Portugal has stepped up its fight against the sale of pirated music and movies which has, as in other European Union nations, dealt a blow to retail sales of CDs and DVDs, threatening the survival of stores.

During the first three months of 2005 police seized 43,451 counterfeit CDs and DVDs, mostly at outdoor markets, across the country, a 25-fold increase over the same time last year.

The items had a retail value of just over one million euros (1.3 million dollars), according to the culture ministry's Inspectorate-General for Cultural Activities (IGAC), which oversees the fight against piracy.

Aside from providing unfair competition to tax-paying stores, piracy gangs finance other illegal activities, from the drugs trade to prostitution and human trafficking, the director of the institution, Paula Andrade, told AFP.

The office has recruited new inspectors each year since 2002, and plans to do so again this year. The inspectors carry out raids together with police against manufacturers and sellers of counterfeit discs, she said.

While Andrade would not say how many inspectors IGAC currently has working against media piracy, she said their numbers had been enough to virtually stamp out sales of counterfeit music outside metro (subway) stations and on busy streets.

The focus now is to put the pressure on vendors of counterfeit CDs and DVDs at popular outdoor fairs where everything from clothes to fruit are sold.

"There was a feeling of total impunity. But they are starting to understand that inspectors will appear and controls exist," said Andrade.

Vendors typically face fines of up to 2,000 euros (2,561 dollars) while makers of counterfeit music and movies can be sentenced to three years in jail.

Police have uncovered operations in small apartments where up to 20 illegal immigrants lived and produced counterfeit discs.

Two pirated CDs or DVDs usually sell for five euros, compared with as much as 15 euros for a major new music release, and double that for a movie, at a major retailer.

Police estimate it costs pirates about one euro to produce a counterfeit CD or DVD.

French record and bookstore chain FNAC blames street sales of counterfeit music along with illegal Internet downloads for an 11 percent drop in sales of CDs by volume, and a six percent fall in terms of value, in Portugal last year.

"A really strong parallel market has emerged, it needs to be combatted," the sales director of FNAC Portugal's music and film division, Luis Coelho, said.

"In 2002 we started to notice lower sales, in 2003 there was a drastic fall and 2004 was completely terrible," he told AFP.

DVD sales, meanwhile, have continued to rise each year but the increase has been slower than what would be expected if the counterfeit market were not so strong, he added.

Counterfeit CD sales account for 20 percent of all music sales in Portugal, according to the International Federation of the Phonographic Industry which represents over 1,450 producers and distributors in 76 countries worldwide.

Across the EU, music piracy accounts for as low as five percent of music sales in Britain to a high of around 40 percent in Finland.

While Coelho welcomed the seizures of counterfeit CDs, he said to fight music piracy music firms need to lower their wholesale prices by about 30 percent so that retailers can offer more competitive prices.

The government could also do its part if it were to sharply lower the sales tax it slaps on CDs, DVDs and books from the current 19 percent, he added.