THE Justice Department in the United States has launched an inquiry into the music industry, amid allegations of anti-competitive practices in the supply of digital downloads.

The department has sent subpoenas to the four music majors — Universal, SonyBMG, EMI and Warner Music — indicating the beginning of a formal competition inquiry, which could run for years.

None of the four companies involved was willing to comment on the record yesterday. Industry sources said, however, that it was unclear which way the inquiry would turn because so little information had been received at this stage.

As news of the subpoenas broke, the Justice Department said that it was “looking at the possibility of anti- competitive practice in the music download industry”. It gave no guidance on the timing of the inquiry.

The scope of the investigation in Washington is thought to encompass the possibility of collusion between the record companies in the setting of digital wholesale prices. These are set at about 60 cents to 80 cents for tracks that retail at 99 cents on iTunes.

However, there are also concerns about whether there is any collusion between Apple and the music companies when it comes to setting the retail price.

A particular issue is the use of so-called “most favoured nation” (MFN) clauses in digital contracts, in which a record company promises a digital retailer that nobody else is getting a better deal.

Universal Music, the market leader, is thought to use the MFN clauses — which are common in other industries — but other record majors claim privately that they do not.

The clauses have aroused the ire of some of the smaller digital music stores, which want the music companies to cut their prices so that they can undercut Apple.

The inquiry follows on from an investigation already begun by Eliot Spitzer, the crusading New York attorney-general. That inquiry began in December.

Mr Spitzer has taken on the music industry once before. His office mounted a pay-for-play inquiry into the relationship between the music companies and the record industry, resulting in fines for SonyBMG and Warner Music.

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