[A2k] Financial Times: Brussels to target Apple’s i Tunes site

[Thiru Balasubramaniam]

<SNIP>

The 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 said it had always wanted to operate a pan-European iTunes store
“accessible by anyone from any member state” but was advised by music
publishers that there were legal limits to the rights they could grant.
“We do not believe the company did anything to violate EU law and we
will continue to work with the EU to resolve this matter.”

<SNIP>

---------

NOTE:

The PRINT Version of FT article concluded with this sentence:  "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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http://www.ft.com/cms/s/216031bc-e131-11db-bd73-000b5df10621.html

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Brussels to target Apple’s iTunes site

By Tobias Buck, Karl de Meyer in Brussels and Emiko Terazono in London

Published: April 2 2007 19:04 | Last updated: April 3 2007 02:46

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 confirmation of the action came as Steve
Jobs, chief executive of Apple, was in London for a joint press
conference with Eric Nicoli, head of EMI. Mr Nicoli announced EMI would
be making its music available on iTunes online without copyright
protection. EMI is the first record “major” to remove digital rights
management – the copyright protection that prevents piracy from its
catalogue.

The 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 said it had always wanted to operate a pan-European iTunes store
“accessible by anyone from any member state” but was advised by music
publishers that there were legal limits to the rights they could grant.
“We do not believe the company did anything to violate EU law and we
will continue to work with the EU to resolve this matter.”

The Commission is now pursuing antitrust investigations against three
of the biggest names in US technology. It has already imposed heavy
fines against Microsoft in a probe that started almost nine years ago.
Microsoft was eventually found guilty of abusing its dominant market
position and has been fined close to €780m ($1bn) so far.

There is also a case against Intel, the chipmaker, which Brussels
believes has undermined competition from AMD, its only rival.

Should the Commission find Apple and the music companies guilty of
breaking competition rules, they would face potentially painful
financial sanctions. The regulator has the power to impose fines worth
up to 10 per cent of a company’s worldwide annual turnover and has
recently toughened up its policy on fines.

But the regulator could also opt for other remedies.

The groups will now be given the chance to defend themselves both in
writing and during a hearing in Brussels.

--------------------------------

NOTE:

The PRINT Version of FT article concluded with this sentence:  "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.



---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org