Music shops sound a monopolistic note

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MUSIC shops are the most monopolistic of any retail sector, with just two companies accounting for almost half the pounds 1.6bn sales of pre-recorded tapes, records, compact discs and videos, according to a new report, writes Patrick Hosking.

The WH Smith group - which owns the Our Price chain, has a half share in Virgin Retail and also sells music through its WH Smith outlets - now controls 28.3 per cent of the market.

Kingfisher-owned Woolworth has another 18.9 per cent. The only other substantial player is HMV, owned by Thorn-EMI, with 10.2 per cent, according to the consultants Verdict Research.

Verdict's senior analyst Hilary Monk said: 'I can't think of another sector where you've got two players accounting for such a big chunk of the market.

'The major retailers do influence each other's prices significantly and there has been a tendency to move in line together,' she said. However, there was no evidence of collusion to fix prices.

Last month the new director- general of fair trading, Sir Bryan Carsberg, re-opened an investigation into CD prices after a rash of fresh complaints.

Kevin Hawkins, head of corporate communications at WH Smith, said recorded music was dominated by six big international publishers. 'Concentration among suppliers tends to encourage concentration among retailers. It's about bargaining power and economies of scale.'

Smith, which is expected to report today a healthy increase in annual pre-tax profits to about pounds 114m, is thought to have seen sluggish sales of music and DIY products this year.