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Last Updated: Tuesday, 3 April 2007, 14:51 GMT 15:51 UK
Q&A: iTunes price probe
More than a billion songs were downloaded from iTunes last year
The European Commission is investigating Apple and some of the world's top record companies over how they sell music through the firm's online iTunes store in Europe.

Brussels says commercial agreements between the companies limit consumer choice and violate EU laws governing the single market.

What is Brussels complaining about?

iTunes is the world's most popular online music store, having sold more than two billion songs to date in its short history.

Brussels is not quibbling about iTunes' dominance of the market but, rather, how it goes about selling its songs to music lovers across Europe.

Consumers can currently only download songs from the iTunes website in their own country, preventing someone in Belgium buying tracks from the British version of the site.

iTunes checks credit card details before accepting payment. For instance, only people with a credit card issued by a bank with an address in Germany can buy from the German site.

Brussels says this system restricts where consumers can buy music and the range of music they can get hold of since no one version of the site has the same selection of songs.

More importantly, Brussels says because consumers cannot shop around and prices vary significantly between different markets, many people are being short-changed.

These anomalies, Brussels argues, are a violation of EU laws designed to protect consumers from restrictive business practices.

What evidence is there for this?

A study by UK consumer body Which? in 2004 said that British users of iTunes were being substantially overcharged.

People living in Britain paid 79p for a song through iTunes, it said, 20% more than their counterparts in France and Germany.

Prices in these two countries, in turn, were higher than elsewhere, with Danes paying 66p.

Which? has welcomed the EU probe saying the current arrangement flouts the laws of the European market, guaranteeing equal access to products and services in individual countries.

It believes the investigation could force prices down for British users.

What is Apple saying?

Apple denies that it has broken any laws, arguing that it would like to operate a single European site without any limits on content or access for all music fans.

But it says it is "hemmed in" by a series of commercial agreements with leading record companies which supply its content under certain copyright provisos.

Apple said the rights contracts it had negotiated came with "certain legal limits", essentially dictating what material can be sold in what countries.

Brussels has not identified the "major" music companies it believes are responsible for this, although newspaper reports suggest officials have all of the 'big four' firms - EMI, Warner Music, Sony BMG and Universal Music - in their sights.

These four firms account for more than 70% of all global music sales.

What happens next?

Brussels has notified Apple and its music partners of its concerns and the firms have two months in which to respond.

They can also request a face-to-face hearing before the Commission to present their case.

The ultimate sanction available to the Commission is to fine guilty firms 10% of their annual global turnover. However, this is only likely to happen in the most extreme cases.

Apple recorded sales of more than $19bn last year.

Brussels is likely to reach a verdict some time later this year.

EU price probe into Apple iTunes
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13 Dec 06 |  Business
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16 Sep 06 |  Technology
Apple gets French iTunes reprieve
22 Jun 06 |  Business

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