A website accused of illegally importing cut-price CDs from Hong Kong has been fined a record £41 million for breaking long-standing rules that prohibit cheaply priced music aimed at Asian consumers from being sold in the UK.
CD Wow, the internet retailer, said last night that it would appeal against the verdict. Henrik Wesslen, the company’s chief executive and co-founder, said that the existing copyright and pricing rules were “mad” — nevertheless the company insisted that it did not flout them, contrary to the claims of its accuser.
Geoff Taylor, chief executive of the BPI, the British music industry’s trade body, said: “CD Wow is no consumer champion; it is a rogue trader that now has to face the consequences of its actions.” The organisation added that CD prices in the UK were falling to as low as £8.50 on average.
At issue are long-standing copyright rules that allow music companies — and other intellectual property holders — to charge different prices in different markets for the same product. It has long been illegal to import CDs or buy downloads from outside the European Economic Area with a view to selling them on a cut-price basis.
CD Wow originally imported cheap CDs from Hong Kong but promised as long ago as 2004 to stop the practice.
However, in March the company was found guilty of continuing the trade and last week was fined £36 million damages and £5 million interest as penalty for its actions.
Yesterday CD Wow — a privately held company with little-known British and European founders — said that the BPI was able to cite only 39 instances of the rules being breached, a fraction of the 10,000 CDs it ships a day.
Mr Wesslen said: “The current copyright rules are mad but that doesn’t mean we don’t stick to them.”
Music is available much more cheaply in Asia than in the UK because it is believed that it is not possible to charge much in countries like India and China, where piracy is rampant.
Record companies charge wholesale prices estimated to be as low as £1 or £2, compared with £6 in the UK, making it theoretically possible to charge far lower prices if the items are imported.
The BPI monitors internet retailers by conducting test purchases; all CDs are serial marked in a way that reveals their territory of origin.
Downloading was not an issue in this case, although internet retailers restrict British consumers from buying overseas by insisting that people with UK credit cards buy music on UK sites.
Source
CD Wow pays high price for selling cheap music in UK
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