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EU Regulators Launch Antitrust Probe into Apple's iTunes

The European Commission confirmed Tuesday it had opened an antitrust probe into the way Apple's iTunes sells music online in coordination with major music companies.

The Commission alleged distribution agreements Apple has signed to sell music on the iTunes online stores in EU countries "contain territorial sales restrictions which violate" EU competition rules because consumers can only download singles or albums from the iTunes store in their country of residence.

"Consumers are thus restricted in their choice of where to buy music and consequently what music is available, and at what price," the Commission said in a statement.

"For example, in order to buy a music download from the iTunes' Belgian online store a consumer must use a credit card issued by a bank with an address in Belgium," it added.

Media reports said major companies involved in the EU probe included Sony BMG Music Entertainment, Universal Music Group, Warner Music and EMI Group.

The cost of buying a single song across the 27-nation bloc varies across the EU.

For example, downloading a single in Britain costs 79 pence (1.17 euros or $1.56), in Denmark 8 kroner (1.07 euros or $1.44), while in countries using the euro like Germany and Belgium, a single costs 99 euro cents ($1.32).

The "statement of objections" EU regulators sent to Apple does not allege the Cupertino, California-based company is in a dominant market position.

The Commission said Apple has two months to answer questions issued in the letter. If found guilty of violating EU competition rules, the company could face fines of as much as 10% of the worldwide annual revenue.

Investigation into Apple

The investigation comes amid moves by European consumer rights groups in Germany, France, the Netherlands and Nordic countries to force Apple to change the rules it imposes on customers of its online music store.

The groups are demanding Apple lift limits preventing consumers the ability to play their downloads on digital players other than Apple's iPod. In February, Norway, which is not a member of the EU, declared those limits illegal and gave Apple until Oct. 1 to change its compatibility rules or face legal action and possible fines.

Apple has said it is willing to open iTunes to players other than iPods if the world's major record labels moved to change their anti-piracy technology.

Apple spokesman Steve Dowling said the company wanted to operate a single store for all of Europe, but music labels and publishers said there were limits to the rights that could they could grant to Apple.

"We don't believe Apple did anything to violate EU law," he said. "We will continue to work with the EU to resolve this matter."

Apple and EMI announced a deal on Monday that would allow EMI's music to be sold on iTunes minus anti-piracy software that limits its use on some players. The move is expected to be watched -- and likely followed -- by other record labels.

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