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Out-Law News 1 min. read

Apple iTunes referred to European Commission


The UK's Office of Fair Trading announced on Friday that it had referred Apple's iTunes service to the European Commission over concerns that downloading iTunes tracks costs UK consumers more than their counterparts in France and Germany.

The iTunes music store, which has been running in the US since April 2003, opened for business in the UK, France and Germany in June this year. The three stores offer single downloads for a price of €0.99 in France and Germany, and £0.79 (€1.20) in the UK.

In October, a broader European version of the store was opened, extending the service to music fans in Austria, Belgium, Finland, Greece, Italy, Luxembourg, Netherlands, Portugal and Spain at the price of €0.99 per song.

The issue came to the attention of the OFT in September when campaign group Which? (formerly known as the Consumers' Association) complained that the service charges UK customers 20% more than its French and German customers, and bars customers in the UK from logging on to the French and German sites to get a cheaper deal.

The OFT has now referred the matter to the European Commission, describing it as "better placed to consider this matter, in particular as Apple iTunes operates in more than three EC Member States."

In addition, said the OFT, the Commission is in a better position fully to address the issues raised by Which? in the context of wider single market issues relating to how the on-line exploitation of music is licensed across Europe.

The Commission is already investigating a potential breach of competition law caused by an agreement among 16 EU royalty-collection societies that creates a "one-stop shop" music licence.

Which? welcomed the referral.

"UK consumers are getting a raw deal from Apple," said Phil Evans, principal policy adviser, Which?, "The on-line music market is a huge growth area; the Single Market should work the same in this market as in others."

"We're campaigning for free movement of goods and services in Europe and we'll take on any company, or group of companies, that seek to carve up the market to their benefit," he added.

Apple has made no comment as yet, although at the time of the original complaint by Which?, the company explained:

"The underlying economic model in each country has an impact on how we price our track downloads. That's not unusual, look at the price of CDs in the US versus the UK. We believe the real comparison to be made is with the price of other track downloads in the UK."

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