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29/08/2016

EU pressure ends iTunes price unbalance

Digital

EU pressure ends iTunes price unbalance

kroes2_pic_commission.jpg

The European Commission yesterday closed its probe of Apple, which was under inquiry for charging British users of its digital music store iTunes more than other EU citizens. The decision follows an announcement by Apple that download prices would be equalised across Europe. However, it remains forbidden for non-residents to purchase from another country’s iTunes store.

Apple announced yesterday that within six months it will reduce the prices of its British iTunes store and balance them with the rest of Europe. The Commission welcomed the move and announced that it does not intend to take further action in this case.

However, it remains open the bigger issue of allowing European consumers to make purchases in iTunes stores in a member state different from the one of residence. At the moment, a German or Spanish consumer cannot buy music from the French or Italian iTunes.

Apple said that this practise depends on the way music copyrights are currently negotiated in Europe. Every country has its own rules. Although the longer-term objective remains the creation of a truly single market for music download, the Commission agreed with Apple’s position and acknowledged that contracts between Apple and the ‘major’ record companies (Sony BMG, EMI, Warner Music and Universal Music) are not in breach of the current EU legislation.

“Some record companies choose not to make available their content on a pan-European basis. They do so in full respect of copyright regulation. There is no violation of antitrust regulation”, Kroes’ spokesperson, Jonathan Todd, said yesterday during the Commission daily briefing in Brussels.

Positions

Competition Commissioner Neelie Kroes  commented in a written statement that "the Commission is very much in favour of solutions which allow consumers to benefit from a truly single market for music downloads". 

Apple's move helps, but does not bring an end to the fragmentation of European markets. Nevertheless, "the fact that the same content is not available on a pan-European basis is not the result of restrictive business practices between Apple and major record companies. Rather it is the result of the existing state of copyright legislation", acknowledged Kroes' spokesperson Jonathan Todd.

"This is an important step towards a pan-European marketplace for music," said Steve Jobs, Apple's CEO. "We hope every major record label will take a pan-European view of pricing".

"We complained about Apple's price discrimination back in 2004, so we're glad they have finally agreed to give British music lovers a fair deal. The fact they will soon be able to download tracks for the same price as European customers will be music to the ears of UK iTunes customers. We hope other internet companies – including online music companies - will follow Apple's lead and match UK prices to prices in continental Europe", commented Which? lawyer Chris Warner.

Background

'Which?', a UK consumer protection organisation, in September 2004 filed a complaint with the European Commission against the higher prices British users had to pay to download music from iTunes in comparison with the other EU countries. 

The unbalance was around 20% of the value at the time of the complaint, but has since decreased due to the value fluctuations between the euro and the pound. The price difference between the UK and the rest of Europe is currently around 6%. A song downloaded from the Belgian iTunes costs 0.99 euros, while the British one charges 79p (1.05 euros).

Following the 'Which?' complaint, the European Commission opened a formal investigation against Apple. After talks between Competition Commissioner Neelie Kroes and Apple chief executive Steve Jobs, the American giant accepted the price cut.

Further Reading