NMa: Consumers Can Benefit from Large Price Differences between CDs

The retail prices of CDs in the Netherlands are relatively high compared to other European countries, but the prices per title very considerably within the Netherlands. Consumers who are prepared to compare the CD prices of various stores can benefit from these price differences. This is apparent from the sector scan of the CD branch carried out by the Netherlands Competition Authority (NMa). The average variation in the price of a CDs in the shops that were investigated, in other words the average difference between the highest and the lowest prices for a CD, amounts to more than EUR 14.

In a exploratory analysis of the Dutch CD sector, NMa analysed its market structure and price formation. In addition, NMa investigated the extent to which price formation with regard to CDs in the Netherlands deviates from that in other countries. It appears from this that the Dutch CD sector has a number of special characteristics which result in relatively high retail prices in the Netherlands, such as the large number of retail outlets, the large proportion of small-scale retailers, the limited size of the Dutch market (high distribution costs, low economies of scale) and the lower proportion of national pop music (which on average is cheaper than international pop music, the most commonly sold genre in the Netherlands).

The sector scan did not give NMa any concrete reason to suspect that record companies have entered into illegal price agreements with regard to the sale of CDs. The considerable spread in consumer prices also gives NMa little reason to assume that record companies dictate the sales prices charged by retailers for their CDs or that the retailers enter into price agreements at the national level. NMa has therefore decided not to start a competition investigation into cartel agreements in the sector. NMa will remain alert to reports which may indicate an infringement of the Competition Act, after which NMa may yet decide to carry out an investigation.

NMa has informed the Minister of Economic Affairs, Mr Hoogervorst, of its findings in a letter. This letter and the report of the sector scan can be obtained from NMa's website.