EU slams record firms for limiting iTunes access

By David Lawsky

BRUSSELS:  Major record companies are forcing Apple to curtail access to iTunes online stores across borders, leading to higher prices and less choice, the European Commission said on Tuesday.

The EU executive sent formal charges to Apple and the major record companies last week because consumers can only buy iTunes in their own countries and cannot shop around for cheaper prices and a broader catalogue in other states.

"Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it," Commission spokesman Jonathan Todd told reporters.

The world's major record companies are Vivendi's Universal Music Group, Sony BMG Music Entertainment, EMI Group and Warner Music Group.

Universal Music said it was "completely satisfied that we have complied with all applicable laws and will respond in due course on the issues raised in the document."

EMI said it would co-operate fully with the Commission, adding: "We do not believe we have breached European competition law, and we will be making that case strongly."

Warner had no comment and Sony-BMG was unavailable for comment. The four companies have until early June to respond to the Commission.

"Apple are the managers of the iTunes store. It's true that the focus is the major record companies," Todd said.

The investigation grew out of a 2005 complaint by the British consumer group Which?, which said iTunes tracks in France and Germany were only 99 euro cents ($1.32) for each download, compared with the 79 British pence ($1.56) paid by UK residents.

The Commission does not dispute Apple's right to use digital rights management (DRM) in its downloads, which critics say is unfair because it makes Apple downloads generally incompatible with MP3 downloads from competing formats.

The probe is mostly unrelated to a deal announced on Monday, under which EMI agreed to make its music available online without a key anti-piracy measure, becoming the first major music group to take the risk in a bid to grow digital sales.

Todd said that under the new arrangement there was still a price differentiation between Britain and the euro zone countries, and consumers may not choose the cheapest place to buy.

(Additional reporting by Kate Holton in London)