EU Investigates Apple's iTunes Pricing in Britain

by , 2:20 PM EST, February 24th, 2005

The European Commission (EC), a regulatory arm of the European Union (EU), is investigating Apple's practice of charging more for iTunes Music Store downloads in the England than it does in the rest of the EU, according to a Reuters report.

A spokesperson for the agency told Reuters, "There is indeed an investigation on our own initiative. We have made informal requests to Apple just to gather information. It is at the early stage."

At issue is the exchange rates for the US Dollar, the Pound Sterling, and the Euro. Apple charges €.99 for a download in Europe and £.79 in the UK for iTMS downloads. That works out to US$1.31 per download in Europe and $1.51 in the UK, a higher price, according to "Which?," the consumer group that filed the original complaint with the European Commission in September of 2004.

According to the article, the consumer group complained to Britain's Office of Fair Trading that British customers are barred from the Apple's iTMS sites in Europe. The British agency then "informally" referred the case to the EC in December of 2004.

Reuters also reported that the informal nature of the referral to the EC stripped Which? of its role as formal complainant, removing them from a direct role in the investigation process.

The European Union aggressively regulates many business practices in its member states, and it is not clear how this will resolve itself.

One thing not covered by Reuters, however, is the fact that licensing for music is handled from country to country, and is not uniform throughout the EU, a fact that was largely responsible for how long it took Apple to launch the iTMS in Europe in the first place.

Accordingly, the rates that Apple is paying to the various copyright holders and related agencies throughout Europe is priced in local currencies, and not US dollars. For most of Europe, that's the Euro, whereas for the UK, it is the Pound Sterling.

Much of this investigation will likely focus on those licensing fees, and not exchange rates, which are mostly irrelevant. Other factors that could play a role include membership rules for the EU on what rights citizens and subjects have across borders within the EU.

Reuters Article