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Amazon investigated over cut-price CDs

Owen Gibson
Wednesday January 7, 2004

Amazon.com, the biggest online retailer in the world, is being investigated by the UK record industry as part of a bid to stop consumers buying cheap CDs imported from abroad.

Record industry trade body the British Phonographic Industry is looking at whether the US website breaks the law by selling American CDs to UK consumers at cheaper prices. It is not investigating Amazon.co.uk, which only sells domestically sourced CDs.

The development comes as the BPI is preparing a lawsuit against UK-based retailer CDWow, which buys CDs at low prices overseas and distributes them from Hong Kong, undercutting high street stores by selling them at ?8.99 each with free delivery.

The site has proved a huge success, with annual turnover in excess of ?100m, but the BPI argues that CDWow breaks the law by importing CDs from outside the European Economic Area and selling them at cheaper prices than UK retailers without the consent of copyright owners.

The case will be heard in the high court next month and CDWow is planning a robust defence, arguing that all necessary copyrights are being paid by CDWow's suppliers and that consent to supply worldwide was given by record companies on a global basis when the business was set up.

The BPI has also launched proceedings against Play.com, a Jersey-based online retailer of CDs, DVDs and video games, which operates on a similar basis.

Amazon.com could be drawn into the row because it sells CDs to UK customers that are not available in this country and undercuts traditional high street retailers. The BPI could argue that they are acting without the consent of UK record companies.

The case has echoes of an earlier high profile court showdown between Tesco and Levi's after the supermarket giant began selling cut-price jeans bought from abroad. Levi-Strauss won that action but CDWow insists there are crucial differences between the two cases.