European Commission to probe charge that Apple is ‘ripping off’ UK iTunes Music Store customers

“A complaint that Apple’s music download service is “ripping off” UK customers was referred to the European Commission today. 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% higher in the UK than in France and Germany. The OFT, the competition watchdog in the UK, has now asked the European Commission to look into the matter,” The Evening Standard reports.

“Phil Evans, principal policy adviser at “Which?,” formerly the Consumers’ Association, said: ‘UK consumers are getting a raw deal from Apple.’ It costs UK music fans 79p (120 euro cents) to download one track, yet in France and Germany the price is just 99 euro cents (68p),” The Evening Standard reports.

“The OFT said in a statement: ”Which?’ complained to the OFT under the Competition Act 1998 that Apple’s iTunes service discriminated on price according to the user’s country of residence and that UK users were unable to benefit from cheaper prices charged on other European iTunes sites, as access to sites serving other countries was barred to non-residents. The OFT has decided that the European Commission is better placed to consider this matter, in particular as Apple iTunes operates in more than three EC member states.’ No one from Apple was initially available to comment,” The Evening Standard reports.

Full article here.

Related MacDailyNews articles:
UK’s Office of Fair Trading investigates Apple’s iTunes for ‘anti-competitive practices’ – September 15, 2004

38 Comments

  1. JadisOne

    This is a test case to sound out how the digital economy is going to work across Europe. Apple are the first company to try and achieve a digital media service within the EU. Once a legal precedent is set, everyone will know where we stand. No conspiracy here, just a need to set a standard.

  2. F(r)ank u very much,
    It would be interesting to see a Global Monetary Unit (GMU for short) that EVERY country used. Might take away from the money conversion headaches. But I am sure it would cause some other headaches in the process.

  3. Dave H
    “then Apple will have to cut it’s UK pricing to match that in the Eurozone, which would finish the UK iTMS for good.”

    Apple will not cut thier price, the rest of Europe iTMS will raise there price. Even if Apple did cut UK price, it would still raise Europe prices to make up the difference, play the numbers game and figure out how much to raise to make the profits same as before. So everyone will pay the same price… it will just be more for some because some whiney bloke got his knickers is a ruffle. Typical, one person (or group) screws up a good deal for the rest.

    The Dude abides.

  4. Dude

    Unfortunately though, the Euro and Pound are not pegged to each other, so the pricing would have to change on a daily basis to meet the law. Much easier (but less profitable) for Apple to cut away the UK, or even sell the UK iTMS to a franchisee.

    Crazy, I know, but the issue needs to be sorted, not least because it is also keeping iTMS out of Denmark, Sweden and the ten new EU members.

  5. Hey, guess what folks? Since the UK so far has steadfastly refused to commit to full EU membership, then they don’t get the full benefits thereof.

    A better analogy to this situation would be a pricing structure difference between the US and Puerto Rico, rather than say New York and California.

  6. Otter
    there is a price differrence in Puerto Rico also though I can buy songs from iTMS I am not allowed to buy from the apple store or have access to educational pricing. Dell has a price difference also (in their ads look for “offer not available in PR”) though IBM does not.

  7. Benn said, “It would be like Apple telling California residents that the have to pay more for iTunes and that they cannot by from a cheaper iTunes store in say New York, were iTunes local to each state.”

    Not really, because Californians and New Yorkers use the same currency. A better comparison would be the US and Canada, and guess what? Because of the exchange rate, Canadians get their songs cheaper too. It seems that this is merely a matter of exchange rates, no? That’s just the way it works. Tough luck. That’s like me complaining that houses are less expensive in Roy, NM than they are here in Albuquerque and suing to lower the cost of housing here because of it. I don’t think there’s any case here.

  8. This is probably good news for consumers, Apple and the industry.

    The primary reason for price differentials is the music business’ fragmented structure.

    Tax rates and the cost of doing business varies from country to country.

    Exchange rates vary, sometimes quite widely, like 20% in a matter of months.

    Want to blame Apple for something? their desire to have easy to remember fixed prices, 99�, 79p etc.

    I can’t see any decision arising that will censure Apple to any significant extent, they have done the best they could under the circumstances. What I do see is the EU knocking some sense in to the record companies. It will take a while, the music business will surely fight to keep their revenue stream.

    Napster had big problems in negotiations to sell music around Europe, they gave up and only opened in the UK (have they other EU stores now?).

    Apple has done pretty well getting the music industry to rationalise, it’s now up to the EU.

  9. I hope you people in the US are aware of the consumer use tax in the US. Depending on what state you are from, you must report all purchases across state lines to the state government so that they can tax you appropriately. So in theory, $.99 in California is different in New York… once you pay taxes of course.

  10. Of the 30+ countries I have visited in my lifetime, no where was more expensive, for me as a Canadian, than London, England. Why would the iTMS not be, like everything else there, more costly? Currency exchange rates, music licensing, advertising, etc. would be pricier, and therefor so would the final product. Buying CD’s on Oxford Street would be quite alot more expensive that $12.99 CDA we pay here for new releases………

  11. I think the EU server is in NL. (?) Anyone know for sure?

    Apple is not so much in the dock as the ‘big 5’ who constantly charge more for music in UK. They are no doubt keeping quiet and letting Apple take the flack. Both Apple and the Music Companies need to be made to explain.

    We all admire SJ but like any businessman he’s in it for the bottom line.
    All power corrupts but absolute power corrupts absolutely.. SJ needs to speak with the Big 5 and tell them they need to harmonise their pricing policies. Apple can then anounce a price correction instead of getting a whole heap of negative publicity from the EU courts.

    If the big 5 don’t agree I think the EU will demand that Apple expose the details of the pricing regime it has with the music companies. Just the threat of that will probably make them see the issue in a whole new light !!

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