FTC Investigates Possible Price Fixing of New CDs : Consumers: Six record companies, asked to submit two years’ worth of documents, say they have done nothing wrong.

The Federal Trade Commission’s three-month probe of used-compact-disc sales has expanded into a broader investigation of possible price fixing in the $5-billion-a-year market for new CDs, The Times learned Thursday.

Government officials declined to comment, but representatives for the distribution arms of Sony Music, Warner Music, MCA Entertainment, EMI Music, Polygram and Bertelsmann confirmed that they have been asked to submit by Oct. 18 two years’ worth of documents relating to CD pricing policies. The record companies say they have done nothing improper and are cooperating with the investigation.

The FTC is also looking into antitrust allegations raised in August in a lawsuit filed by singer Don Henley in Los Angeles Superior Court, in which the entertainer claims that some of the most powerful executives in the music industry conspired to blackball him during his contract dispute with Geffen Records. The company has denied Henley’s charges, and the case is pending.

While some insiders privately characterized the government probe as a “fishing expedition,” consumer advocates suggested that the inquiry echoed concerns long voiced by compact disc fans.

“For some time now, consumers have felt that the record companies are gouging them with high CD prices,” said Pete Howard, editor of ICE, the nation’s leading CD-audiophile newsletter. “In the past 10 years, the cost of producing CDs has dropped significantly, but the price consumers pay just keeps going up.”

Indeed, the suggested retail price of superstar CD recordings leaped again last month with the release of the new Prince “Hits” collection on Warner Music, which registers at $17.98--a dollar higher than the highest previous suggested retail price, established last year. Capitol Records will quickly follow suit next month when it releases Frank Sinatra’s “Duets” album, also at $17.98.

The FTC probe was launched in June and initially focused on the refusal of Sony, Warner’s WEA, EMI Music’s CEMA and MCA Entertainment’s UNI to underwrite advertisements for stores that sold used compact discs.

One month into the investigation, however, FTC officials began to zero in on price-fixing allegations raised in antitrust lawsuits filed against the four conglomerates by Torrance-based Wherehouse Entertainment and the Independent Music Retailers Assn., a national coalition of about 200 mom-and-pop used-CD merchants.

The FTC began interviewing retailers in July and sent letters to the nation’s six major record companies asking for information related to their price policies on new compact discs.

Insiders expected the FTC to drop its probe in August after the record companies reversed their staunch anti-used-CD policies and initiated proceedings to resolve their legal disputes with used-CD merchants.

Instead, the FTC sent out additional requests to the six companies in September seeking documents specifically related to “retail promotion” and “minimum advertising price” policies dating to Jan. 1, 1992.

While FTC probes rarely culminate in legal action, antitrust experts suggest that government inquiries frequently alter industry practices.

“Not many businesses like it when the government initiates an investigation of this scope,” said Warren Grimes, a law professor at Southwestern University who served as chief counsel to the House Judiciary Subcommittee on Monopoly and Commercial Law from 1980 to 1988. “While only a small percentage of FTC investigations ever result in a formal complaint being filed, many times the scrutiny that an industry comes under can force a change in behavior.”