EU Opens Antitrust Probe on iTunes

The European Commission confirmed Tuesday it has opened an antitrust probe into Apple's iTunes and the way it works with the major music companies to sell songs online.

The commission alleged distribution agreements Apple has signed with the record labels to sell their music on iTunes stores in EU countries "contain territorial sales restrictions which violate" EU competition rules.

People can only download singles or albums from the iTunes store in their country of residence, the commission said.

"Consumers are thus restricted in their choice of where to buy music and consequently what music is available, and at what price," it said in a statement. "For example, in order to buy a music download from the iTunes' Belgian online store a consumer must use a credit card issued by a bank with an address in Belgium."

Apple spokesman Steve Dowling said Monday 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."

The cost of buying a single song across the 27-nation bloc varies among the available iTunes stores in EU nations.

For example, downloading a single in Britain costs $1.56, in Denmark $1.44, while in countries using the euro such as Germany and Belgium, a single track costs $1.32.

The "statement of objections" EU regulators sent to Apple does not allege the Cupertino, Calif.-based company is in a dominant market position.

Apple has two months to answer questions issued in the letter, the commission said. If found guilty of violating EU competition rules, Apple could face hefty fines, which in theory could total up to 10 percent of the company's worldwide annual turnover.

The EU investigation comes amid moves by European consumer rights groups in Germany, France, the Netherlands and Nordic countries to force Apple to change the rules it imposes on its online music store customers.

The groups are demanding Apple lift limits preventing consumers from playing their downloads on digital players other than Apple's iPod. In February, Norway, which is not a member of the EU, declared those limits illegal and gave Apple until Oct. 1 to change its compatibility rules or face legal action and possible fines.

The EU investigation does not deal with these concerns, however.

Apple has said it is willing to open iTunes to players other than iPods if the world's major record labels moved to change their anti-piracy technology.

Apple and EMI announced a deal on Monday that would allow EMI's music to be sold on iTunes minus anti-piracy software that limits its use on some players. The move is expected to be watched -- and likely followed -- by other record labels.


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