Yesterday, Sir Bryan Carsberg, Director General of Fair Trading, said his office had decided to refer Britain's pounds 1.2bn record industry to the MMC because record companies' use of copyright laws to ban the import of cheap CDs 'may be frustrating competition'.
His decision comes hard on the heels of the report from the National Heritage Select Committee this week, which was very critical of CD prices. The MPs, chaired by Gerald Kaufman, aimed to discover why CD prices were up to one-third lower in the United States than in Britain.
'The evidence and the report have confirmed my view that the market for recorded music merits examination by the MMC,' Sir Bryan said.
'I hope they will consider in particular whether copyright, which is a reward for innovation and creativity, is being used in such a way as to restrict, distort or prevent competition.'
Britain's copyright laws disallow imports of recorded music from outside European Community countries. The companies say that if this is changed, the market will be flooded with Taiwanese products.
The Consumers' Association said it was 'delighted' by the referral, and Stephen Locke, director of policy, demanded a change in copyright law.
John Deacon, the director general of the British Phonographic Industry, which represents 150 British companies, said: 'Following the blatantly prejudiced attitude of the Kaufman committee towards this industry, we will now take the opportunity to put our case to unbiased professionals who have a reputation for impartiality.'Reuse content