EU Targets Apple
April 3, 2007
European Union regulators confirmed on Tuesday the launch of antitrust proceedings against Apple and a number of unnamed major record companies. According to media reports, these include Universal, Warner, EMI and Sony BMG.
The EU probe focuses upon the way music is sold through the iTunes' Internet platform. This allegedly prohibits users in one country from downloading music from a website intended to serve another through the use of credit card details.
Virtual boundaries
For example, this would mean that a consumer must use a Belgian credit card if he or she wants to purchase a music download from the iTunes' Belgian online store.
A spokesman for Neelie Kroes, EU competition commissioner, said: "Consumers are thus restricted in their choice of where to buy music, and consequently what music is available and at what price."
"The commission alleges that these agreements violate the European Commission treaty rules prohibiting restrictive business practices," he added.
The antitrust proceedings stem from a complaint from the British consumer body Which?. It criticized the fact that songs on iTunes cost considerably more in the UK than in other parts of Europe.
Research by Which? in 2005 found that UK users paid the equivalent of 1.16 euros to download a song, compared with 99 euro cents in France and Germany.
Apple said it wanted to operate a single European iTunes store, but had been advised by music labels and publishers that there were legal obstacles.
Apple - EMI agreement
The EU move is unrelated to Monday's deal between Apple and EMI that would allow the British music publisher to make some of its content available on-line to users of the iTunes platform without antipiracy protection, meaning it could be played on mp3 players other than Apple's on iPod.
Brussels has previously criticized Apple's use of digital rights technology to stop consumers from copying songs downloaded from iTunes to other computers and mp3 devices other than the iPod. But today, the European Commission stressed that its current investigation was not about the bundling of iTunes and the iPod.
The companies have two months to respond in writing to the commission's "statement of objections," the first step in formal proceedings. They can also ask for a hearing, usually held a month later.
If Apple and the music companies are found guilty of breaking competition rules, they could face considerable financial penalties. The regulator has the power to impose fines of up to ten percent of a firm's worldwide sales.