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European Commission files formal objection to iTunes sales model
Posted on April 5th, 2007 by Ruben Francia

European Commission files formal objection to iTunes sales modelThe European Commission (EC) issued a Statement of Objections against alleged territorial restrictions in online music sales to Apple and unidentified record companies, believed to be EMI, Sony BMG, Universal Music and Warner Music. The EC asserts that agreements between Apple and the music labels “violate the EC Treaty’s rules prohibiting restrictive business practices.”

Apple said that it does not believe that it has violated EU law, asserting its hand was forced by the music labels who said the separate stores were necessary for legal purposes.

‘Apple has always wanted to operate a single, pan-European iTunes store, accessible by anyone from any member state,’ the company said in a statement. ‘But we were advised by the music labels and publishers that there were certain legal limits to the rights they could grant us.’

Apple could be found guilty of territorial restriction even if it was made to do so by the music labels, Principal Economist Alena Kozakova told MacNewsWorld.

“It may be true that actually they didn’t initiate it,” Kozakova said. “However, under the European Union law, if you conclude an agreement you know restricts competition, you are as guilty as the other parties involved. It’s extremely difficult to ascertain in whose interest this agreement was, but just a statement by Apple, unfortunately, will not do it.”

Universal Music, EMI and Warner Music said they have been contacted by the EU.

EMI said it doesn’t believe it has violated European law and will make that case “strongly.” The other labels haven’t commented.

Statements of Objections are a formal step in European antitrust investigations. Companies who have received such statements have two months to defend themselves in writing. They can also ask the commission to hear their case at an oral hearing which usually takes place about one month after the written reply has been received.

The commission can fine companies up to 10 percent of their annual worldwide turnover for breaching EU antitrust rules.

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