An internet retailer that broke a legally-binding promise not to sell imported CDs at almost half the price they sold for on the high street has been ordered to pay the UK record industry £35 million, it emerged today.

A High Court judge, sitting in London, ruled in March that Music Trading Online was “in substantial breach” of its 2004 court undertaking not to continue marketing “parallel imports” through its online operation, CD Wow.

A decision on the sum to be paid by the Hong Kong-based company was not expected until after an inquiry, planned for July, into how much it owed in damages to music companies which complained of infringement of their UK copyright.

However, it was announced today that the judge who heard the case, Mr Justice Evans-Lombe, had now assessed the damages at £35 million.

But, with the addition of legal costs, the total bill faced by CD Wow is said to be around £41 million.

Announcing the award today, the British Phonographic Industry (BPI), the UK record companies’ trade association, said it was the largest damages award ever made in favour of the BPI and “sets an important legal precedent as the industry seeks to prevent the illegal importing of CDs from outside Europe”.

Geoff Taylor, BPI’s chief executive, said: “CD Wow has been undermining the legitimate businesses of UK retailers and record companies by continuing to import CDs and music DVDs from Asia, despite having given court undertakings that it would stop doing so.

“Imports of this kind undermine the huge investments made by businesses here in homegrown musical talent.”

He said: “The vibrancy of British music depends on a fair return on the investments that allow British talent to shine. This decision is an important step in ensuring that British music has a bright future.”

The BPI says that the scale of the damages awarded represents a “significant legal victory for the UK recorded music industry, and will serve as a major deterrent to any would-be illegal importers”.

It announced that it has already begun taking steps to enforce the damages award, having obtained a freezing order on the retailer’s Hong Kong bank accounts and assets.

Ruling that the company was in contempt of court, Mr Justice Evans-Lombe rejected defence arguments that the album sales were the result of “mere inadvertence” on the part of CD Wow.

The imported CDs - by artists including Robbie Williams, Radiohead, Coldplay, Snow Patrol and Oasis - were genuine products, but their sale in Britain breached UK copyright.

The March ruling was won by record companies including EMI, Sony, Mercury and Warner, suing on behalf of themselves and other members of the trade organisations British Phonographic Industry and Phonographic Performance Ltd.

The companies had complained that, despite earlier court action, Music Trading continued to buy CDs and DVDs in countries such as Hong Kong where they were cheaper, and sell them in the UK without consent from the copyright owners.

CD Wow, which sold the latest albums for as little as £6.99, insisted that any breaches of its court undertaking were due to “human error” and that, in any event, it was the victim of a “policy of protectionism” on the part of the record industry.

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