French authorities have launched an investigation of EMI France and music retailer Fnac over anticopying technology included on CDs that allegedly renders them unplayable on some systems.
A magistrate judge on 31 July ordered the investigation following a review of consumer complaints by a local division of the Bureau of Competition's antifraud unit (DDCCRF).
The move is among the most threatening actions yet taken in Europe against record labels and retailers over anticopying technology.
The labels want to prevent consumers from making direct copies of CDs into unprotected computer files, such as MP3s, which can then be distributed over the Internet and peer-to-peer networks such as Kazaa. The move has led to a sharp backlash from consumers who fear they may lose the ability to make personal backup copies of CDs, something that's currently allowed under copyright laws in some countries, including France. In addition, such digital rights management technology has been linked to problems playing back discs on some devices.
French regulators were alerted to the playback problems in September 2003 by a consumer group known as UFC-Que Choisir, which submitted numerous complaints from CD buyers to the Hauts-de-Seine bureau of the DDCCRF.
"For months, complaints from buyers of locked CDs have piled up in UFC-Que Choisir's mailbox," the group said in a statement. "These letters noted that many CDs out of the package were not readable on certain devices, including hi-fi systems, computers and car stereos."
The DDCCRF carried out its own tests, and a judge subsequently ordered a judicial examination of EMI Music France and Fnac on charges of fraud. The charges carry possible prison terms of up to 2 years for company executives, and a fine of about $45,000 (£24,978), UFC attorney Sandra Woehlin said. UFC has also demanded that the discs be withdrawn from the market.
"In this case, CDs should be readable on any device while respecting the standards in force," she said.
Fnac, the biggest music retailer in France, said it believes it acted in good faith towards consumers.
"As soon as Fnac was informed of the problems encountered with certain protected audio CDs, the company immediately set up information points to help consumers," Fnac said in a statement. "Fnac also agreed to give refunds to customers who found problems playing back the discs… knowing that these problems are not foreseeable."
Fnac added that it believes it has stood on the side of the consumer, and said that the actual number of reported problems have been very few.
EMI France said it has updated its anticopying system since the sales period of the discs under review by the court.
"EMI France does not wish to comment in detail on the examination," the company said in a statement. "This business relates to discs marketed between October 2002 and August 2003. These discs were equipped with a copy control version that hasn't been used by EMI France for at least a year."
In September 2003, EMI in a civil lawsuit was ordered to provide a refund to a consumer who could not play back a copy-protected CD on her car stereo.
CNET News.com's Evan Hansen contributed to this report.