EU: Apple Has Europe in iTunes Cuffs

The European Commission has issued a complaint against Apple and major record companies over the way music is sold via
Apple’s online iTunes store.

The EC’s complaint focuses on the fact that
European consumers can only buy from iTunes in their specific country of
residence. “Consumers are thus restricted in their choice of where to buy music, and consequently what music is available, and at what price,” the EC said in its
official Statement of Objection.

The arrangements between Apple and major record companies contain
territorial restrictions that the EC said violates Article 81 of the EC
treaty. As part of the verification process, consumers are tied to the store
where their credit card was issued so, for example, someone downloading from
The Belgian iTunes store must use a credit card from a bank with a Belgian

The EC did not specifically identify the record companies it sent the
complaint to. Reuters quoted a British consumer group as spurring the
complaint back in 2005 when it noted residents of France and Germany pay
only 99 euro cents (US$1.32) for each song they download, compared with the
higher 79 British pence (US$1.56) paid by those living in Great Britain.

Apple could not be reached for comment, but Apple spokesman Steve Dowling
told the Associated Press the company wanted to operate a single
store for all of Europe, but music labels and publishers said there were
limits to the rights they could grant to Apple.

“We don’t believe Apple did anything to violate EU law,” he said. “We
will continue to work with the EU to resolve this matter.”

Statements of Objections are a formal step in European antitrust
investigations. After receiving the statement, companies have two months to
defend themselves in writing. They can also ask for a hearing earlier. After
the response or hearing, companies found guilty can be fined as much as 10 percent of the annual earnings worldwide.

Apple has been subject to complaints from France, Norway and other
countries that its digital rights management (DRM) software is too restrictive, but the EC statement included a comment that this complaint
had nothing to do with that issue. France has since softened
its hard-line stance on the matter.

The EU charge follows news that EMI will make its digital music catalog available to online
retailers without digital rights management (DRM) restrictions. Apple is the
first online store to sign up and said it will begin selling EMI’s catalog
DRM-free from the iTunes Store in May.

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