The Tokyo High Court has dealt a blow to Japanese labels’ efforts to maintain their tight grip on mobile-based music distribution.

The court on Jan. 29 dismissed an appeal by four Japanese record companies against a ruling by the government’s Fair Trade Commission (FTC) that found them guilty of breaking the Antimonopoly Law by preventing other companies from launching mobile-based “chaku-uta” (master ringtone) distribution services.

The four labels are Sony Music Entertainment (Japan), Victor Entertainment, Universal Music and Avex Marketing.

Presiding judge Toshiaki Harada said the four labels had reached an implicit agreement not to allow companies other than Label Mobile (jointly owned by the four companies, and now known as Recochoku) to use recordings whose copyrights they control. He said this could impede fair competition and should be eliminated.

In 2005, the FTC told the four companies, as well as Toshiba-EMI (now EMI Music Japan), to stop the practice because it impeded free competition. The labels, except for Toshiba-EMI, asked the FTC to re-examine the situation. But in a July 2008 ruling, the FTC stuck by its original finding, against which the labels launched a lawsuit.

At present it’s unclear what the labels’ next step will be. If they back down, there could be increased price competition in the Japanese mobile-based master-ringtone market, which was worth 3.9 billion yen ($45.5 million), in the July-September 2009 quarter.