Brussels to investigate Apple over iTunes 'rip-off'

A complaint that Apple Computer's music download service is "ripping off" UK customers has been referred to the European Commission, raising the possibility that the company could be fined for anti-competitive practices and failing to treat Europe as a single market.

The consumer body Which? wrote to the Office of Fair Trading (OFT) in September, asking it to investigate why prices for using the iTunes service are 20 per cent higher in the UK than in France and Germany. UK music fans are charged 79p (¤1.14) per downloaded track, while those in eurozone countries pay just 99 cents (68p).

Apple's price differential is exposed because it is the only major music downloading service to operate in multiple European countries. Napster, its main rival in the UK, has not yet opened any Continental sites.

Phil Evans, principal policy adviser at Which?, formerly the Consumers' Association, said: "UK consumers are getting a raw deal from Apple. The online music market is a huge growth area; the single market should work the same in this market as in others."

The European Commission could not say yet what sort of fines might be imposed if Apple was found to have breached the law. But a spokesman said: "It might be that the company will change its practice. Earlier this year the Commission asked airlines why they were charging people living in different parts of Europe different amounts for tickets on the same route ­ and the airlines changed their practices without any ruling being needed."

Earlier this year Microsoft was fined ¤497m by the Commission for breaking the Competition Act by bundling its Media Player software with its Windows operating system. Rivals said that meant they could not compete fairly to offer their services. Microsoft is appealing against the decision.

The OFT said the Commission was "better placed" to rule on the iTunes issue because the service operates in more than three European countries.

Launched in June, the iTunes Music Store is a digital record store which allows anyone to buy and download songs to a computer, and then either load those on to an iPod digital music player or "burn" a CD. Industry figures suggest that it has roughly 70 per cent of the download market in the UK and France, but only about 30 per cent in Germany. Which? complained to the OFT that the iTunes service discriminates on price according to the user's country of residence.

A representative for Apple said the company had no comment. Apple previously told Which?: "The underlying economic model in each country has an impact on how we price our track downloads. Look at the price of CDs in the US versus the UK. We believe the real comparison to be made is with the price of other track downloads in the UK."