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Justice Dept. Eyeballs Antitrust Implications of New Online Music Ventures

16 Oct, 2001 By: Hive News

The Justice Department is looking into developing ventures by the major record companies to see whether they might stifle competition in the soon-to-launch online music market, a department spokeswoman told the Associated Press on Tuesday.

Last week, recording companies, Internet firms and trade groups started receiving subpoenas calling for documents detailing how music is being licensed to Internet companies, according to the AP.

"The antitrust division is looking at potential anticompetitive practices and the competitive effects of certain joint ventures in the online music industry," Justice spokeswoman Gina Talamona told the AP.

The recording industry is on track to launch two rival online music subscription services later this year, pressplay, formed by Sony and Universal; and MusicNet, a partnership of the other three music majors - Warner, EMI and BMG.

Recording Industry Association of America spokeswoman Amy Weiss told the AP that the record trade group will comply with the Justice Department's request.

"We are confident that, once it has gathered the relevant facts, the department will conclude that our actions have been fully compliant with all applicable laws," Weiss told the AP.

MusicNet and pressplay also said they would cooperate with the inquiry. Seth Oster of pressplay told the AP that the company has been working with federal investigators for several months, and "all the steps have been taken all along the way to make sure our service and the space in general is pro-competitive."

The Justice Department's move comes after a similar investigation was initiated in June by European antitrust regulators, the AP said.

A judge hearing the Napster case in San Francisco helped fuel concerns about the ventures last week. U.S. District Judge Marilyn Hall Patel said MusicNet appears to be an anticompetitive business that "looks bad, sounds bad and smells bad."

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