Brussels to Grill Apple on iTunes Pricing

The EC says Apple's requirement that users shop at the online store tied to the country of their credit card's origin leads to different prices for the same music

The European Commission will this week meet with consumer icon Apple and major record companies over allegations that Apple's online music store iTunes restricts consumer choice within the 27-member Union, which is against the EU's legal principle of free competition.

Apple and the some of the world's four major record companies will on Wednesday and Thursday (19-20 September) defend their music distribution structure before the EU executive's anti-trust officials.

If Brussels concludes that the practice is against EU law it could fine the involved companies up to 10 percent of their global turnover.

Apple alone currently has a worldwide turnover of over €15 billion a year, based on earnings in the first three quarters of 2007.

It controls 70 percent of the global music download market, with its easily recognisable iPod music player visible on just about every city street in Europe today.

Different currency, different price

At the moment, users of iTunes can only buy music from the online store offered in the country where their credit card is issued, which is usually their country of residence. This limits EU consumers' choice of music and leads to different prices for the same recordings, argues the commission.

Customers who live in the euro zone pay €0.99 cents per song they download. But Apple customers in the UK, which uses the pound sterling, pay €1.17, while people in Denmark, which uses the danske krone, pay €1.07 per tune.

The hearing will be closed to the public and while Apple will be present through the entire hearing, no two record companies will be present at the same time as each of the record companies signed a different and confidential contract with Apple.

The investigation comes after UK consumer group Which! complained about the difference in prices of tracks bought on iTunes across the bloc.

In April, when the commission announced the objections to the companies, it stressed that the case had no relation to Apple's dominant position in the EU online music market.

The hearing also does not concern the way Apple uses security software - the so-called Digital Rights Management (DRM) - to limit the type of music players its customers can use to play songs they buy, which is another issue of concern for European consumer groups.

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