EU Opens iTunes Antitrust Investigation

The European Commission has launched a formal inquiry into Apple's iTunes store, saying the territorial limits on purchases violate EU competition regulations.

The European Commission has launched a formal inquiry into Apple’s iTunes store, accusing it of restricting customer choice by entering into agreement with major record labels which restrict where iTunes customers can buy music, video, and other media. Currently, users who reside in one EU country cannot buy music, video, or other media from an iTunes store set up for another country—although they might like to do so since price differentials between iTunes stores could mean a significant savings. “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 a statement.

The EC says it has written Apple and an undisclosed number of record companies notifying them of the EC’s objections to the way iTunes sells music and media; the letters are the first step in formal antitrust proceedings.

The investigation follows a complaint that customers of Apple’s iTunes store have to pay more for downloads than their counterparts in Europe. Converted to U.S. dollars, buying a single song from iTunes in Britain costs about $1.55; in Denmark, that’s $1.44, and in Germany the price converts to about $1.32. In the U.S., of course, tracks are $0.99. The EU bloc currently includes 27 nations.

For its part, Apple has maintained for years that it would prefer to operate a pan-European version of its iTunes store, rather than separate stores for every EU nation, but music labels and publishers would only get behind a one-store-per-country due to limitations on the rights they could grant Apple for online sales. Apple spokesperson Steve Dowling said “We don’t believe Apple did anything to violate EU law. We will continue to work with the EU to resolve this matter.”

Apple and music distributors have two months to respond to the EC’s letter of objections.

The EC antitrust investigation is unrelated to Apple’s joint announcement that music label EMI would begin distributing its entire music catalog via iTunes without digital rights management technology (DRM) beginning in May. The investigation is also unrelated to calls from Norway (which is not an EU member) that Apple be required to sell music in a format which can interoperate with players other than Apple’s iPod/iTunes platform. Apple has until October 1 to either remove those limitations in Norway or face legal action and possible fines.