EU convinces Apple to cut UK iTunes prices
LEIGH PHILLIPS
09.01.2008 @ 17:39 CET
Computer manufacturer Apple is to cut the price it charges UK customers for songs from its iTunes online music shop in order to head off an EU antitrust case.
Following discussions between Apple CEO Steve Jobs and competition commissioner Neelie Kroes, the firm announced Wednesday (9 January) that, within six months, it is to charge British customers the same price it charges customers in the 15 member states that use the euro.
Consumers in one member state will still not able to purchase songs from an iTunes shop within another member state (Photo: EUobserver.com)
Currently iTunes charges 79 pence (€1.06) for a song download, while customers in the eurozone are charged only €0.99 (74 pence) per song, a difference that adds up if consumers buy a lot of songs online.
The price difference was enough for UK consumer watchdog Which? to register a complaint with the UK Office of Fair Trading, who in turn referred the complaint to the EU's antitrust regulator.
At the time of the complaint, Which? had found that UK customers paid some 20% more for a song than iTunes' French and German customers and were barred from purchasing songs from continental iTunes shops in order to avoid the higher price tag.
Last April, the commission said that the company was illegally limiting where customers could purchase tracks by setting prices higher in certain jurisdictions. Had the commission found Apple in violation of antitrust regulations, the firm could have been fined up to ten percent of its annual sales.
Welcoming Apple's decision, Ms Kroes said in a statement, "The commission is very much in favour of solutions that allow consumers to benefit from a truly single market for music downloads."
"This is an important step towards a pan-European marketplace for music," said Steve Jobs, Apple's CEO.
When asked about possible currency fluctuations between the pound and the euro – or other European member state currencies - affecting iTunes pricing, a commission spokesperson said that the commission is not a price regulator.
"The problem was that iTunes' UK prices had been a matter of commercial policy, which is different from minor discrepancies that result from currency fluctuations," said the spokesperson.
But despite the move on pricing, it will still be the case that consumers in one member state will be unable to purchase songs from an iTunes shop within another member state.
In order to buy songs from an iTunes store, a customer must have a credit card from the same country in which the particular online shop is based. It is not possible to buy a song by, for example, Chambao, a popular flamenco nuevo band from Andalucia, from the Belgian iTunes shop.
"The fact that some content on iTunes is not available right across the EU is unfortunate," said the spokesman. "My own kids complain to me about it."
But the commission found that this was a product of copyright restrictions and commercial decisions by record companies, not Apple, and was not a violation of antitrust regulations. Nonetheless, Brussels said the issue needs to be looked at further.
Despite calling the move a "great victory", Which? also said it now wants to see Apple lift restrictions so that all consumers across Europe "have access to the same tracks as well as the same prices."