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| Lazy Bones |
Rolling Stones OK with DVD deal
By ANGELA PACIENZA -- Canadian Press
TORONTO -- An exclusive arrangement made between the Rolling Stones and Best Buy stores to sell the band's DVD Four Flicks doesn't contravene Canada's Competition Act, the bureau said Thursday.
In its ruling, the Ottawa-based bureau said the agreement between Best Buy Canada Ltd. and TGA Entertainment Ltd. doesn't violate any laws because it only concerned one DVD.
"It's one DVD set by a single artist . . . (we looked at) that particular DVD set compared to the rest of the world and the impact of that particular agreement on HMV's overall business," said Madeleine Dussault, assistant deputy commissioner of competition.
Last month, HMV filed a complaint with the bureau alleging the exclusivity deal, which lasts until mid-March, breached the act by denying access to a product supply and reducing competition at the retail level.
The board said they couldn't find the requisite exclusionary and anti-competitive effects for there to be an offence under the act.
Best Buy was pleased with the outcome. "We believe it was a sound business move to begin with," said spokeswoman Lori DeCou.
HMV wasn't surprised by the decision, said president Humphrey Kadaner, adding he didn't regret taking the action which generated lots of buzz on both sides of the border.
"Just because they've concluded that the exclusive deal isn't illegal in our minds doesn't make it right," he said from Edmonton where he was visiting stores.
"Given the reaction was so positive from consumers we feel almost emboldened that we took this step. It sent the right message."
HMV, which has 100 stores across Canada, launched the complaint fearing that exclusivity deals with big box stores, which don't stock a band's full catalogue like regular CD shops, will become more common and hurt specialty music stores. Kadaner said specialty stores in Canada represent over 60 per cent of the market share whereas the reverse is true in the U.S.
The chain, along with Music World and Sunrise Records, pulled everything by the band from store shelves shortly after learning about the exclusive arrangement in late October. Saying it was unfair of the Stones to lump Canada with the U.S. market, they hoped to pressure the band to renege on the deal, which saw the set sold for $39.99 at Canada's 15 Best Buy stores and Future Shops' 105.
The merchandise has not been restocked since then at all three retail chains.
"There are no immediate plans. They certainly wouldn't be in before Christmas," said Tim Baker, a buyer at Sunrise.
It's a sensitive battle as CD retailers have been struggling in recent years to stay afloat under diminishing record sales in the wake of Internet downloading. Some artists have been adding bonus DVDs and CDs in an effort to entice buyers.
Kadaner said record labels have indicated that the public hoopla over the exclusivity deal may have made some artists who were considering deals reconsider.
"Us taking the position had other artists take notice," he said.
In this case, the label's hands were tied because the DVD was produced and distributed by the Stones' management, TGA Entertainment.
The DVD collection, which includes four DVDs totalling five hours of music, has sold more than 125,000 copies in the U.S. and Canada since its release a month ago, according to numbers provided by TGA Entertainment.
This wasn't the first time an exclusivity deal was questioned. In 2001 Best Buy made a deal to have early rights to U2's Elevation DVD. The plan was to sell the DVD exclusively through Best Buy stores in the U.S. for the first two weeks of sales. Afterwards it would have been stocked in regular CD shops.
The band's music label gave in after American retailers caused a fuss. Music labels and CD retailers work closely together to promote CD sales and artists, and are typically eager to maintain friendly working relationships.
This time there was no label to negotiate with as the Stones' management company made the deal directly with Best Buy.
"It's a setback for traditional retail as far as what they felt the Competition Act would allow or wouldn't allow," said Ken Kozey, president of the Retail Music Association of Canada, which ironically includes both HMV and Best Buy.
"When you have retail chains that cross both borders, and you get the volume of the U.S. market, Canada gets included in the whole deal. We don't think it's fair as far as retail, and I'm not so sure the labels think it's fair."
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| jb |
With only 125k sold, what are they suppose to say? |
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| dob99 |
Here is the full text of the decision, from the Internet site of the Competition Bureau of Canada:
"Examination of the distribution agreement for the Rolling Stones FOUR FLICKS DVD set
Overview
HMV Canada Inc. (HMV) filed a complaint with the Competition Bureau, in November 2003, regarding the exclusive agreement between Best Buy Canada Ltd./Magasins Best Buy Ltée. (Best Buy) and TGA Entertainment Ltd. (TGA), with respect to the distribution of the Rolling Stones Four Flicks music DVD set. HMV alleged that the exclusivity deal between Best Buy and TGA breached the Competition Act by denying access to supply of a product and reducing competition at the retail level.
The Bureau examined these allegations under the exclusive dealing, refusal to supply, and abuse of dominance provisions of the Competition Act. The examination did not establish the existence of the requisite exclusionary and anti-competitive effects for there to be an offense under the Act. The Bureau concluded that the agreement in question does not violate the Act.
The following is a detailed explanation of the examination under each applicable provision of the Act:
Exclusive Dealing – section 77
Exclusive dealing arrangements are a common business practice used by retailers to differentiate products offered. As such, exclusive arrangements are not in and of themselves contrary to the law. The Bureau, nonetheless, examines all complaints concerning such arrangements under the Competition Act.
Generally speaking, the Bureau may intervene in matters involving exclusive arrangements when strict conditions, as outlined in section 77 of the Act, are satisfied. For instance, an exclusive arrangement violates the law in situations where it is a practice engaged in by a major supplier of a product or is widespread in a market; and where it has some exclusionary effects such that competition is lessened substantially.
In this case, the exclusivity agreement regarding one DVD set released by a single artist over a limited time period does not constitute an anti-competitive practice.
Refusal to Supply – section 75
The conditions to be met under the refusal to supply provision are set out in section 75 of the Act. In particular, the business being refused supply must be substantially affected or be precluded from carrying on business due to an inability to obtain adequate supplies of a product anywhere in a market on usual trade terms. The inability to obtain adequate supplies of the product must be due to insufficient competition among suppliers of the product.
Given that the DVD segment includes many titles that retailers may carry, the Bureau cannot demonstrate that HMV is substantially affected in its business or is precluded from carrying on business due to an inability to access one particular DVD set.
Abuse of Dominance – section 79
Section 79 of the Act addresses the abuse of dominance provision. Under this provision, it must be established that a dominant supplier of a product is engaging in a practice of anti-competitive acts, with the result that competition is being lessened substantially.
There are numerous producers and retailers of music and video products. Consequently, neither TGA nor Best Buy is in a position to control the markets in which it competes. Hence, neither is a dominant supplier in its respective markets.
Conclusion
On the basis of the facts outlined above, the Bureau has concluded its examination of this complaint.
Competition Bureau
December 18, 2003" |
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| glencar |
Smackdown, HMV! |
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| Factory Girl |
Its not good that only 125,000 were sold. |
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CHAT
ROOM aka THE FUN HOUSE] [
RESTROOMS]