic advice to the ACCC. To explore more: .... on parallel imports (please note external links)
.... on section 46 of the Trade Practices Act (please note external links)
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