The Big Five settle price-fixing case (1 Viewer)

[Brian Perry]

http://www.chicagotribune.com/busine...siness% 2Dhed
One has to wonder whether the entire point of this lawsuit was to enrich a bunch of attorneys or to promote Spitzer's future career. $67 million to be paid to consumers who purchased CDs from 1995 to 2000 comes to what--about 2 cents per consumer? (Or less.)

 

[John Kotches]

Is this before or after the lawyers' fees?

Regards,

 

[Brian Perry]

John,

I'm not sure. But Spitzer's quote said that consumers would see a "substantial" refund. Sure, $67 million, in and of itself, is certainly substantial. But when it gets split up into a billion pieces, I can't see it amounting to anything on a per-consumer basis. I've purchased over five hundred CDs over the last six years, and I'd be surprised if I were entitled to more than $10 (probably a coupon and only after filling out a mountain of paperwork...does anyone even keep receipts for CDs?).

By the way, I don't even believe the Big Five are guilty of what they are accused. I'm just saying that it's a meaningless settlement for anyone other than Spitzer and the lawyers (and the defendants, of course).

 

[Brian Perry]

The other thing that's fishy is the "5.5 million CDs valued at $75 million" that will be given to schools to promote musical education. Which CDs are these, exactly? The rejects no one wants? Even they were brand-new-in-demand CDs, valuing them at $13.76 per unit is very misleading. That would be the retail price, which is irrelevant in this case.

 

[Benson R]

What I don't get about all this is the record companies claim that they do this to benefit the smaller retailers. The record companies are right, they have no incentive to set a MAP since the their fee is the same irregardless. But I see no benefit to smaller stores. They have no choice but to sell at MAP because they need their advertising subsidized but the department stores don't need all the advertising material and then can still undercut the record store's prices.

 

[Lee Scoggins]

Is this before or after the lawyers' fees?

Good question.
If its like the tobacco legislation, it will mean pennies for consumers.
Big Deal.

 

[Thomas Newton]

Sure, $67 million, in and of itself, is certainly substantial.

Not if the amount of the overcharges was in the neighborhood of $480 million, as some posts I have seen elsewhere suggest. Then the settlement would become a slap on the wrist, as the defendants walked away with $350+ million in their pockets.

 

[Michael Reuben]

Is this before or after the lawyers' fees?

The case was brought by government officials. Unless some of them hired private law firms (which Spitzer did not), it's unlikely that there will be significant fees awarded.

M.