THE four leading record companies in the United States are being sued for allegedly fixing the price at which songs can be downloaded from the internet.

In the first case to test whether consumers are paying too much for online music, Sony BMG, Universal, Warner and EMI — which together control 85 per cent of the music market — have been named in a class action brought by dozens of customers who have shopped with online music services such as iTunes.

The record companies are being accused of conspiring to fix the wholesale price of their songs at 70c, and of putting pressure on Apple to raise the price at which it sells songs to more than the present 99c.

They are also alleged to have inserted anti-competitive clauses into their contracts with online music providers, forcing the providers to pay all the labels the same amount for their songs.

In a statement filed with a court in California, a copy of which has been seen by The Times, the consumers claim that the labels “sought to delay the online music market with their joint ventures, and, when they could not hold market forces back any longer, conspired to set the wholesale price of online music at supra-competitive levels to protect the CD market.

“But for the defendants’ anti-competitive conduct, online music would be dramatically less expensive than CDs.”

The labels would not comment on the claims, although Warner said that it intended to “vigorously defend” the 14 lawsuits against it, with hearings starting next month.

If successful, the case could put pressure on European competition authorities to take action against the labels in Britain.

“Downloads should be much cheaper than they are,” Chris Burke, of Lerach Coughlin, a San Francisco law firm involved in the case, said.

“The labels know they are fighting a battle with technology, but technology will have to win in the long term and the price of music will have to come down.”

The case is likely to centre on the effect of so-called “most favoured nation” clauses, understood to be widespread in the music industry, which oblige online music providers to offer one record company the same price for its songs as it offers other companies for theirs.

The clauses are already the subject of an ongoing investigation by Eliot Spitzer, the New York attorney-general. Two years ago the big Hollywood studios were forced to drop similar clauses from their contracts with television networks after an inquiry by the European Commission.

The Commission has had the matter of music downloads referred to it by the Office of Fair Trading, the UK competition watchdog.

Independent labels said that record companies had no bargaining power when it came to dealing with leading players such as iTunes and that, if anyone was being exploited, it was the independents.

“Apple uses its weight to increase the bottom line at the expense of small companies. It tells you what price you’re getting for your music and there’s no room to negotiate,” the director of one independent said.

The action is being brought in America, where contingency fees mean that the claimants will not pay if the case fails and judges may award “punitive damages” above and beyond the amount which is paid in compensation.

THE VIRTUAL SHOP EXPANDS

The British artist James Blunt topped the first European digital song downloads chart with You’re Beautiful

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive