EU Delving Into Studios' DVD Pricing in Europe12 Jun, 2001 By: Hive News
The European Commission is investigating whether Hollywood movie studios are charging consumers artificially high prices for DVD movies in Europe, reports Tuesday's Los Angeles Times.
The inquiry into DVD pricing practices by Vivendi Universal, Twentieth Century Fox, AOL Time Warner Inc., Walt Disney Co., MGM, Sony Corp. and Paramount Pictures was announced Monday by European Union.
The inquiry was triggered after "a significant number" of complaints from consumers, said Mario Monti, the EU's competition commissioner.
The studios and DVD player manufacturers have carved the world into six markets, and DVDs sold in Europe are encoded and can be used only on DVD players sold in Europe. So a consumer in Western Europe could not play a DVD purchased in the U.S., Latin America or Eastern Europe.
This price-coding "system could be used as a smoke screen to allow [film production companies] to maintain artificially high prices or to deny choice to consumers," Monti said Monday.
Studios wouldn't comment on the EU inquiry, according to the Times, except for Disney, which released a statement saying the company would cooperate with the EU.
Consumer groups say Europeans must pay around $17 to $27 per DVD, while prices in the United States range between $15 and $25.
U.S. DVD pricing structures differ from company to company, while theatrical movie, DVD and videocassette release dates vary from country to country -- which is why the geographic coding system was developed. If found guilty, the studios could face fines of up to 10% of their annual DVD sales in Europe.
In a separate finding, the Australian Competition and Consumer Commission last month found that the DVD coding system "is a mechanism to allow price discrimination."
The coding system was a technological solution that gave studios the ability to ensure that DVDs available in the U.S. were not prematurely released before DVDs were released in the local country. But in Australia, the government's consumer watchdog group found that DVDs sold in the U.S. for about $20 sell for the equivalent of up to $26 in Australia, said the Times.