Compact disc prices to be scrutinised again

THE compact disc industry is to be scrutinised by the Office of Fair Trading to see whether prices are unjustifiably high.

Sir Bryan Carsberg, who became director general of the OFT in June, is to examine whether regulatory action is needed only months after his predecessor, Sir Gordon Borrie, gave the industry a clean bill of health.

In a letter to Nigel Griffiths, a Labour spokesman for consumer affairs, Sir Bryan said that he wanted to look at the evidence. It is believed Mr Griffiths had approached the OFT saying that there was widespread dissatisfaction with the conclusions of the earlier investigation.

The British Phonographic Industry reacted angrily yesterday. John Deacon, the director general of the BPI, said: 'We earn valuable foreign currency for the UK economy and British music and musicians are widely respected around the world. It is unfortunate that such success, from one of Britain's leading cultural industries, is not better understood at home.'

In April, Sir Gordon wrote to the BPI saying that he could see little reason why CD prices were so high, but that consumers appeared willing to pay the prices charged. He concluded that there was no monopoly in the business and no evidence of collusion between CD producers or retailers.

The manufacturing cost of a CD is about pounds 1 yet the retail price can be pounds 12.99 or more. The BPI said that such comparisons were a 'nonsense' as the price of signing up a new act and relasing a new CD album could be pounds 250,000.

In the first quarter of this year, the average retail price of a CD was between pounds 8 and pounds 9 with 'bargain basement' CDs reportedly selling for as little as pounds 2.99. But the price to the trade was pounds 5.34 compared with pounds 3.70 for a vinyl LP and pounds 3.72 for a cassette. Retail prices tend to be about 60 per cent higher than trade prices because of distribution costs and the profit margins taken by the retailers.

The higher CD prices are causing concern as they persist even though CDs are no longer an elitist product. In the 12 months ending in March this year, British sales of CDs reached 64.2 million, overtaking cassette sales of 63.8 million. Sales of vinyl LPs dwindled to 11.1 million in the same period.

This is in contrast with the picture two years earlier, when vinyl sold 35.4 million and cassettes 80.9 million, compared with CD sales of 44.6 million.

Although Sir Bryan will look first at the evidence already collected, the fresh approach was warmly welcomed by consumer groups. The Consumers' Association said: 'Its very good news indeed and suggests the OFT does believe there are new angles to explore.'

But a spokesman for the BPI said: 'The industry has alreday been cleared by Sir Gordon and I cannot see that any new evidence has come to light.'

Sir Leon Brittan, the European competition commissioner, confirmed yesterday that the EC saw no need for a formal investigation of the CD business. But he added: 'The commission remains alert to the possibility of anti- competitive behaviour in relation to compact disc prices.'

He said the commission had powers to take action if enough evidence emerged of foul play.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Technical Author / Multimedia Writer

Negotiable: Recruitment Genius: This recognized leader in providing software s...

Recruitment Genius: Clinical Lead / RGN

£40000 - £42000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: IT Sales Consultant

£35000 - £40000 per annum: Recruitment Genius: This IT support company has a n...

Recruitment Genius: Works Engineer

Negotiable: Recruitment Genius: A works engineer is required in a progressive ...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent