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EU to target Apple’s iTunes site

April 4, 2007

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British newspaper Financial Times reported that Apple and several big music companies are facing a European Commission antitrust probe after Brussels issued formal charges alleging that the deals underpinning the sale of music through the hugely popular iTunes platform violated competition rules.

In a surprise development, the Brussels regulator last week sent a confidential statement of objections to Apple and “major record companies”. These are understood to include Universal, Warner, EMI and Sony BMG.

The European Commission’s main concern is that iTunes’ set-up in the European market prohibits users in one country from downloading music from a website intended to serve another. Its move was triggered by a 2004 complaint from Which?, the UK consumer organisation, criticising the fact that the UK version of iTunes was more expensive than the version in other European markets.

A spokesman for Neelie Kroes, EU competition commissioner, said Apple’s agreements restricted “music sales in the sense that consumers can only buy music from the iTunes store in their country of residence” and that consumers were therefore limited “in their choice of where to buy music and, consequently, what music is available and at what price”. He said: “The Commission alleges that these agreements violate the [EU] treaty’s rules prohibiting restrictive business practices.” Brussels stressed that its allegations had nothing to do with the lack of interoperability between the iTunes format and rival players.

Apple spokesman Steve Dowling said the company wanted to operate a single store for all of Europe, but music labels and publishers said there were limits to the rights that could 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.”

The groups will now be given the chance to defend themselves both in writing and during a hearing in Brussels. People familiar with the case expect the groups to argue that copyrights are currently awarded and administered on a national basis, making it difficult for national iTunes websites to sell songs across borders.

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