It has been more than two weeks since the European Commission issued formal antitrust charges against Apple and the four music majors over iTunes, but I’m still puzzled by some aspects of this affair.

As always, the Commission refused to provide details of the charges, which were communicated to the five groups in a confidential statement of objections.

Brussels merely said that the deals underpinning the sale of music through the iTunes platform appeared to amount to an "agreement to restrict competition". It added that its concerns related to the fact that users from one EU country are prevented from accessing the iTunes website in another EU country, and so can’t benefit from lower prices there.

So far, so good.

But then the Commission broke with its customary tight-lipped procedure and started telling journalists that Apple was not the real target of its investigation. The real villains of the piece, explained a Commission spokesman in a press conference, were undoubtedly Universal, Sony BMG, Warner and Emi. It was their desire to continue operating in different national markets that effectively kept Apple from offering a pan-European product - or from allowing music fans to shop online across borders.

But if that is true, why is Apple being charged in the first place? Surely, as one of the recipients of the statement of objections, and as the dominant firm for distributing music through the net, the US group must have something to answer for.

Just consider the background to this case, which was triggered by a complaint from a UK consumer organisation: The complaint highlighted the fact that downloading a song from the British iTunes website was far more expensive than from iTunes in Germany or France. British consumer were, alas, unable to access these websites even though the EU in theory at least boasts an open and borderless market for every product and service under the sun.

Whatever the reason for this - and clearly the music companies have a big say in the way copyrights are managed and accounted for - surely the crucial factor here is pricing. If all the songs on all the European iTunes platforms cost the same, there would be no demand for European consumers to go to an iTunes website outside their home country in the first place. The price for a download, however, is set exclusively by Apple itself, which makes the Commission’s hasty defence of the US group all the more surprising.

Now, given that I have not seen a copy of the charges, it is perfectly possible that I am missing an important fact or two. But given that the Commission was perfectly happy to exculpate Apple in public despite the charges, it would have been nice to hear the regulator tackle some of the more critical questions in public as well.

April 16th, 2007 in Commission | Permalink